Listed firm Philippine National Reinsurance Corp. (PhilNaRe) has entered into a memorandum of understanding (MOU) with Singaporean company ACR Capital Holdings Pte Ltd. in line with efforts to boost the reinsurer’s Asian operations.
PhilNaRe said it is looking at a possible long term strategic partnership with ACR Capital to help build PhilNaRe’s book of Asian business.
Likewise, PhilNaRe said ACR Capital can help build a domestic catastrophe pool in the country.
PhilNaRe said ACR Capital can also help provide technical expertise in the area of large commercial risks in underwriting on a facultative basis.
ACR will likewise develop an information technology system that will enhance PhilNaRe’s operational efficiency.
Under the MOU, ACR has the option to invest in PhilNaRe, subject to further discussion and negotiations between the parties, conduct a due diligence, securing the required government and regulatory consents and approvals, and execution of definitive agreements to implement the proposed transaction.
For the first quarter of this year, PhilNaRe reported a 36.6 percent contraction in its net income due to “lackluster results” from its investments.
Net income dropped to P110 million from P174 million in the same period last year despite a 189-percent rise in underwriting income.
Reinsurance premiums in the first quarter were slightly higher year-on-year at P726 million while net underwriting income surged to P111 million from P38 million.
PhilNaRe’s net investment income in the first quarter was P86 million, down sharply from P187 million in the same period last year
“At this time last year, the stock market was moving up, as was the peso, and interest rates were trending down,” said John Huang, PhilNaRe senior vice president and chief financial officer said in an earlier statement.
“This year, we have the exact opposite. Add to that the volatile international markets and you have a situation with limited trading opportunities,” he added.