MANILA, Philippines - The Bank of the Philippine Islands (BPI) has completed the sale of its insurance unit Ayala Life Assurance Inc. to Philippine American Life and General Insurance Co. (Philamlife), creating a new company called BPI-Philam Life Assurance Corp.
The new insurance firm will specialize in bancassurance, or the sale of life insurance policies through the branches and business centers of BPI.
Philamlife, the country’s largest life insurance firm, acquired last August a majority 51 percent stake in Ayala Life Assurance Inc. (Ayala Life), the life insurer of BPI and the Ayala Group of Companies.
“Ayala Life, which will serve as the bancassurance platform for both companies, will be renamed BPI-Philam Life Assurance Corp.,” Gertie K. Sinio, senior vice president of BPI, said in a report.
Philamlife continued to dominate the country’s life insurance industry with P13.6 billion worth of premiums in 2008. Ayala Life, which ranked seventh last year, reported total premiums worth P1.88 billion.
The joint venture comes at an appropriate time for Philamlife, whose joint venture agreement with Banco de Oro Unibank Inc. (BDO) expires next year through joint venture company Philam Equitable PCI Bank Life Assurance Co. (PELAC).
BDO has since entered into an agreement with Generali Pilipinas, a joint venture firm between Assicurazioni Generali SpA of Italy, and Jerneh Asia Berhad of Malaysia.
Bancassurance allows life insurers a powerful, extensive and wide-reaching distribution network through a bank’s branch network, including its three-million client base. The bank, in turn, profits through fee-based earnings and the introduction of other bank products to the existing and new insurance clientele.
BPI president Aurelio Montinola III said there are cross-selling (bancassurance) opportunities on both sides.
“Philamlife will have access to our customer base for life insurance products, while BPI will have reciprocal access to Philamlife’s customers for banking products,” Montinola said.
The popular bancassurance product is the variable unit-linked (VUL) products, which is a combination of life insurance and investments (a hybrid unit investment trust fund or UITF). It also introduced the single-pay or one-time payment system other than the regular pay or payment by tranches.
Most banks that practice bancassurance are also selling traditional life insurance products.