The insurance industry in the Philippines is gearing up for a strong year, as total premium income rose by more than 40 per cent year-on-year (y-o-y) in the second quarter.
The sector is expected to return to 2013’s record highs after a moderate decline last year, and foreign interest remains strong, with half a dozen firms vying to establish bancassurance channels via Philippine National Bank (PNB).
Total premiums were up 42 per cent y-o-y in the first six months of the year at 116.1 billion pesos (US$2.5 billion), according to the sector regulator, the Insurance Commission (IC), while total assets grew 12.8 per cent to reach 1.07 trillion pesos (US$22.9 billion), and investments rose by 17.2 per cent to 929.9 billion pesos (US$19.9 billion).
Despite a slight deceleration in the first three months of the year, broader economic growth remains robust at over five per cent, with industry revenues and assets also showing strong expansion to date, particularly in the life insurance segment.
Total life premiums rose by 49.5 per cent y-o-y to 98.8 billion (US$2.1 billion) in the first half of the year, while assets and investments increased by 15.5 and 19.1 per cent, respectively.
Most life insurers recorded double-digit growth in premiums in the first quarter, according to recent data from the IC, though BPI-Philam Life Assurance – a joint venture between Bank of the Philippine Islands and Philam Life – posted the strongest results, with a 135.3 per cent y-o-y increase in premiums to 5.9 billion pesos (US$126.4 million).
This was followed by Insular Life Assurance (133.6 per cent), Manulife Chinabank Life Assurance (117.9 per cent), Sun Life Grepa Financial (86.7 per cent), Philippine AXA Life Insurance (61.7 per cent) and SLCP (35.9 per cent).
Meanwhile, the non-life segment recorded more modest growth in the second quarter, with gross written premiums rising 7.4 per cent y-o-y to 32.7 billion pesos (US$700.4 million), though net income growth exceeded that of the life segment, up 40.4 per cent at 1.8 billion pesos (US$38.8 million).
The latter half of the year could see even stronger growth, according to Riza Mantaring, president and CEO of Sun Life of Canada Philippines (SLCP).
Speaking to local media in late July, Mantaring credited an increase in investment opportunities in the sector, ample liquidity and a solid macroeconomic environment as key growth
“If the first quarter is any indicator, this will probably (be) a record year for life insurance,” she said, emphasising the cyclical nature of the industry, which is prone to posting stronger growth in the second half of the year.
Emmanuel Dooc, commissioner of the IC, told local media in July that the quarterly results put the industry on track to surpass the record premiums witnessed in 2013, to reach an all-time high of close to 250 billion pesos (US$5.4 billion). Total industry premiums reached 198.13 billion pesos (US$4.28 billion) that year, before falling 4.63 per cent in 2014.
Changing the channel
A greater diversity of delivery channels is expected to spur further industry expansion, with a raft of foreign players looking to round out their offering with bancassurance products.
Several foreign financial institutions have expressed interest in forming a joint venture or alliance with PNB, local media reported in August, including Taiwan’s Fubon Life, South Korea’s Samsung Life, Germany’s Allianz and Switzerland’s Zurich Life.
With the regulations on bancassurance recently tightened by the IC in May, PNB is an attractive target for foreign firms looking to enter the market.
“It is the only bank of significant size and financial stability that will make sense for a foreign player to join forces,” Dooc told local media in August.
The bank’s existing bancassurance partner, PNB Life Insurance, will reportedly be involved in the entrance of any new foreign player.
Many industry heavy-hitters have already paired with local commercial banks, including BPI-Philam, Italy’s Generali, France’s AXA, Canada’s Sun Life Financial and Manulife Financial.
Together, they account for more than 80 per cent of industry-wide premium income and consistently post stronger growth rates than stand-alone insurers, according to local press reports.