5 non-life insurers plan mega-merger

MANILA, Philippines -  Five non-life insurance companies are poised to merge this year.

Stronghold Insurance Co. Inc. has initiated a merger deal with Milestone Guaranty and Assurance Corp. and BF General Insurance Co.

Insurance Commission (IC) Emmanuel Dooc refused to confirm the report, but admitted that insurers are seriously moving toward consolidation.

“Distressed companies are having talks with healthy insurers for possible merger,” Dooc said.

Industry sources said Stronghold initiated talks with Premiere Insurance and Surety Corp. and Country Bankers Insurance Corp. for a similar deal.

If the mega deal pushes through, the surviving entity would have a total premium portfolio of over P400 million, enough to catapult it among the top 20 industry players.

Mergers and acquisitions are expected in the non-life insurance sector with the impending capital increase requirement to P550 million at the end of the year, from the present P250 million.

Non-life insurers said the present volume of business in contrast with the number of industry players makes it more attractive to sell at a possible premium rather than raise additional funds to meet the regulatory requirements.
According to the IC, the number of  non-life insurance players could drop to over 40 players in 2017.