Malayan Insurance D&O market share increasing

The Malayan Insurance Co. Inc. (Malayan Insurance) has maintained its strong performance in the directors’ and officers’ liability insurance ( D&O) market accounting for roughly 20-percent market share.

As of presstime, Malayan Insurance has written P50-million worth of premiums of the P250 million worth of premiums in that market. That amounts to several billions of pesos cover.

A P10-million premium has an estimated cover of over a billion pesos.

D&O insurance is defined as a legal liability policy providing cover for wrongful act made by a director, officer of a company or its subsidiary.

The company pays for the premiums through a blanket cover.

Malayan Insurance cover some 30 corporations.

“We can not reveal their names as there is a protective clause in their policies, it is  a standard industry practice,” Arlene Q. Calimag, head of Miscellanous Casualty and Engineering of Malayan Insurance, which sells the D&O policies known as Foresight.

There are a few non-life insurance companies selling D&O policies, mostly foreign firms.

The policy covers all past, present and future directors and officers of the company, all past and present employees of the company in supervisory or managerial positions.

The Malayan official said that shareholders of a company may file claims resulting from a drop in share price due to misleading statements, from mergers or acquisitions, and from poor business decisions.

“Employees, both past and present, may also claim on charges of sexual harassment, wrongful termination, any discrimination. Regulators, customers, business partners and any other third parties may also file suits,” Calimag added.

The D&O insurance coverage has two parts. One is the termed Part A which protects the D&O on claim where they are not able, whether at common, statute or otherwise, to receive indemnity from their company.

Part B is the company reimbursement section which reimburses the company for payments made to indemnify the D&O for claims made against the D&O.

Calimag said that to ensure its ability to pay claims, Malayan Insurance not only keeps a huge reserve but also reinsures with respected foreign reinsurers such as Munich Reinsurance.

D&O liability insurance represents two percent of total premiums of Malayan Insurance.

Last year, the non-life insurance arm of the Yuchengco group reported total premiums amounting to over P5 billion.

It remains the market leader for the fourth consecutive year.

In 2005, premiums was P4.5 billion from P4.3 billion the year before.

It is recognized as a major contributor of fire, motorcar, marine, casualty, and personal accident insurance, as well as surety and bonds.

Last year, A.M. Best Co. assigned a financial strength rating of B++ to Malayan Insurance reflecting excellent capitalization, leading market position and stable income supported by strong investment performance.

A.M.Best is the world’s oldest and most authoritative insurance rating and information source.

Standard & Poors (S&P) likewise affirmed its rating of BBpi for Malayan Insurance, stating that “Malayan’s rating remains supported by leading market franchise, satisfactory solvency and adequate level of reserving.”