AIA Group bullish on Philippine market

MANILA, Philippines - Asian insurance and financial giant AIA Group is excited about the enormous opportunities offered by the Philippine market with its strong economic growth trends and expanding middle class.
AIA Group chief executive officer and president Mark Edward Tucker said the Philippine economy is one of the strongest in the region, offering opportunities to strengthen its life insurance business, through its subsidiary, the Philippine American Life and General Insurance Co. (Philam Life).

Tucker said the Philippine market is under penetrated.

“It is also experiencing increasing urbanization, an emerging middle class, changing demographics, improving balance sheets, strong public borrowings, all are ideal ingredients for the life insurance business,” he said.

The country’s penetration rate in terms of total premiums stood at 1.7 percent of gross domestic product (GDP), lower than Vietnam’s 2.1 percent, Thailand’s 4.7 percent, and Malaysia’s 4.9 percent.

The Philippines claims that almost a third of the country’s 100 million population has some kind of insurance protection, but majority hold microinsurance not traditional protection or unit-linked linked (VUL) investment-laced life insurance.

Arleen May Guevara, Philam Life chief investment officer, said the country’s average population age of 23 years makes it among the youngest in the region, often referred to as the demographic sweet spot.

Guevara said life insurers want to be part of the lives of individuals who are just joining the country’s work force.

“We should ensure their wellness while they are young, while they are entering the work force, while building their families, start their children’s education, until their retirement. We want to be relevant, throughout the generations,” she said.

Guevara said Philam Life ensures the health of its customer’s policies through quality and long-term investments in huge infrastructure projects, including those that fall under the public private partnership (PPP) projects.

The insurer has existing investments in several infrastructure projects in major toll roads, energy, power generation, key utility projects like water.

“It (infrastructure investments) is a natural fit being large amounts for long-term periods, and it is part of nation building, it fits to our appetite,” Guevara said. “We will entertain investment prospects whether it is through bilateral deals, club deals, bond issues or loans.”

Tucker pointed out the AIA Group has investments in infrastructure projects worth $40-to $50-billion across Asia.

“We look for long dated assets, thus lengthening the tenure, duration of infra assets. Insurance companies are natural owners of infrastructure investments,” the AIA chief executive said.