PHILIPPINE National Bank (PNB) is set to infuse up to P245 million into its life insurance arm Allianz PNB Life Insurance, Inc. to meet the regulator’s minimum capital requirement, the bank told the stock exchange on Monday.

PNB said its board of directors approved last week its plan to inject additional capital into Allianz PNB. The transaction is still subject to regulatory and other approvals, it said.

“We are putting in additional capital into Allianz PNB Life to ensure that we are comfortably above the minimum regulatory capital and liquidity requirements. We would like to be proactive in ensuring we are able to continue and capture opportunities as we expand the business,” PNB President and Chief Executive Officer Jose Arnulfo “Wick” A. Veloso said via e-mail on Monday.

“The additional capital will support the affiliate’s current sales performance and new growth opportunities. It will also keep the 51-49 JV (joint venture) proportionate shareholdings,” Mr. Veloso added.

Life and nonlife insurance companies are required to maintain at least P1.3 billion in capital by the end of 2022 after the Insurance Commission increased the minimum requirement in a bid to strengthen the local industry.

Allianz acquired 51% of PNB Life Insurance, Inc., the life insurance arm of the Tan-led lender, in June 2016.

Meanwhile, PNB sold its 65.75% stake in its nonlife insurance arm PNB General Insurers Co., Inc. (PNBGen) to Allied Bankers Insurance Corp. (ABIC) as part of a move to consolidate LT Group, Inc.’s nonlife insurance businesses. ABIC is the nonlife insurance arm of LT Group.

ABIC has made two out of the three tranches of payments for the P1.523-billion deal, with the third instalment set to be settled in June.

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.

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 15 centavos or 0.65% to close at P22.85 each on Monday. — Beatrice M. Laforga