ALLIED BANKERS Insurance Corp. (ABIC) has settled its second payment for its purchase of Philippine National Bank’s (PNB) nonlife insurance arm PNB General Insurers Co., Inc. (PNBGen).
The Tan-led bank told the local stock exchange on Monday that it received P450.7 million for the second installment payment from ABIC for the bank’s 65.75% stake in its nonlife insurance arm PNBGen.
The payment will be completed in three tranches, with the last one worth P450.7 million due on June 21.
“The sale of PNBGen shares is consistent with the bank’s objective to exit the nonlife insurance business being a non-core undertaking,” PNB said in the disclosure.
“The bank will remain in the bancassurance space to support its strategic growth plans and at the same time eliminate insurance underwriting risk,” it added.
PNB said proceeds of the transaction will be used for general business purposes.
PNBGen is the Tan-led bank’s nonlife insurance arm that offers coverage for fire and allied perils, marine, motor car, aviation, surety, engineering, and accident insurance, among others.
Meanwhile, ABIC is the non-life insurance arm of LT Group, Inc. The move to sell PBGen is part of LT Group’s efforts to consolidate its nonlife insurance businesses.
The share purchase agreement worth P1.523 billion was finalized on Dec. 29. The initial payment worth P521.8 million was also settled that day, followed by the first installment worth P100.156 million in January.
Based on net premiums written, PNBGen ranked 24th (P623.89 million) in 2019 while the ABIC placed 28th (P473 million), according to data from the Insurance Commission.
PNB saw its net income slump by 73% year on year to P2.6 billion in 2020 after increasing its loan loss reserves to P16.9 billion, five times higher than the year-ago level. It said it allocated loan loss reserves for the worst-hit sectors during the pandemic, including real estate, transportation, wholesale and retail trade to manage risk exposures.
Shares in PNB went down by 40 centavos to close at P22.85 each on Monday. — B.M. Laforga