This encouraging prospect follows the merger of two of the country’s biggest names in the Philippine reinsurance business: Malayan Reinsurance Corp. (Malayan Re) of the Yuchengcos and Universal Reinsurance Corp. (Uni Re) of the Ayalas. Both groups have equal interests in the new company.
Known as Universal Malayan Reinsurance Corp. (UMRe), this "merger of equals" will allow expanded product diversification and higher reinsurance capability for the new company.
"The merger augurs well for the Philippine reinsurance industry which now witnesses two major conglomerates in the country coming together to pursue a common vision," said Herminia S. Jacinto, president of UMRe.
She noted that the timing of the merger is auspicious, coming at a time when the reinsurance industry is gradually picking up the pace a few years after the 9/11 incident that led to a shortage in global reinsurance capacity.
With the resulting shortage, foreign insurers set stringent terms and conditions for local insurance writing companies which made business quite difficult for the Philippine insurance industry.
Reinsurance firms hiked their premium rates for insurers following the September attacks to recoup the huge losses they incurred to pay off claims. The huge losses put some global reinsurers out of business, thus leaving a smaller number of global reinsurance companies that are now dictating reinsurance premium rates worldwide.
Reinsurance absorbs part of the risks of insurance companies. They provide the insurers the ability and capacity to write more risks. Reinsurers are also known as "all-weather" friends.
The new company has a net worth of over P1 billion, making it a significant player in the Asean region. The merger capitalizes on URC’s strong presence is the life reinsurance business and Malayan’s well-known dominance in the property and casualty business. The merged company will be further strengthened by cost efficiencies through unified operations.