MANILA, Philippines - The National Life Insurance Co. (NLIC) is seeking a 90-day extension to Aug. 15, 2014, from the May 15 deadline to give more time for the potential investor to conduct due diligence.
The request was made by the Interim Governance Board (IGB), an entity formed to oversee the planned rehabilitation of NLIC. The insurance company has been placed under conservatorship, including six conservators, since 2006.
IGB chairman Reynaldo G. Centeno in a letter to the Insurance Commission (IC) said that the board has successfully appointed R. G. Manabat & Co., the Philippine member of KPMG International, as financial advisor.
Among the many tasks of the financial advisor is to engage potential investors for 51-percent equity stake of NLIC.
Centeno said that R.G. Manabat & Co. was seeking an extension from the May 15 deadline “to allow the potential investors more time to conduct the necessary due diligence and for the IGB and the IC to study the proposal in the best interest of the policy holders.â€
Industry sources indicate that up to three potential investors have shown interest, among these is reportedly Aegis Insurance Inc., a Canada-based mutual insurance company.
The entry of an investor is a prerequisite embodied in the 2013 rehabilitation plan, which would “equitize†or convert to equity the existing 10,791 policies-in-force, including the controversial Premium Deposit Fund (PDF).
Failure to secure an investor will likely mean that NLIC would be destined for liquidation, since a number of prospective investors in the passed have withdrawn interest, and that the proposed rehabilitation plan would be rendered .
BDO Unibank Inc. and the Philippine American Life and General Insurance Inc. (Philam Life) had “looked into†NLIC but withdrew their bid.
NLIC and all local insurers must raise at least P250-million minimum paid up capital to operate, not to mention operating capital for its day-to-day operations.
Outside the rehabilitation plan, NLIC must continue paying out dividends to its policy and PDF holders worth million of pesos.
At stake for the prospective investor meanwhile is an established insurance and agency infrastructure, plus entering the life insurance industry with a minimum paid up capital requirement of P250 million, rather than the P500-million to P1 billion for new entrants.
It likewise acquires the NLIC head office along Ayala Ave. and another high-value property in Mandaluyong City.