More foreign insurers entering local market

MANILA, Philippines - The country’s insurance industry is now like a magnet, as a number of global-scaled insurers are making a beeline to get regulatory approvals. 

In fact, C.V. Starr & Co. Inc. (C.V. Starr), the diversified investing group of Maurice “Hank” R. Greenberg, has been granted a license by the Securities and Exchange Commission (SEC) to operate a full branch in the Philippines. 

The branch will reportedly start a non-life insurance business in the Philippines, thus crowding the already suffocating 80 or so non-life insurance companies already operating in the Philippines. 

Greenberg is not new to the Philippines market. He once headed the powerful American International Group (AIG) then mother unit of the Philippine American Life and General Insurance Co. (Philam Life). He has since disconnected with AIG and Philam Life is now connected with the AIA Group. 

He is one of the founders of the Philippine American Chamber of Commerce. 

Meanwhile, KPMG has made representations with the Insurance Commission (IC) in search of new business opportunities for its global clientele base. 

KPMG is an international auditing, advisory and tax firm that operates as a network of member firms offering audit, tax and advisory services. Its expertise is advising major corporates and governments on risk mitigation and investment opportunities. 

“They came looking for a list of investment opportunities in our insurance industry,” an unnamed IC official said. 

In fact, two foreign embassies likewise sent their respective commercial attaches asking for advice for the same opportunities. “One of the attaches’ represents one of the strongest country in the region, while the other comes from Europe,” the official said. 

Two local non-life insurance firms also admitted that they are in talks with foreign insurers for either a joint venture or an outright acquisition. 

“We can not reveal the names of the local insurers or the foreign investors at this point of the discussions, except that these are serious not exploratory talks,” IC officials said. 

Meanwhile, a total of 10 domestic non-life insurance companies are in various stages of forming joint ventures or merging operations.

In a recent regional insurance forum, IC Commissioner Emmanuel Dooc said that eight of the 10 are in various stages of either forming joint ventures. They already submitted their formal intentions with the SEC and the IC. 

“That is one of the major challenges facing the industry as a result of the higher capitalization requirements,” Dooc said at the forum. 

Foreign firms prefer to form joint ventures recognizing the local insurers familiarity with the domestic market. Foreign firms will also have to raise a minimum of P1-billion paid up capital to put up their own company. 

At the end of 2012, the country’s non-life insurance industry reported a combined net income of just P2.5 billion and premiums warned of P23.9 billion. 

Total investments was placed at P58.8 billion. 

Total assets were valued at P125 billion and a combined networth of P57.2 billion.