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Philam Life net worth up 53% in 2017

The Philippine American Life and General Insurance Co. (Philam Life) saw its net worth jump in 2017.
In a media briefing Monday, Philam Life said it booked a net worth of P69.5 billion in 2017, 53% higher from last year’s P45.5 billion. — Karl Angelo N. Vidal

DBM chief sees Philippines bagging credit rating upgrade within the year

THE DEPARTMENT of Budget and Management (DBM) expects an improvement of the Philippines’ sovereign credit rating this year, noting that it will be favorable for the government’s bid to increase the share of borrowed funds from abroad.
“We are confident that sustaining our fiscal reform agenda, primarily with Tax Reform and Budget Reform, will lead to a credit upgrade within the year,” Budget Secretary Benjamin E. Diokno said in a statement on Monday, April 30.
S&P Global Ratings on Thursday last week raised its outlook for the Philippines to “positive” from “stable,” which implies that the country’s “BBB” rating–a notch above investment grade–could be upgraded in the next six months to two years.
The debt watcher said that it will watch whether the Tax Reform for Acceleration and Inclusion (TRAIN) law would generate lower-than-expected fiscal deficits and whether it would drive down government debt.
The Development Budget Coordination Committee (DBCC) in its meeting on April 24 raised its revenue program, taking into account the higher incremental revenues the TRAIN law would generate in the medium term.
The inter-agency group also revised the borrowing program this year to a 65-35 mix, in favor of local sources, from the 74-26 ratio earlier set for 2018 and the 80-20 portfolio programmed last year.
“A potential credit upgrade will only maximize the benefits of this revised financing program.The economy stands to benefit greatly as it will potentially translate to lower borrowing rates to finance our priority programs and projects,” added Mr. Diokno. — Elijah Joseph C. Tubayan

SEC issues advisory against 30 online Ponzi schemes

The Securities and Exchange Commission (SEC) has warned the public against so-called online paluwagan schemes that collect money from investors with the promise of high returns within a short period of time.
In an advisory posted to its website, the country’s corporate regulator listed down 30 social media accounts which it described as a Ponzi scheme, or a fraudulent investment operation where old investors are paid off using payments from new investors instead of real cash-generating business activities.
The social media accounts are as follows:
1. Road To Stockmarket/Dream Builders – Rtsm 2;
2. Steady Money Onpal;
3. G-Funds;
4. Team Amazing Grace;
5. Donatos Team – Gig;
6. Team Donatos;
7. Building Bridge;
8. Gbs New Hope;
9. Gbs Trust Traders;
10. Whilmz Team International;
11. Whilmz International Online Paluwagan;
12. Rosca – Money’s Worth Onpal;
13. Warriors Team Onpal;
14. Team Warriors;
15. Xplosion;
16. Red Packet;
17. Elite Savers Club;
18. Share Ko Profit Ko;
19. Sutm & Boj;
20. Real Team Angel International;
21. Original Team Angels;
22. Return Of The Comeback Team Angels Internationals;
23. Cone Weekly Investment;
24. 2do Marketing Services;
25. Power7 M2g;
26. Onpal Adhoc;
27. Swift Earners Guild;
28. Exclusive Circle Of Earners;
29. Old Tbc; and
30. Lover’s Profit Sharing
— Arra B. Francia

Police, civilians kidnapped by Abu Sayyaf

Two police officers were among the four individuals abducted in Patikul, Sulu on April 29.
The two officers, identified as Police Officer 2 (PO2) Benierose Alvarez and PO1 Dinah Gumahad were aboard a tricycle with one Jakosalem Ahamad Blas and one Faizal Ahidji when they were flagged down by 11 armed men led by Abu Sayyaf member Mujir Yada and were forcibly taken southward.
Joint Task Force Sulu and the Philippine National Police are currently conducting rescue operations to recover the four victims. — Minde Nyl R. Dela Cruz

URC profit drops 12% in first quarter

Universal Robina Corp. (URC)’s attributable profit fell by 12% in the first quarter of 2018, as the cost of raw materials, manufacturing, and direct labor outpaced the minimal sales growth for the period.
In a regulatory filing on Monday, April 29, the Gokongwei-led food and beverage manufacturer reported a net income attributable to the parent of P2.95 billion in the first three months of the year, lower than the P3.37 billion it booked in the same period a year ago.
Revenues grew by 1.6% to P31.2 billion, driven by the international operation of its branded consumer foods (BCF) segment. The international arm improved its sales by 9.6% to P10.8 billion for the quarter, or 6.5% to $209 million in terms of US dollars.
“Topline growth came from Vietnam, Malaysia, and SBA. Vietnam is still on its path to recovery with C2 and Rong Do showing continued momentum, as well as biscuits and candies both registering strong performance,” the company said.
The local market meanwhile was met with headwinds for the January to March period, as net sales slowed by 4.6% to P14.3 billion. URC attributed the decline to the underperformance of snacks and total beverages, as well as lower volumes in the coffee category. — Arra B. Francia

PDEA to file drug charges vs over 200 barangay officials, councilors

The Philippine Drug Enforcement Agency (PDEA) is set to file charges against the 207 barangay captains and councilors involved in illegal drugs.
“PDEA will be filing cases against the personalities in the list. While we have at hand pieces of evidence against them, PDEA is continuously conducting case build up for the case to be airtight,” PDEA Director General Aaron N. Aquino said in a press briefing on Monday.
The list, which PDEA said was validated by four government agencies, consisted of 207 names, 90 were of village chiefs while 117 are of councilors. A total of 70 names (25 barangay captains and 45 councilors) came from the Bicol Region, followed by the Cordillera Administrative Region (CAR) with 34 names, and Autonomous Region of Muslim Mindanao (ARMM) with 13 names.
Mr. Aquino said he is awaiting the orders of President Rodrigo R. Duterte to release the names of the 93 other higher ranking officials. — Minde Nyl R. Dela Cruz

This art fundraiser of students for their prof is the nicest tribute

Love is expressed in various ways. For these students from the University of the Philippines (UP) Diliman, love is expressed through a fundraiser meant to help their professor whose bills are piling up in the hospital.
Hosted by the UP Department of Art Studies (DAS), College of Fine Arts (CFA), colleagues from UP Diliman, and the Alliance of Concerned Teachers (ACT), Art for Alice Guillermo is an that’s happening on May 5, 2018, Saturday, from 4 to 8 p.m., at the UP CFA Auditorium.
Professor Guillermo is professor emeritus of DAS where she is also the former chair. She is an esteemed art and social critic with a number of published books on social realist and Philippine arts.
Professor Guillermo went through a complete heart block in 2017 where she was confined in the hospital for two months. A heart pacemaker was mounted to strengthen her health. This year, she suffered an acute intraparenchymal hemorrhage or hemorrhagic stroke and an acute kidney injury: raising her hospitalization and home care expenses.
The Art for Alice fundraiser has three components: an arts raffle with tickets priced at P5,000 each and guarantees an art work prize; an online arts auction; and a lugawan.
For art work donations, contact Flaudette May Datuin at DAS, or Leonilo Doloricon at 0920-254-1589. The drop-off points are the Department of Visual Communication office, CFA at E. Jacinto Street, UP Diliman. Look for Ms. Jane M. For DAS, it is at Pav 1122 (Palma Hall Annex) along Quirino Avenue, opposite NSRI. Look for Hans.
Works by artists Francis M. Verano, Leonilo Doloricon, Con Cabrera, Iggy Rodriguez, Vincent Coronel, Joe Datuin, Ambie Abano, Raul Lebajo, Irma Lacorte, Aba Dalena, Tednicalao Dimaporo Camahalan, Jun Vinculado, and Kelly Ramos, among others, have been donated and received for the online auction and arts raffle.
For arts raffle ticket, contact Janette or SC at the UP Film Institute at 981-8500 loc 2670. For the Lugawan for Alice, spearheaded by ACT, tickets are sold for P500 and P1,000. For tickets, contact Zenie Lao-Santos 0919-868-8154.
For the online auction, click here to bid.
For those who wish to donate cash or purchase tickets through bank transfer payments, here are the banking details: DAS bank account is Landbank of the Philippines 3071-0412-70, with account names as Flaudette May Datuin and Cherryl Navida; ACT-Alliance of Concerned Teachers, Incorporated is at PNB UP Diliman Branch, Savings Account No. 393062600015. Send the scanned copy of your bank deposit slip to roland.tolentino@gmail.com.
For more details of the Art for Alice fundraiser, go to the Art for Alice page on Facebook.

Car sales and insurance

The country’s insurance sector exhibited another strong growth in 2017. Data from the Insurance Commission (IC) showed that the industry’s total premiums grew to P259.646 billion, up by 11.97% from P231.883 billion in 2016. According to Insurance Commissioner Dennis B. Funa, this is partly due to the growth of the country’s equities market and strong car sales.

As a result of the aggressive growth of the country’s automotive industry in recent years, car insurance has been one of the biggest segments for nonlife insurers today.

Sales of vehicles in 2017 grew robustly, especially at the end of the year, as consumers went into panic buying due to the anticipated implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law that raised excise taxes on cars.

According to the data released last January by the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA), the groups’ member companies sold 425,673 vehicles last year, up by 18.4% from the previous year’s 359,572 units.

Along with the increase in car sales, the number of vehicle owners who purchased car insurance also shoot up.

Car or auto insurance, as defined by Investopedia, is a policy purchased by vehicle owners to mitigate costs associated with getting into a vehicular accident.

“Instead of paying out of pocket for auto accidents, people pay annual premiums to an auto insurance company; the company then pays all or most of the costs associated with an auto accident or other vehicle damage,” Investopedia said in its Web site.

Car accidents are unpredictable. It can happen to anyone even to the most careful driver on the road. In times like this, the best tool that every car owner can take advantage of is the benefits brought by insuring the car. While car insurance cannot prevent accidents from happening, it saves the owner to further financial damage caused by unfortunate incidents.

In the country’s capital region alone, a total of 110,025 road crash incidents were recorded in 2017, which is 703 cases higher from the previous year’s 109,322, according to the Metropolitan Manila Development Authority (MMDA). The recent figure translates roughly to 300 cases of road crashes per day.

Vehicle marketplace Carmudi said on its Web site that having a car insurance has become more of a necessity than a luxury these days.

“In fact, it’s one of the best tools you can take advantage of when it comes to providing financial protection against physical damages or injuries resulting from vehicular accidents, traffic collisions and natural calamities,” Carmudi said.

“But more than that, a vehicle insurance gives you an extremely important benefit money can’t buy: peace of mind. This comes in many forms: not worrying where you’ll get the money to pay for your hospital bills and car repair; not fearing how you’ll pay for the injuries of other people; and not fretting about how your family will survive if you’re bedridden and unable to work for a long time,” it added.

Carmudi added that one of the most important steps every vehicle owner needs to do is to become more informed about the insurance options. In this way, the owner can choose the best insurance that fits his needs and budget.

All of the different types of car insurance policies today fall under two categories: third-party liability insurance and first-party insurance. Simply put, third-party liability insurance is an insurance that covers any wrongdoings that the policy-owner has made to other people and their possessions while first-party insurance covers casualties that the insurance holder or his passengers experience in an accident or collision.

In a report, professional services firm Ernst & Young said that the automotive retail will shift from a product-driven to a customer-centric approach to drive customer loyalty and to adapt to changing customer behavior and expectations. In this matter, insurance companies would play an important role.

“Achieving this transformation in automotive retail will not only require a concerted effort from both automakers and dealers, but will also demand an unprecedented level of collaboration with other stakeholders in the ecosystem, particularly insurance companies, auto finance and after-sales market participants,” Randall J. Miller, Global Automotive and Transportation leader at Ernst & Young, was quoted as saying in the report. — Mark Louis F. Ferrolino

The Next 50 and Beyond: Asian Institute of Management continues to ‘Lead. Inspire. Transform.’

By Jikyeong Kang, President and Dean of the Asian Institute of Management

Fifty years ago, Asia and the Philippines were a vastly different place. Most countries in the region were on the cusp of economic transformation spurred by changes in the sociopolitical landscape. The time was ripe for the likes of Washington SyCip and Eugenio López, together with a group from the Harvard Business School led by Stephen Fuller, to envision a business school — the first in Southeast Asia. Thus, on a one-hectare tract of land provided by Ayala Corporation, rose the Asian Institute of Management (AIM).

Today, the main building of AIM still bears Mr. López’s name; the W. SyCip Graduate School of Business is home to the Institute’s flagship MBA program; and Jaime Augusto Zobel De Ayala II and Mark B. Fuller sit on AIM’s Board of Governors.

Even as we at AIM treasure our legacy as one of the first business schools in Asia, we still work hard to keep the trailblazing spirit of our founders alive today and into the next 50 years and beyond.

We have a rally cry: Lead. Inspire. Transform. It reminds us of our legacy as pioneers, our solemn responsibility as educators, and the positive impact we continue to create as influencers in the Philippines, Asia, and the world through our network of 43,000 alumni.

Leading with a New Laboratory

In 2017, AIM established the School of Innovation, Technology, and Entrepreneurship (SITE), which offers programs designed for innovators, entrepreneurs, and data scientists.

SITE also features a corporate data science laboratory to support and thread its three programs: the Master of Science in Innovation and Business, the Master in Entrepreneurship, and the Master of Science in Data Science.

We call the lab ACCeSs@AIM or the Analytics, Computing, and Complex Systems laboratory. It is envisioned to lead the use of data science, artificial intelligence, and various computational models to drive industries, government agencies, and other sectors to innovate.

Aside from having full-time, world-class data scientists and engineers, such as Chris Monterola and Erika Legara, ACCeSs@AIM houses a 500-teraflop Acer supercomputer that is the fastest in the Philippines and ranks among the top in Southeast Asia in terms of technological power and sophistication.

Inspiring the Next Generation of Innovators

Several years back, we realized that individuals in the fields of science, technology, engineering, agriculture, architecture, mathematics, and medicine (STEAM) had the potential to be brilliant innovators.

Being a business school, we knew AIM could offer these talents something unique: A course that teaches STEAM individuals the fundamentals of business, design, and leadership skills through team-based innovation projects. The goal was to produce business savvy technopreneurs and corporate innovators.

The result was the Master of Science in Innovation and Business (MSIB), which AIM launched in 2016. We recently graduated our first batch and are very proud of what they achieved even before the end of the program!

As a capstone project, MSIB students showcase their innovations during Demo Day, where they pitch to companies, venture capitalists, and potential angel investors. Our pioneer MSIB batch has, thus far, received a total of P2.5M in seed funding; most of it courtesy of the MSIB capstone project called StudyPlay, which received a total investment offer of P2M.

Of the 21 students in the first batch, 15 have received awards from national and international parties as of this writing. We expect to add to this list in the coming weeks.

Most recently, our students, whose capstone project is called e-Magsasaka, were named Grand Champions at the EWS Innovation Olympics 2017. The same students received P250,000 in funding this April on top of the P150,000 prize they received as finalists last year.

Some of the international recognitions our MSIB students have received include those from the UN Breakthrough Innovation Challenge in the US, the International Youth Forum on Innovation 2017 in Singapore, UNDP Youth Co: Lab Summit in Thailand, and the Re.A.Pra Case Competition in Singapore.

One group’s capstone project, EngageMED, has been incorporated in Singapore and has already closed a business partnership with a Singapore-based IT consulting company. Another group of students banded together after the program to form Kezar Innovations, which was also incorporated in Singapore just this March.

Six other startups are currently being developed. A third of the class was interviewed by AIM’s industry partners three months before the end of the program, and five students were offered jobs soon after. Of the five, three students signed employment contracts before graduation, and 10 graduates reported a 2–3x multiplier from their previous salaries.

In January 2018, classes began for our second batch of MSIB students. We are all excited to see what they will achieve!

Transforming the Region’s Data Science Future

AIM’s newest program is the first formal graduate degree program for data science in the Philippines and among the first in Asia. We designed the Master of Science in Data Science (MSDS) program based on the far-reaching role that data plays in today’s business.

As a business school, we immediately recognized several key challenges in the field of data science and analytics: Learning to ask the right questions, producing actionable insights, and communicating data-driven solutions across the organization. These are the key differentiating factors of our MSDS program, in addition to the world-class data science faculty we boast.

Almost immediately after announcing the MSDS program, there was widespread interest from various sectors. Data science is industry agnostic and companies in the Philippines realized the value of investing in the next generation of data science leaders. Our pioneer batch of MSDS students began classes in March 2018, with 19 out of 42 students sponsored by companies and organizations based in Manila.

When Chris Monterola and Erika Legara went to Arizona to attend a recent meeting of the Association to Advance Collegiate Schools of Business (AACSB) — AIM being one of the few Asian business schools accredited by the body — they ran a session on our MSDS program and ACCeSs@AIM. Over 150 deans and heads of business schools asked the same question: How was AIM able to develop a hardcore technical course in a business school?

Data science disciplines are usually housed in engineering or computer science departments, which makes the incorporation of solid, business-focused curricula a challenge; but that is AIM’s unique advantage. We leveraged our practitioner-oriented, case-method-driven ethos and produced an MSDS curriculum as only an agile management school like AIM can.

For instance, our students do not use dummy data sets, but live data. Additionally, within their first two months, MSDS students are taught to assess data strategy and propose real-world solutions by consulting actual companies.

The MSDS program will culminate with a capstone project, where students take on problems from various companies, organizations, and government agencies for which there are no existing solutions.

AIM’s MSDS program is a showcase of true academic rigor. In fact, at a recent AACSB Conference, Balaji Padmanabhan, director of the Center for Analytics and Creativity, stated that AIM’s MSDS program curriculum offers the best program design he has ever seen anywhere in the world.

We do all this to transform the business landscape to one where the products of data science training will no longer be foot soldiers but battalion commanders.

We have witnessed how the path to today’s C-suite does not have to come via finance, marketing, sales, or operations. It can very well be a technical path. Given AIM’s legacy of producing leaders, we want our MSDS graduates to be Chief Data Officers; or even — with the solid business training AIM delivers — a whole generation of CEOs.

Protecting your valuables against misfortune

Nonlife insurance, which as the name suggests, is a form of property and casualty insurance that does not cover an individual’s life. Many a people possess it in one form or another, through fire insurance, motor-car insurance, or home insurance, and in a lot of ways, it is a valuable way for Filipinos to safeguard their possessions from unexpected misfortune. It is also known as general insurance, or property and casualty insurance.

“Property and casualty insurance is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event,” personal finance expert Randell Tiongson wrote in his Web site.

“For the insured, it means that the agreement is merely to help him recover what was actually lost due to the unknown or contingent event. A contract of indemnity is therefore exclusive to property insurance.”

In other words, nonlife insurance policies protect (through monetary compensation) the insured against unfortunate events or accidents. While life insurance provides monetary compensation towards the policy holder’s beneficiaries in the event of fatal accidents or sudden illness, property and casualty insurance protect against events like fire, theft, or natural calamities.

Nonlife insurance is classified into different categories, and their value is dependent on the policy holder’s situation and preferences. For instance, a salesman who has to travel a lot for work and who rents an apartment gains much more value from car and travel insurance than home insurance. As any person can hold many types, there is a great deal of flexibility in choosing which ones are best for any given situation.

Car Insurance

One of the most common types of nonlife insurance is car insurance.

“As the name itself says, car insurance insures your car (and the riders) in the event of accidents resulting from both natural (e.g. typhoons, floods, etc.) and man-made (e.g. theft, exterior and interior damages) occurrences,” Mr. Tiongson wrote.

“Comprehensive car insurance includes protection against accidents and theft, and provides roadside and sometimes medical assistance and coverage as well.”

He added that for the average annual cost of car insurance for a Toyota Vios, it will cost policy owners around P18,000. With the recent prices of the Toyota Vios settling around P600,000 to over a million pesos, serious repairs or parts replacements for vehicle owners can reach over a hundred thousand pesos. In the case of the car getting totaled and needs replacement, the premium for car insurance would be several times cheaper than getting a new car. For frequent travelers, or those who drive on accident-prone roads, it pays to have car insurance. Car owners, meanwhile, are obligated by law to apply for car insurance.

Home Insurance

Much like how car insurance functions, home insurance provides protection for homeowners. Real estate is one of the most popular investments for Filipinos.

“Owning a home is part of the Filipino dream, and real estate is the preferable investment (over paper assets) in this country,” Mr. Tiongson wrote.

With how important real estate is viewed as property in the country, he added, it should be a given to protect one’s home at all costs. However, many home owners for whatever reason are averse to getting comprehensive home insurance policies, especially those with expensive annual premiums.

“You may be thinking that your house is sturdy, made of concrete, and has a stable foundation, so why bother with home insurance?” Mr. Tiongson wrote.

“The annual premiums are a small price to pay in the event that you make a claim. An annual premium in the five-digit range will give you a coverage valued in the millions. Home insurance provides coverage from natural disasters, robberies and water damages, and may offer additional benefits such as a relocation allowance, legal assistance, and medical (ICU) assistance.”

Home insurance policies are best suited for Filipinos who live in areas prone to natural disasters like typhoons, floods and earthquakes. It may also be worthwhile for the owners of secondhand houses to get insurance if the previous homeowners neglected the maintenance of amenities to protect against water leaks, pipe damages, rot and structural failure.

Travel Insurance

When buying plane tickets, many Filipinos dismiss the value of travel insurance, believing it to simply be unnecessary and expensive. For an average economy flight, travel insurance usually costs around P800 to P1,000 to cover a single short trip, and covers unforeseen events like flight delays, trip cancellations, lost luggage, and the like.

Travel insurance is doubly more valuable for those traveling with precious or fragile items in their luggage, or for those who are traveling under a carrier with a bad reputation for unreliable service.

“If you plan to travel far away (e.g. from Southeast Asia to Europe) and expect to buy a lot of new belongings, maybe you should consider travel insurance for this once-in-a-lifetime trip,” Mr. Tiongson noted. — Bjorn Biel M. Beltran

Digital transformation in the insurance sector

Existing for nearly 200 years now, the insurance industry in the Philippines, according to the Oxford Business Group (OBG), has been expanding steadily in recent years, and is among the region’s most mature and competitive sector.

“In addition to having a strong economy and a growing middle class, the country has a large number of people who have historically been underinsured. The push for inclusiveness is adding to new business coming from individuals seeking to build wealth and protect their assets. The sector is also well regulated, open to foreign investment, and underpinned by a long history,” OBG stated in a 2017 report.

According to recent reports, the insurance sector had another banner year in 2017. Insurance Commissioner Dennis B. Funa said that the three sectors — life, nonlife and mutual benefit associations — all posted positive growth in the four parameters of assets, premiums earned, net worth, and paid-up capital or guaranty fund.

As the sector continues to thrive and grow, trends also continue to evolve. According to Mr. Funa, based on reports, the emerging trends involve the greater use of online platforms and social media to sell insurance products.

“With this, and other innovations in the distribution and sales of insurance products, we are expecting heightened product awareness, improved efficiency in their delivery, and ultimately, increase in market penetration,” the commissioner was quoted as saying.

Similarly, OBG reported that there are signs that technology is starting to play an increasingly large role in the country’s insurance sector. To illustrate, OBG shared that some insurance companies have partnered with digital solutions and telecommunications companies to offer insurance solutions through the use of financial technology. Moreover, some insurers also collaborated with money transfer companies to sell affordable insurance products, and increase distribution in harder-to-reach locations around the country.

OBG continued to cite examples and shared that some companies are forging partnerships to offer services that will allow customers to also make cashless transactions.

On a global scale, digitization of selling insurance products and other services has also become a norm and a major disruption in the industry.

PricewaterhouseCoopers (PwC), a multinational professional services network, said in its Top Insurance Issues 2018 compilation report that the insurance industry has gone through its own digital transformation over the past five years.

“With a general acceptance that digital is here to stay, most insurers have incorporated digital into their organizations, implementing ad hoc capabilities to make their business faster and cheaper, creating online tools to further engage their distribution channels, and implementing table stakes technology in areas such as marketing, digital portals, customer self-service capabilities, and automation of some back-end processes,” PwC stated in the report.

“As we move into 2018, digital is continuing to reshape the way insurers do business. The ecosystem of available capabilities has grown exponentially and industry leaders are starting to leave behind the ‘fast-follower’ mentality, reallocating their investments into core capabilities that give them a more customer-centric view, as well as ways to differentiate themselves in the market,” the report continued.

PwC said that companies that develop a meaningful competitive advantage will design and implement digital platforms that can handle disruption and positively change cost structures.

“They will build scalable systems, deliver an end-to-end customer experience, and change their business models to foster a test and learn environment that helps them improve how they go to market. These leaders will be the most likely to quickly adjust and grow as the industry continues to become more digital,” PwC stated.

The report went on by saying that building a digital platform that will take your company into the future — not just respond to current needs — is critical to prolonged success.

Insurers are also advised to better know their customers by serving them better. “Developing a detailed understanding of customers and their end-to-end journeys is necessary to improve customer value. Knowing your customers — not just as segments but individuals — will help you pinpoint opportunities and effectively optimize their experience across all channels and throughout their lifetimes. Tying these digital initiatives to measurable business value from the beginning is critical to justifying the case for investment and creating a framework for measuring the effectiveness and impact of various initiatives,” the report said.

Meanwhile, amid emerging trends and major disruptions both locally and globally, OBG’s outlook for the insurance sector in the country remained positive. In their 2017 report, OBG shared that the Philippines’ insurance sector is well-positioned for the future.

“Its companies are firmly established, weaker institutions are being recapitalized, merged or folded, and insurers have a large market to sell into. Challenges remain primarily around awareness and affordability, and tapping markets outside of large urban areas will require the development of the right products at the right price point,” OBG said. — Romsanne R. Ortiguero

Stronger than ever

The Philippine insurance industry had a remarkably successful 2017, with its assets, investments, net worth, net income and premium all growing at double-digit rates from 2016, according to data from the Insurance Commission.

Assets totaled P1.56 trillion by the end of 2017, up 18.95% from P1.31 trillion by the end of the preceding year. That amount is the highest it has ever been. The life insurance sector accounted for the vast majority of the assets — P1.26 trillion or 81% of the total. The nonlife insurance sector held P221.74 billion of the industry’s assets, and the remaining P77.47 billion worth of assets was in the possession of the mutual benefit associations or MBAs.

“The increase in the total assets of the life insurance sector is attributed to the 78.16% increase in reinsurance accounts receivables or those amounts collectible arising from reinsurance transactions to P4.65 billion as of end of 2017 from P2.61 billion as of end of 2016, and the 25.40% increase in the segregated fund assets during the same comparable period,” Insurance Commissioner Dennis B. Funa explained in a statement. Among the 30 life insurance companies, five held assets worth more than P100 billion, while 13 had at least P10 billion.

What explains the surge in the total assets of nonlife insurance companies, meanwhile, is the increase in the receivables from reinsurance transactions, which reached P64.12 billion in 2017, an increase of 65.31% from P38.79 billion in 2016. The premiums receivable of the nonlife insurance sector also rose from P19.60 billion to P25.26 billion. Only five of the 69 nonlife insurance companies had assets of more than P10 billion.

Mr. Funa, who was appointed in 2016 by President Rodrigo R. Duterte to head the Insurance Commission, noted assets worth P1.33 trillion, approximately 85% of the total, were placed in different classes of investments. “Again, as of yearend 2017, the industry recorded the highest invested funds in the total amount of P1.33 trillion compared to those reported in recent years,” he added.

The industry’s total net worth in 2017 reached P320.3 billion, 18.11% higher than the P271.2 billion recorded in 2016. The net worth of the life insurance sector, in particular, rose by 19.48% from P169.5 billion to P202.5 billion. The increase was primarily a result of the growth in investment fluctuation reserves.

Nonlife insurance sector’s net worth also went up by 13.89% from P76.6 billion to P87.3 billion, an increase attributable to the 25.43% increase in the total unassigned surplus/retained earnings and 20.56% increase in investment fluctuation reserves. MBAs likewise saw a substantial 21.76% increase in their net worth on account of the 34.05% increase in their total unassigned surplus/retained earnings.

When it comes to paid-up capital, life insurance companies posted an increase of 26.13% from P16.3 billion to P20.6 billion, and this improvement was a factor in the growth in the companies’ collective net worth. Nonlife insurance companies’ paid-up capital expanded at a relatively slower pace of 9.36% from P28.8 billion to P31.5 billion.

The most remarkable improvement in the Philippine insurance industry’s performance in 2017 was in its net income, which grew from P24.2 billion to P36.4 billion. “After experiencing a slight decline [in] revenue in 2016, the industry posted a 50.44% increase in net income as of yearend 2017,” Mr. Funa said.

Life insurance companies experienced an astounding 55.94% increase in net income from P17.5 billion to P27.3 billion, a welcome consequence of the increase in underwriting income. The MBA sector also posted a substantial net income increase, which was driven by a significant increase in its investment income. The nonlife insurance sector also experienced an increase in net income, from P3.4 billion to P3.6 billion, though at a clip not as remarkable as those of other sectors.

Premiums-wise, the industry performed well, with premiums amounting to P259.6 billion collected in 2017. “In 2017, the life insurance sector accounted for 77.94% of the industry total premiums or P202.5 billion, while the nonlife insurance sector and MBA sector account[ed] for 18.70% and 3.37%, respectively,” Mr. Funa said.

He explained that of the total premiums generated by the life insurance sector, 74% were generated from the sale of variable life insurance products, adding that premiums collected from those products increased by 12.29%, while premiums collected from traditional life insurance products increased by 6.83%.

“The nonlife insurance sector reported a year-on-year increase of 16.74% in net premiums written which can be attributed to the increase of 17.11% in premiums collected from its motor car line and 16.59% in premiums collected from its fire line,” Mr. Funa said. “The combined premiums for the said lines comprise more than half of the premiums collected by the nonlife insurance sector.”

In a BusinessWorld report published earlier this year, Mr. Funa noted that the industry could take a hit from the tax reform law that took effect this year by way of estate tax adjustments. Under the Republic Act 10963 or the Tax Reform for Acceleration and Inclusion Law, estate tax rate is now fixed at 6%. It used to be that the rate varied depending on the value of the net estate.

“I understand that the lower and simplified tax on estates will likely affect the business of insurance, particularly life insurance whose proceeds were previously, commonly used to pay off estate taxes,” Mr. Funa was quoted as saying in the report. “With the new lower tax scheme, resorting to this course may no longer be necessary.”

In another BusinessWorld report, life insurers were said to be expecting insurance premiums to maintain a double-digit rate of growth this year on the back of solid macroeconomic fundamentals and as insurance users seek more protection from risk, despite of the new estate tax rate and the doubling in documentary stamp tax (DST) for insurance policies.

“I look at the tax reform more from a positive point of view. If you look at it from an insurance angle you might say that there are some aspects that are more on the difficult side, like the estate tax, the DST. But overall, lowering the income tax should lead to more money in the pocket and more available assets. That means also lower income classes can start accumulating wealth and protecting themselves,” Olaf Kliesow, president of the Philippine Life Insurance Association, was quoted as telling the media. One of the key provisions of the tax reform program is the lowering of the personal income tax; starting this year, those with annual income below P250,000, for instance, no longer have to pay personal income tax.

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