ALLIANZ PNB Life Insurance, Inc. expects the life insurance industry to post slower growth in 2019 dragged by liquidity issues in the first half of the year.
Allianz PNB Life President and Chief Executive Officer Alexander Grenz said he expects the life insurance sector to post “slightly above 10%” growth in premiums this year.
Data from the Insurance Commission showed total premiums of life insurers at P228.61 billion as of end-2018, 12.89% higher than the P202.5 billion tallied a year ago.
“We see challenges in the market anyway,” the newly-appointed chief told reporters in a press conference. “[T]he market is suffering a little bit because there’s little liquidity in the first half of the year in the market. That will also slow down the market growth this year.”
However, he noted that market liquidity is “expected to recover in the second half of the year” following the central bank’s cut in reserve requirements.
In May, the Bangko Sentral ng Pilipinas (BSP) announced a 200-basis-point cut in reserve requirement ratio (RRR) which will be completed on July 26.
The phased reduction will bring down the reserve requirement of universal and commercial banks to 16% and to 6% for thrift lenders. Meanwhile, the RRR of rural and cooperative banks was brought down to 4%.
“I do believe we can still outperform the market growth…so I would hope, that end of the year, we would see bigger growth than 10-11%. That’s what I’m 100% committed to,” Mr. Grenz said.
Earlier this year, the former chief of Allianz PNB Life Olaf Kliesow said the joint venture between German insurer Allianz SE and Lucio C. Tan-owned Philippine National Bank (PNB) is expecting “low double-digit” growth this year.
In April, the life insurer announced the appointment of Mr. Grenz as the new chief of Allianz PNB Life effective June 1, as Mr. Kliesow took the role of global head of rewards & performance at Allianz SE.
The German insurer 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. — K.A.N. Vidal