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Ayala Life Assurance Corp. (Ayala Life) will continue to increase the sale of its traditional life insurance policies even as it steps up sale of investment-laced products.

Traditional policies bring in recurring business while most investment products also known as variable insurance products are generally single-pay premiums.

But Ayala Life officials admitted that bancassurance, or the sale of life policies through the bank branches and client base, will increasingly be one of the major contributors of its annual sales.

“The success of bancassurance is not just selling the products through the bank but ensuring that bank and life insurance products are blended to create the true bank and life insurance marriage,” Ayala Life chief executive Emilio S. de Quiros Jr. said.

In the first three months of 2007, unaudited net income hit P145 million, better than the P48.6 million in the period in 2006. It actually reached P562 million due to the earnings gained from the sale of its old building along Ayala Ave.

“Nevertheless, the first three months income this year is still higher than the previous period,”De Quiros added.

Ayala Life is looking for a net income of P425 million this year from the P317 million last year, and it remains on track.

Total premiums target is P2.5 billion this year from the P1.8 billion registered in the whole of 2006. That should keep the insurer in the top 10 largest life insurance  companies in the country.

Initial reports for the first four months indicate that bancassurance sales surpassing 225 percent compared to last year.

Alternative distribution channels grew by 162 percent, and group insurance by 30 percent.

“Overall growth is a positive 45 percent,” the Ayala Life chief executive said.

Agency contributions are almost flatish which is alright, as it contributes recurring business despite not registering outstanding figures. First semester agency sales is traditionally weaker than the next semester.

Meanwhile, the low interest rate environment remains a threat to the investment earnings of most insurers. Most of the insurers have been forced to reprice upwards the policies.

Others have also improved their investment mix to ensure continuous growth of its investments to cover all policies.

Ayala Life has already repriced its products and improved its investment mix since last year riding on the crest of the resurgent equities market.

De Quiros said that Ayala Life got a boost from its corporate lending activity with the corproate paper launched by Globe Telecomminucations in 2005. Last year, it got another bonus from the bullish equities market.

“It will not be any different this year as we continue to take advantage of the strong showing of the stock market,” he added.

Incidentally, Ayala Plans’ net income hit P76.3 million in the first quarter of 2007 versus the P14.4 million in the same period last year.

BPI Bancassurance Inc. reported a net income of P619 million this year versus the P295 million last year.