Philamlife exits pre-need, HMO businesses

The country’s largest life insurer The Philippine American Life and General Insurance Company (Philamlife) sold its pre-need and health maintenance organization (HMO) businesses to Systems Technology Institute (STI) and Philippines First Insurance Co. Inc. In statement issued Friday, Philamlife vice-chairman Jose L. Cuisia said the sale is part of the insurer’s strategy to focus on core life insurance and wealth management operations as it moves towards becoming part of the American International Assurance Co. Ltd. (AIA) Group. While Philam Plans and PhilamCare are “robust and financially sound" businesses, these are not core businesses of Philamlife, said Cuisia, who is also the chairman of Philam Plans. The 20-year old Philam Plans has over 300,000 pre-need plans in-force through a nationwide agency force of over 5,000 agents across 63 branch locations. With a P30-billion trust fund last year, it is the largest in the industry as majority of its assets are in liquid assets such as government securities with less than four percent in real estate and blue-chip equities. The share sale transaction is conditional upon regulatory approvals. Deutsche Bank acted as sole financial advisor to Philamlife on the transactions. Eusebio Tanco, president of PhilFirst Insurance and executive committee chairman of STI, said Philam Plans is an “excellent fit" with its existing operations. He believed STI is capable of increasing Philam Plans product portfolio by accessing STI’s network of education services. “There are really strong synergies between the provider of the educational plans and the provider of education services which we believe would provide significant improvement to the industry," STI President and CEO Monico V. Jacob said. The 26-year old educational institution, whose students mostly come from the lower class, has 95 tertiary campuses in every major urban center in the country. It attained its highest ever enrollment of 64,000 students for the school year 2009-2010, having expanded its field of expertise in the areas of engineering, healthcare, business administration as well as hotel and restaurant management courses. STI recorded P1.1 billion in revenues during the financial year ending 2008. One of the country’s leading HMOs, PhilamCare has over 160,000 cardholders. It has total assets of P794 million and stockholders’ equity of P239 million at end-2008. It saw a 12 percent growth in revenues at P1.05 billion last year. “We believe STI can further enhance PhilamCare’s growth since we are in the process of developing our network of health care professionals and affiliated hospitals and clinics nationwide," Jacob said. Through its affiliates, STI also operates a megaclinic in SM MegaMall and two tertiary hospitals with a combined 257-bed capacity. "We want to be known in the health care business. PhilamCare is an excellent fit with our existing operations since we are expanding our business to include health care courses and hospital services and management," Tanco said. STI has De Los Santos-STI Medical Center, the DLS-STI College of Health Professions and the management of the Dr. Fe Del Mundo Medical Center under its wing. “We are delighted to have the opportunity to acquire PhilamCare, which is an excellent addition to our growing roster of health care organizations. PhilamCare clients, partners and employees can be assured that healthcare agreements remain the same and there will be continuity of operations and services," he added. Established in 1906, PhilFirst Insurance is the first Filipino non-life insurance company. - Ruby Anne M. Rubio, GMANews.TV