First Pacific joins Philamlife buyers' list

The First Pacific Co. Ltd. is reportedly interested in bidding for the Philippine American Life and General Insurance Co. (Philamlife).

Philamlife was placed in the auction block as a result of a huge bail-out package received by the American International Group (AIG) from the US government. AIG was in the verge of bankruptcy due to the US subprime fiasco.

To raise funds, AIG placed several of its global operations for sale to repay the US government.

The entry of First Pacific will change the complexion of the race for Philamlife, often called the Pearl of Philippine life insurance.

The Hong Kong-based First Pacific is a major player in the regional market, with its presence felt in the Philippines through Metro Pacific Investment Corp. (Metro Pacific), headed by Manuel V. Pangilinan. It reported a recurring profit of $126.5 million and a net profit of $156.8 million in the first nine months of 2008.

Metro Pacific has substantial investments in telecommunications, utilities, property development, health, media and media outlets, infrastructure, authorized capital stock of P21.55 billion and a reported net income of P660 million in the first nine months of 2008.

“Acquiring Philamlife will give the group a major financial institution for cash flow and investments in both short to long term. And it can complement its expanding Philippine operations as well as develop further side business,” industry sources, who refused to be named, added.

Other than First Pacific, the field of bidders are unchanged which includes Pru-Life of UK, the team of AXA of France and the Metrobank Group, the Ayala Group of Companies, Manulife Financial of Canada, and the partnership of Assicurazioni Generali SpA and Banco de Oro Unibank.

“The asking price is very steep, and a financial commitment is reportedly required prior to due diligence. That is why the Government Service and Insurance System (GSIS) pulled out,” the sources said, adding that only bidders with strong regional partners can sustain their interest for the insurer.

“Chances are it is our principals that are holding separate talks with JP Morgan or the Blackstone Group,” one of them said. The two global entities were hired by AIG and the Federal Reserve of New York to take care of disposing Philamlife and its subsidiaries, except its non-life insurance operations.

Unconfimed reports indicate that AIG wanted P36 billion for the sale of Philamlife.

However, BDO chairperson Tessie Sy-Coson said that she “does not believe everything that appears in the newspapers” referring to reports of the P36 billion asking price. “It is a long process but our partners (Generali) continue to pursue it.”

GSIS announced it was withdrawing its bid for Philamlife last week due to the steep financial requirements connected with the process.

Sun Life Financial of Canada earlier expressed interest in joining the fray but reportedly withdrew as “its priorities were not exactly similar to Philamlife.”

The Philippine branch of Deutsche Bank was tapped to represent JP Morgan and the Blackstone Group, to investigate and undertake due diligence on interested parties.

AIG has up to 2010 to pay its combined $150-billion obligation to the US government.