Standard Insurance president Ernesto T. Echauz said the merged company will be listed with the Philippine Stock Exchange (PSE). According to Echauz, the process of due diligence will start in the first quarter of 2002.
Echauz said the prospective merger partner is a local firm which is a strong player in the fire insurance market. It is also allied with a financial institution and ranked among the top 10 non-life insurance companies in the country.
Non-life insurance firms listed among the top 10 which are allied with a banking institution and are relatively strong in the fire insurance market are FGU Insurance Corp. (allied with the Bank of the Philippine Islands); UCPB General Insurance Co. Inc. (United Coconut Planters Bank); FEB Mitsui Marine (Bank of the Philippine Islands); and, the Philippine Charter Insurance Corp. (Metrobank).
"We are open to a merger for bigness, because we do not expect the economic conditions to improve next year. And to be able to survive better, a merger with a leading player would be helpful. The prospective partner must also have strong financials similar to us," Echauz said. Standard Insurance is an affiliate of Security Bank.
He added: "What we also want is complementation. It must be strong in the fire market to compliment our strength in the motor vehicle insurance market resulting in a good combination. It does not make sense with another company that is also strong in motor insurance."
The equity distribution of the "new" company is still a matter of negotiations. But he insisted that Standard Insurance should remain the surviving entity also Echauz did not rule out a 50-50 equity sharing after the initial public offering (IPO).
By end 2001, the insurer will increase its capital from P250 million to P500 million.
Standard Insurance reported gross premiums of P776.5 million in 2000, making it number eight among the country’s non-life insurance companies. There were a total of 97 industry players as of end 2000.
The total gross premiums of the non-life insurance sector was roughly P22 billion last year. The top 10 accounted for approximately P10 billion of the total gross premiums.