Philamlife awaits buyer as parent firm sells assets

NO SINGLE domestic insurer can afford to buy Philippine American Life Insurance Co. (Philamlife) and any taker will need the help of a foreign financier, analysts said, unless Manila’s top financial companies opt to expand their own insurance businesses. And while the country’s conglomerates may have the ready cash to match Philamlife’s P170 billion in assets and net worth of P49.5 billion, the question is whether they would be willing to dip their hands into a non-core business, they added. Even the Yuchengco Group of Companies, which has launched an offer, may need to find a partner, and an outside one at that, to purchase Philamlife, put up for sale by its parent firm in the US in the wake of a worsening financial crisis. American International Group, Inc. (AIG) on Friday announced that it would be selling assets, Philamlife included, to repay an $85-billion lifeline extended by the US government. Philamlife, a wholly-owned unit, will be sold with some local affiliates. Yuchengco group officials declined to comment when asked on the progress of talks following AIG’s announcement. Lorenzo V. Tan, president and CEO of Yuchengco-owned Rizal Commercial Banking Corp. (RCBC) said there was "no word at this time". Philamlife has eight subsidiaries whose businesses include pre-need plans, bancassurance, healthcare, banking, credit cards, asset management, property and casualty insurance, property management and development, and business process outsourcing. These subsidiaries are Philam Equitable Life Assurance Company, Philam Plans Inc., Philam Care, AIG Philam Savings Bank, Philam Asset Management Inc., Philam Properties, AIG Business Processing Services, Inc. and Philam Insurance. "Philamlife is a very good candidate for acquisition. The ones interested in the financial assets would be foreign institutions," Astro C. del Castillo of First Grade Holdings, Inc. said. "They [Yuchengcos] can get a good partner and sweetener and be part of a consortium and at the end of the day, they’ll have the controlling stake," another analyst said, noting how the Yuchengcos were able to buy Nippon Life’s insurance business. Nippon Life, a joint venture of the Yuchengco group and a Japanese firm, has been renamed Great Life Financial Assurance Corp. The Yuchengco’s insurance business includes Great Pacific Life Assurance Corp. (Grepalife), unlisted non-life insurer Malayan Insurance Co. Inc., and Great Life Financial Assurance Corp. It also lists Funeraria Paz Sucat, Inc. and Lifetime Plans as insurance businesses. Industry officials doubt the possibility of local insurers forming a consortium as a majority of Philippine insurance firms are mainly family-owned. "I would discount forming a consortium. Who would have the controlling stake would be an issue," said Peter G. Coyiuto, former chief of the 34-strong Philippine Life Insurance Association and president of First Life Insurance. Despite Philamlife being AIG’s "crown jewel" in Asia, analysts said prospective foreign buyers may cherrypick from the American financial giant’s insurance units in Taiwan, China and Hong Kong where the business is more lucrative. "If you buy a company, you look at the future stream of income. AIG’s peak operation is in China, Hong Kong and Taiwan," Mr. Coyiuto said. Conglomerates owned by the Gokongwei family, tobacco magnate Lucio Tan and retail tycoon Henry Sy would have the liquidity AIG needs but insurance may not be their cup of tea, analysts said. The banking industry’s big players Metropolitan Trust and Bank Corp. (Metrobank) and Bank of the Philippine Islands (BPI) are unlikely takers with each already having their insurance affiliates, analysts said. Metrobank has Axa Philippines, while BPI has Ayala Life. - BusinessWorld