Insurers express interest in fixed income exchange

The country’s life insurance industry has expressed interest in the Philippine Dealing and Exchange Corp. (PDEx), the country’s first fixed income exchange (FIE).

Philippine American Life and General Insurance Co. (Philamlife) is already one of the original incorporators, acquiring a significant equity in the exchange. It is the only insurance firm directly involved in the FIE.

AsianLife Financial Assurance Corp. (ALFA) president and chief executive officer Eulogio A. Mendoza said the FIE offers new opportunities for life insurance firms as an investment vehicle or through direct participation.

"It offers another avenue or portfolio of investments for insurers," Mendoza said. ALFA is an affiliate of the ATR Kim Eng Capital Partners Inc. (ATR Capital).

ALFA’s principal is already deeply involved in stock trading at the Philippine Stock Exchange (PSE), as well as the launching of several initial public offerings (IPO) this year.

Mendoza said that it makes a lot of sense for ATR Capital or ALFA to either acquire a member seat or equity in the PDEx.

Meanwhile, Ayala Life Assurance Inc. president Emilio de Quiros said that the FIE allows securities transactions to be more transparent and marked-to-market.

"If there is enough volume in the future, the spreads could be competitive from the present situation wherein spreads are extremely wide and highly speculative," De Quiros said.

With the electronic-driven securities exchange, insurers and the investing public in general could see the price movements of securities or commercial papers as the transactions are taking place.

Without it, investors have to rely on the registry of scripless securities (ROSS) or the individual traders.

The launching of the FIE comes at a time when the Insurance Commission (IC) has tightened the investments of insurers in the overseas market.

While the IC did not bar investments in overseas investment instruments, it urged insurers to give first priority to government securities and domestically-originated instrumentalities.

The FIE is an electronic and transparent trading system for government securities and other debt instruments such as commercial debt papers.