ALLIANZ PNB Life Insurance, Inc. said mechanisms for infrastructure investment for life insurance firms should be improved as it eyes to place funds in longer-term investments.
On Friday, Allianz PNB Life President and Chief Executive Officer Alexander Grenz said the insurance firm is looking for vehicles “to hedge basically out risk and hedge our investments over long term.”
“We are speaking not only about the five, seven and 10 years, which are typically…in the market, but if we could find things which help us to invest 20-30 years with certain guaranteed years, that is something life insurance is highly interested in,” he told reporters in a media briefing before the weekend.
He added that investments in state infrastructure seem “promising,” although he noted these should be improved to leverage better on life insurance firms.
“If you look at the P&C (property and casualty) insurance companies, (it is) very suitable (for them) because a lot of them are short term. But for life insurance companies, (it) can be sometimes tough because what we can provide and what the government should leverage better is long-term investments,” Mr. Grenz said.
The Insurance Commission recently made moves to encourage insurers to invest in infrastructure to boost funds for priority projects.
The Insurance Commission on Dec. 28 last year issued Circular Letter No. 2018-74 which set guidelines for insurance and reinsurance firms to “invest in debt and/or equity security instrument for the infrastructure projects under Philippine Development Plan” in order to help them “comply with the minimum net worth requirement” set by the regulator.
Insurance may participate in construction, financing or operation and maintenance contracts involving projects like highways, railways, airports, power facilities, irrigation and housing projects, among others. The IC likewise reduced risk charges for debt and equity investments.
The government has embarked on an P8-trillion infrastructure development program until 2022, when President Rodrigo R. Duterte ends his six-year term, in an effort to boost economic growth to 7-8% until then.
“I think it’s a missed opportunity that such vehicles and financial instruments are not catering to the life insurance particularly,” Mr. Grenz said.
However, he noted that the insurance firm is “also considering like everybody else” to put infrastructure investment into the mix of their investment strategy.
“But in infrastructure, you also see very long term projects. Some of these longer term projects we’ll be interested in, possibly investments,” he said.
Insurers’ investment in state infrastructure projects edged up to P16 billion last year from P15.1 billion in 2017, the Insurance Commission earlier said.
Allianz PNB Life is a joint venture between German insurer Allianz SE and Lucio C. Tan-owned Philippine National Bank. Allianz completed the 51% acquisition of PNB Life Insurance, Inc., the life insurance arm of PNB, in June 2016.
Allianz PNB Life was the ninth-largest life insurer in terms of premium income with P8.99 billion as of end-2018, higher than the P5.3 billion booked in 2017. — Karl Angelo N. Vidal