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GSIS abandons bid for life insurer Philamlife


MANILA, Philippines - State-run Government Service Insurance System (GSIS) has abandoned plans to bid for Philippine American Life and General Insurance, Co. (Philamlife), country’s largest life insurer, which is being sold to help pay for its parent company’s debts. Winston F. Garcia, GSIS president and general manager, told reporters Wednesday that Philamlife is requiring bidders to make an offer even before they conduct a due diligence. "How can we make an offer if they don’t allow us to do due diligence?" he complained. "For me, P1 million is the worth of Philamlife," he added. "The premiums that planholders pay on a regular basis have to be invested somewhere. They are invested in stocks, which are down. They are bragging about the cashflow but how about the liabilities Philamlife will face once these plans mature?" BusinessWorld was unable to reach Philamlife officials Wednesday. In October, Philamlife’s parent firm, the beleaguered American International Group Inc. (AIG), announced it was selling its assets to pay its loan from the US Federal Reserve. That lifeline saved AIG from collapse. Based on data from the Insurance Commission, Philamlife’s assets of P108.35 billion was the largest among local life insurers in 2007. Its net worth was also the highest at P21.37 billion. Large local conglomerates like the Metrobank Group of tycoon George S.K. Ty, San Miguel Corp., Ayala Corp. and the Yuchengco Group of Companies have expressed interest to acquire Philamlife. Mr. Garcia also told reporters Wednesday that French bank BNP Paribas and a local bank, which he declined to name, have expressed interest in acquiring the state pension fund’s thrift banking arm, GSIS Family Bank. The Industrial and Commercial Bank of China (ICBC) Ltd., the largest among China’s four state-owned commercial banks, is interested in GSIS Family Bank as well, and has finished its due diligence. Mr. Garcia said GSIS is thinking of putting up 60% to 70% of the thrift bank for sale for P3 billion to P4 billion. "It is going to be a buy-in. We will issue new shares to them. They will buy in 60%-70% of the company. This will enhance the value of our stake in the bank and at the same time, increase the viability of the bank. We will retain our shares in the bank," he added. GSIS gained control over debt-ridden ComSavings Bank, which was renamed GSIS Family Bank, in 1986 after the bank failed to pay its debt to GSIS. "We don’t know how to run a bank. It is a foreclosed property of GSIS. We want to recover our investment there. We believe it will be better run by the private (sector). If the price is right, we will sell it," he said. — Ruby Anne M. Rubio, BusinessWorld
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