IC approves PNB’s consolidation of non-life insurance businesses

MANILA, Philippines — The Insurance Commission has given tobacco and airline magnate Lucio Tan the green light to consolidate by unloading the stake of Philippine National Bank (PNB) in PNB General Insurers Co. Ltd. (PNBGen) for P1.52 billion.

In a disclosure to the Philippine Stock Exchange (PSE), PNB said it obtained the approval to sell its 100 percent stake in PNBGen to Allied Bankers Insurance Corp. (ABIC) from the regulator last Dec. 29, 2020.

“The sale of PNBGen shares is consistent with the bank’s objective to exit the non-life insurance business being a non-core undertaking. The proceeds of the transaction will be used for general corporate purposes,” PNB said.

However, PNB said it would remain in the bancassurance space to support its strategic growth plans and at the same time eliminate insurance underwriting risk.

PNB has a 66.75 percent direct stake in PNBGen, while PNB Holdings owns the remaining 34.25 percent. PNBGen started operations in 1991 and offers fire, marine, fidelity and surety, as well as other kinds of non-life insurance business.

On the other hand, ABIC was founded by a group of enterprising Filipino-Chinese businessmen on May 1960 and came into being on March 1980 after the SEC approved the amendment of 19-year charter of what was once known as the Tan-led Sincere Insurance Co. Inc.

With the approval, ABIC paid PNB Holdings a total of P521.82 million on Dec. 29, 2020.

PNB, on the other hand, will receive P100.15 million on Jan. 20, P450.7 million on March 21, and P450.7 million on June 21.

ABIC ranked 10th in the list of non-life insurance companies in terms of net worth with P1.69 billion as of end-2019, while PNBGen was ranked 43rd with P960.63 million.

PNBGen, however, ranked sixth in terms of assets with P7.54 billion and ABIC placed 24th with P2.7 billion.

In terms of gross premiums written, PNBGen placed 10th with P2.93 billion and ABIC ranked 28th with P807.62 million.

However, ABIC ranked 10th in terms of earnings with P126.86 million and PNBGen 13th with P101.59 million.

Under Republic Act 10607 or the amended Insurance Code of the Philippines, insurance companies are required to have a paid up capital of at least P900 million by the end of 2019 to be raised to P1.3 billion by the end of 2022.

PNBGen has a paid-up capital of P912.6 million as of end-2019, while ABIC has P470 million.