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Around 10 groups eyeing stake in Philamlife

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By Lala Rimando, abs-cbnNEWS.com/Newsbreak | 10/06/2008 1:37 PM

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The head of financially beleaguered American International Group’s (AIG) Philippine subsidiary said Monday that several foreign and local groups have expressed interest in buying the whole or a piece of the Philippine insurer.

Jose Cuisia, chief executive of the Philippine American Life and General Insurance Co (Philamlife) told a press conference that “close to 10 groups,” both foreign and local, have communicated directly with him to express their interest to buy a stake in the country’s leading life insurer.

“I don’t know how many expressed interest directly to JP Morgan (the global coordinators for AIG's divestiture programme), but what I know are those who called me, sent text messages, emailed, etcetera,” Cuisia said.

“These are very respectable groups [and this is why this] is very encouraging for us,” Cusia said. “There are also private equity funds who have expressed interest.”

Philamlife, with total assets of P170 billion and whose interests also include banking, asset management and outsourcing, is among the assets being sold by AIG to pay off its $61 billion debt to the U.S. government. The emergency loan kept AIG, once the world’s largest insurer, from going under after toxic mortgages led to massive losses.

The sale of Philamlife, considered one of AIG’s crown jewels in Asia, is the Philippine’s first direct experience of the impact of the financial shakeup in the US. 

Whole or part

AIG, which is selling various valuable worldwide assets outside its property and casualty insurance business, has enlisted Blackstone Group LP and J.P. Morgan Chase & Co to be the global coordinators for the divestiture program.

The two will set the parameters of the sale process, including the valuation and the shortlisting of potential buyers.

“It is not up to us, but up to JP Morgan,” Cuisia said when asked what are the criteria for choosing the new owners and when the handover will be. 

Details on whether Philamlife and its subsidiaries will be sold as a block or per unit are still fuzzy. 

The entire group may be too big for a single buyer to digest. It has a consolidated networth of P49.5 billion and has assets of up to P170 billion as of December 2007. 

“Some [of the buyers] expressed interest only in the bank. [But] most are interested in Philamlife as a group. Right now, we don’t know if we will be sold as one whole group or [per] unit.”

Philamlife is the undisputed market leader in the local life insurance sector for more than six decades. Profits from its insurance operations have been spawned to other businesses, including pre-need plans, bancassurance, healthcare, banking, credit cards, asset management, property and casualty insurance, property management and development, and business process outsourcing.

These businesses are housed under subsidiaries, including Philam Plans Inc., AIG Philam Savings Bank, Philam Equitable Life Assurance Company, Philam Care, Philam Asset Management Inc., Philam Properties, AIG Business Processing Services, Inc. and Philam Insurance.

Buying a “trophy” 

The Philippine insurance industry’s life sector is dominated by foreign groups, led by AIG, Sunlife and Manulife. 

The non-life sector, however, is dominated by Filipino insurers led by the Yuchengco’s Malayan Insurance Company. 

The Yuchengco family was the only interested buyer who has publicly admitted that they are interested in buying Philamlife.

While Cuisia stressed that foreign groups have also communicated directly with him about the sale prospects, he also commented that this is a unique opportunity for local groups to participate.

“It was unimaginable in the past for Philamlife to be owned by local interest,” Cuisia said.

“But this is a unique opportunity for Filipinos to own a trophy company like Philamlife.” 

 No MBO

Cuisia also dispelled rumors that he is leading a management-led buyout of the group.

Cuisia, who joined Philamlife shortly after his stint as central bank governor in the nineties, said "I want to make sure that the policy holders' and employees' interst are protected. I dont want to be in conflict [with the potential buyers]."

Since parent AIG's financial troubles hugged worldwide headlines after it sought emergency financial assistance from the US Federal Bank in September 16, Philamlife executives have been constantly assuring the public that its own local operations are shielded from its parent's woes.