MB allows PNB, Allied to go into bancassurance

Monetary authorities have approved the application of Philippine National Bank (PNB) and Allied Banking Corp. to sell the products of their insurance affiliates and subsidiaries.

PNB owns 40 percent of PNB General Insurance Corp. and has a stake in PNB Beneficial Life. Allied has a 25-percent equity in New York Life Insurance Corp.

"The MB approval will allow these banks to promote and sell the products of their subsidiary/affiliate insurance firms under bancassurance," Bangko Sentral ng Pilipinas (BSP) officer-in-charge and MB acting chairman Alberto V. Reyes.

Recently, the Philippine American Life and General Insurance Co. (Philamlife) said it is expanding its operation by engaging in bancassurance with Equitable PCI Bank, the country’s third largest bank, by forming Philam Equitable Life Assurance Co. (Pelac).

Under the alliance, Philamlife acquires 95 percent of the Equitable PCI Life, the bank’s life insurance operation, while Equitable PCI Bank retains five-percent ownership. Bancassurance is the distribution of insurance products through a bank’s distribution channels.

Philamlife has invested P70 million for the acquisition and it expects Pelac to realize net income in the next five years.

Pelac will be the primary vehicle of Philam Group of Companies in distributing insurance products through the banks network of over 400 branches.

Bancassurance is a relatively new channel in the Philippines although it is extensively used in Europe. In the Philippines, thus far there are only three or four banks that are into bancassurance.