Philam Life to policy holders: Ownership change not cause for worry

Posted at 10/05/2008 12:06 PM | Updated as of 10/05/2008 2:25 PM

The Philippine-American Insurance Company (Philam Life) on Sunday assured its clients that it will continue normal operations and that it is "strongly capitalized" despite its impending change of ownership.

The American Insurance Group (AIG) had announced earlier that it will be selling its non-core assets, which includes its Philippine subsidiary Philam Life, in order to pay its loan to the American government.

The AIG was dragged into the US Federal bailout last September 16 after the failure of its financial products.

In an interview at DZMM teleradyo with Philam Life President and Chief Executive Officer (CEO) Jose Cuisa Jr., he said that Philam Life remains stable and it can fulfill its obligations to policy holders despite the company’s change of ownership.

“Hindi dapat sila mabahala sapagkat malakas ang Philam Life, gaya ng sabi ko, very strongly capitalized. Mayroon kaming very solid investment portfolio, at iyan ang sasagot sa mga obligasyon namin sa policy holders, at tuloy-tuloy pa rin iyong operations namin, lagi pa ring normal. At saka kung magkaroon man ng bagong pag-aari, hindi naman magpapalit iyong mga procedures namin, mga policies namin, sapagkat ito ay naging rason namin for our success. Kaya itutuloy namin iyan,” he said.   

AIG debt affects Philam Life

Cuisa mentioned a week before that there were no plans of selling Philam Life. He said that it changed later on, however, because AIG wanted to raise amounts to immediately settle its debt to the Federal Reserve Bank of New York.

“Nangailangan sila ng tulong at ibinigay naman ito ng Federal Reserve Bank of New York. Umutang sila ng $61B. Ang gusto nilang gawin, mabayaran agad itong utang kaya maski ayaw nilang ibenta itong subsidiaries nila, parang na-force na sila upang mabayaran itong malaking utang nila sa Federal Reserve Bank of New York,” he said.

According to Cuisa, AIG has a loan of $61B to the Federal Reserve Bank of New York as a result of their losses brought about by the mortgage problem and the credit crunch in the US. He also said that it has $85B on credit facilities when AIG’s credit rating was reduced.

“Noong binabaan iyong credit rating ng AIG they had to put in a lot more collaterals which required them precisely to stop the credit facility of the Federal Reserve Bank, ito ngang $85B sa credit facilities,” he said.

He added that Philam Life is only one of the many subsidiaries that AIG plans on selling. Another company that will be sold is the American Life Insurance Company (ALICO) in Japan.

“Ngunit magkukulang sila sa pagbayad kung hindi nila ibebenta ang Philam Life, iyong American Life Insurance sa Japan, gaya ng ALICO Japan o ang American Life Insurance Company, mas malaki pa sa Philam Life iyon. At saka iyon mas profitable pa kaysa sa Philam Life. Ngunit iyon ibebenta rin nila gaya ng Philam Life sapagkat gaya ng sabi ko, kailangan nilang maka-raise ng malaking amount upang mabayaran iyong utang sa Federal Reserve Bank,” he said.

Cuisa explained that international investment banks JP Morgan and Blackstone will be receiving offers from different investors who are interested in buying Philam Life. He emphasized that Philam Life will be handed on to the best bidder given how it has become a household name in the Philippines.

Philam Life still strong

“Iyong dalawang investment banks na in-appoint ng AIG, dalawang international investment banks iyan, JP Morgan at Blackstone, sila ang tatanggap ng mga offers ng mga iba’t ibang investors na interesado. Titignan nila kung anong makukuha nila sa pagbenta ng Philam Life at saka iyong mga subsidiaries and affiliates kasi hindi iyan basta-basta ibebenta, kailangan makuha nila iyong value kasi alam nila iyong Philam Life is, gaya ng sabi mo, naging household name iyan, malaking malaking brand equity, may value iyan.

"May assets ang Philam Life, malaki ang assets ng Philam Life. Ang consolidated net worth ng Philam Life P49.5B as of December 31, 2007. Ang ibig sabihin niyan, makakakuha sila ng malaking pera kapag nabenta nila ang Philam Life. So they will have to get the best bid. Ibi-bid siguro iyan eh. May magiging bidding for those interested to buy Philam Life,” he said.

As of this time, Cuisa stated that several companies have expressed interest in buying Philam Life, both on the domestic and global scale. However, he refused to give names as he said that he was informed in confidence.

“Oo maraming may interest, both local and foreign. Ngunit hindi ko masasabi ang mga pangalan kasi ito sinabi sa akin in confidence,” he said.

As a result of the US financial crisis, Philam Life policy holders began to be anxious given its connection to AIG. Cuisa however assured policy holders that they need not worry as Philam Life remains to be strongly capitalized.

“Gaya ng sabi ng insurance commissioner, Philam Life has the strongest capital base in the entire life insurance industry. Sabi rin niya na kayang-kaya ng Philam Life mabayaran lahat ng policies kasi nga nasabi ko malaki ang capital base namin, malaki ang net worth namin,” he said.

He added that there wouldn’t be any major changes in Philam Life’s policies and procedures, saying that its next owner would be hesitant to make alterations as it was Philam Life’s management team that made the company the leader for the past six decades of its operation.

“Kasi iyong bibili nga makikita nila na very successful ang Philam Life. Bakit nila papalitan iyong mga policies, mga procedures? Eh sa tingin ko itutuloy nila iyan. At saka sa tingin ko rin na kakausapin nila iyong management team to stay on kasi itong management team is what’s responsible for the success of Philam Life. Kaya it is to their interest to keep this management team in Philam Life. Keep the agency force that has been successful in making Philam Life the leader for the past six decades,” he said.