Sunday, October 12, 2008 Cuisia: Insurance clients can expect payoff if they think long-term By Nancy R. Cudis Sun.Star Staff Reporter
A WEEK after the American International Group (AIG) announced its intention to sell its Philippine unit, it is still business as usual at the Philippine American Life and General Insurance Company (Philamlife).
Philamlife continues to reassure clients that the company is financially capable of meeting its commitments and obligations.
After dispelling worries that the sale of its assets would affect its ability to pay claims, the local unit is now correcting a barrage of common concerns by policyholders who are worried that the new owners might change their benefits.
Jose Cuisia, Philamlife president and chief executive officer, said that is not possible because the company has obligations to meet as a highly regulated insurance company. Policyholders are entitled to complain to the insurance commission if the company failed to accomplish its commitments.
Long-term view
For the past week, Cuisia reported that less than one percent of Philamlife’s more than one million corporate and individual policyholders in the country terminated their policies.
“But they withdraw because they do not understand what’s going on. When they do, they change their mind or they come back to us since we allow a 14-day reinstatement without charges and without presenting proof of insurability,” he said in a press conference at the Cebu City Sports Club yesterday.
To cope with the expected stream of concerns, Philamlife and its affiliates equipped their offices with hotlines and dispatched additional employees at the frontlines to immediately answer phone and walk-in inquiries.
Cuisia said they continue to encourage individuals to buy the policies they offer since “this is a good time for them to invest with the global market down.”
“About 10 to 15 years from now, the value of their investments would be much higher but they must be willing to take a longer perspective. If they just withdraw their investments after one to two years, they will not get the benefits we offer,” he said.
Cuisia said that there would be no negative effect, as far as the policyholders are concerned, with the buyout of the largest insurance company in the country because the new owners will have to respect and continue Philamlife’s obligations.
He added that the only effect would be an opportunity for another company “to own a very large and valuable company and the greater synergy that will result from the acquisition.”
“Whoever buys Philamlife will pay a high price if they will (also) replace our people-management, employees, agency force-who have been responsible for maintaining Philamlife as an insurance leader for the past 60 years. As much as possible, they will want to continue the success. While I cannot guarantee this, I think the new owners would want to add new people in the finance area, which normally happens in an acquisition, but not necessarily make major changes,” he said.
Core business
Last Oct. 4, AIG announced its plan to sell some of its companies and assets to refocus the company on its core property and casualty insurance business, to pay off an $85-billion lifeline from the US Federal Reserve Bank of New York.
Cuisia said that while AIG owns 99.98 percent of Philamlife, there are no local partners who could buy the Philippine unit.
However, he said that certain companies who could form themselves into a group could qualify as a buyer, as long as they are “top-rated, financially strong brand names with the capability to continue Philamlife’s legacy of leadership, strength, stability, and dedication.”
“We earned the trust and confidence of our policyholders through the past six decades and we intend to keep that trust and confidence,” he said.
About 10 local and foreign entities have expressed interest in acquiring all or part of the Philamlife group.
Orderly
How the group will be sold, whether in block or in units, is still a matter of discussion with AIG’s financial advisers, JP Morgan and The Blackstone Group, this week.
“I don’t know how long the sale will take but AIG wants this to be an orderly and professionally managed process in order to raise the funds to pay off the loan as soon as possible,” said Cuisia.
In an earlier statement, Philamlife said it is a strong business with a solid future being well capitalized and having the strongest balance sheet in the life insurance industry in the country.
It offers a comprehensive range of life and general insurance products that provide protection, savings, investments, education, accident, health, property, and casualty coverage.
As of Dec. 31, 2007, Philamlife had consolidated assets of P170 billion and consolidated stockholders’ equity of P49.5 billion.
In 2007, revenues amounted to P36.7 billion, reflecting a 14 percent growth from a year ago. The bulk of the company’s invested assets is concentrated on “marketable and liquid” Philippine government securities, corporate bonds and blue chip equities. (NRC)
