AIG Phl earnings up 37% in 2013

MANILA, Philippines - AIG Philippines Insurance Inc. (formerly Chartis Philippines Inc.) has reported a net income of P208.6 million last year, up 36.9 percent from P152.2 million in 2012.

This came despite a change in priorities from consumer market-centric to commercial market-focus in preparation to concentrating in its core competency moving forward.

AIG Philippines Insurance Inc. president and chief executive officer Mark Lwin said that auto and residential property premium witnessed a run-off last year as the focus turned to larger commercial accounts.

“New business for these two consumer lines was halted at beginning of 2013,” Lwin said.

Nonetheless, AIG Philippines remained in the top 10 performers in the country’s non-life insurance industry last year despite the change in priorities.

“AIG Philippines’ focus market is within commercial insurance where we can create value through our financial capacity, technical and engineering expertise, knowledge of emerging risks, and strong claims servicing capabilities,” he pointed out.

Investments and other sources of income more than doubled from P83.3 million in 2012 to P320 million last year. Expenses likewise shrunk by  30 percent to just P824 million.

Gross premiums written (GPW) ended 2013 at P2.5 billion (roughly $56 million) down 17.6 percent from the P2.9 billion the year before.

The chief executive explained that GPW is AIG Philippines’ focus top-line metric reflecting business growth.  Ninety-nine percent of reinsurance is ceded to AIG parent and enjoys the full backing and confidence of AIG’s global strength.

Majority of the domestic players are burdened by an independent panel of external insurers and reinsurers, thus increasing their risk premiums.

Net premiums written (NPW) likewise fell 40 percent to P578.1 million last year from the P966 million in 2012. “NPW varies year-to-year based on internal AIG capital management strategies, whereas GPW is our consistent measure of business growth,” he explained.

In a separate report, AIG Philippines explained that contraction in GPW and NPW from 2012 to 2013 was due to rationalization of non-core business segments, i.e.,  consumer auto and residential home insurance.

Note that commercial lines GPW expansion was at 15 percent, while consumer rationalization caused a reduction in GPW of 39 percent.

The numbers are expected to return to the positive territory as groundwork in the commercial market starts to reap its benefits.

AIG Philippines has been busy in the property and power sector last year, moving in a similar direction as the Philippine economy.

“We are getting into the commercial property sector, power generation and distribution, mall development, infrastructure, mergers and acquisition (M&A) market, financial sector, tourism, as well as cyber insurance, director and officers (D&O) market, marine, aviation and the environment,” Lwin stressed.

He pointed out that AIG Philippines has within its grasp 40 highly-qualified engineers based in the region to look into various commercial accounts. It also employs 3,500 nationals that have been in the business for a long time.

Lwin said that they are excited over the economic growth of the Philippines, seeing a lot more opportunites as domestic and foreign business expands.

“The country’s non-life insurance market remains under penetrated, while the domestic conglomerates and foreign direct investments are expanding,” the AIG Philippines chief executive said. “The Asean economic integration offers further opportunities.”