Philamlife sells pre-need, HMO units to Tanco-owned firms

MANILA, Philippines - Philippine American Life and General Insurance Co. (Philamlife), the local arm of insurance giant AIG, has agreed to sell its pre-need and health maintenance organization (HMO) subsidiaries to companies controlled by businessman Eusebio H. Tanco.

In a press statement released yesterday, Philamlife vice-chairman Jose L. Cuisia said the sale of the two subsidiaries is “part of our strategy to focus on core life insurance and wealth management operations.”

Under the deal, Philam Plans Inc. and PhilamCare will be acquired by Philippines First Insurance Co. Inc. (PhilFirst Insurance) and Systems Technology Institute Inc. (STI) for a still undisclosed amount. Both acquisitions will be folded into holding firm STI Investments Inc.

Cuisia said the sale of Philam Plans and PhilamCare would allow the financial institution to focus on its core business of life insurance through Philamlife and wealth management through Philam Asset Management Inc. (PAMI), the fund manager of several mutual funds.

Philamlife recently acquired 51 percent of Ayala Life Assurance Co. from the Bank of the Philippine Islands (BPI), solidifying its top spot in the country’s life insurance industry.

In an interview, Tanco said the acquisitions would provide a good fit to existing businesses in education, insurance and health care.

Aside from top IT-based school STI and non-life firm PhilFirst Insurance, Tanco also has interests in life insurance, hospitals and health centers, textiles and chemicals, cargo handling, power distribution, property, stock brokering and investment banking.

Tanco told The STAR that the transfer of the two companies could be completed within the month, barring any regulatory hitches. Monico V. Jacob, the president and chief executive officer of STI, will assume the post of chief executive of the two newly-acquired companies.

“We will retain all the personnel,” he added.

Tanco, the president of PhilFirst Insurance and executive committee chairman of STI, pointed out that while other pre-need plan companies rely on third-party schools for the provision of education, STI will provide the education services itself as a result of the transaction.

“STI intends to grow Philam Plans and we are capable of increasing Philam Plans’ product,” he said.

Philam Plans is the country’s largest pre-need company with over 300,000 pre-need plans in-force. It provides pension, education and life plans through 5,000 agents across 63 branch locations. It is capitalized at over P700 million and has a trust fund of P30 billion as of end-2008.

PhilamCare, on the other hand, is one of the leading HMOs in the Philippines. It is a provider of health care products and services to over 160,000 cardholders. It has total assets worth P794 million and stockholders’ equity of P239 million at end-2008. PhilamCare posted P1.05 billion in revenues in 2008.

PhilFirst Insurance is the first Filipino domestic non-life insurance company, established in 1906, which provides a wide array of non-life insurance coverage to individuals and corporations.

STI, which holds a solid reputation in the information technology (IT) field, also offers college degrees in health care, hospitality and business, and has a network of 95 tertiary campuses spread out nationwide. It also operates a network of prep schools, grade schools and high schools across the nation. It recently achieved its highest ever enrollment of 64,000 students for school year 2009-2010.

STI generated revenues of P1.1 billion in 2008.