Philam Life posts strong H1results

MANILA, Philippines - The Philippine American Life and General Insurance Co. (Philam Life) has reported that 93-percent of its new business came from the sale of variable unit linked (VUL) life insurance products. VULs are life products laced with an investment product.

“Philam Life continued to show strong 2013 first half results while successfully shifting its new business to VUL,” Rex A. Mendoza, president and chief executive officer of Philam Life, said.

Gross premium income of Philam Life amounted to P15.2 billion last year, while the entire life insurance industry reported premium income of a little over P120 billion.

However, these VUL sales are still pre-dominantly single premium with only eight percent being traditional or recurring business.

Single premiums are simply a one-time payment scheme for VULs while the traditional payment scheme are spread out in three-, five, or 10-year periods.

Single premiums are popular since it is lower in value and the investment portion is attractive. Traditional pay requires larger premium amounts but spread out in longer periods.

Single premiums give the insurer larger numbers to report in a given year, but traditional pay gives the insurer recurring business.

Insurers argue that single premiums generally result in a backflow in a three to five year period.

But VULs, especially the traditional pay type, result in a win-win situation for the insured and insurer. “The insured is protected while possibly getting to us the money they invest, and the insurer receives regular business while avoiding having to re-price their products,” Mendoza added.

Last year, almost half of Philam Life’s total premiums (P6.6 billion) were VULs while the bulk amounting to approximately P8.6 billion were traditional pay products.

The variable unit linked products make investments in the equity fund, balanced fund, and dollar bond fund, based on Philam Life’s 2012 audited financial statement.

The insurer makes investments mainly from fixed income investments to ensure that it has reserves to pay for maturing claims.

Other sources are real estate rentals and corporate lending.

It manages 7,800 active agents as of August 2013.

Philam Life also has a joint venture bancassurance company called BPI Philam Life Assurance Co. (BPI Philam), which is allied with the Bank of the Philippine Islands (BPI). It ranked fifth overall among the 30 life insurance companies licensed by the Insurance Commission (IC) last year.