Macquarie offers help in M&A talks with Philippine insurers

MANILA, Philippines – Macquarie Group Ltd. is reportedly assisting several foreign financial institutions interested in starting merger and acquisition (M&A) talks with Philippine insurance firms.

The global investment banking and diversified financial services group is reportedly prepared to initially invest up to $50 million (approximately P2.35 billion).

“The amount can be in the form of co-equity investment, or a loan to acquire an insurer,” sources close to the parties involved said.

For a new entrant in the country’s insurance industry, a minimum paid-up capital is required by the Insurance Commission (IC) in either life or non-life sector.

Likewise, the minimum capital for a composite license is P2 billion. A composite license holder can be engaged in both life and non-life insurance activities. Some of the existing composite license holders are Paramount Life and General Insurance Corp. and Philippine American Life and General Insurance Co. (Philam Life).

“A number of European financial institutions and insurance-related firms are looking for an acquisition,” sources said.

In a recent press briefing, IC commissioner Emmanuel Dooc said there were several inquiries in his office by European investors.

He likewise said Macquarie’s offer of at least $50 million in financial assistance could result in two M&As.

“When FWD Life Insurance entered the market without an acquisition, they raised P1 billion capital plus at least P250 million for operational purposes,” Dooc explained.

Since then, FWD Life has forged a joint venture bancassurance deal with Security Banking Corp. In the 2015 report of the commission, FWD Life has generated over P2 billion gross premiums through its bank partner.

In the past year, Ageas Insurance International NV of Belgium partnered with East West Banking Corp. to form a joint venture bancassurance firm.

Germany’s financial and insurance giant Allianz AG entered the Philippines by acquiring 51-equity in PNB Life Insurance Inc., an affiliate of the Philippine National Bank (PNB).