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SM group teams up with Generali, Kuok for Philamlife bid

abs-cbnNEWS.com | 11/12/2008 3:04 PM

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The holding company of the elite Sy family said on Wednesday that it has formed a consortium with two foreign partners for a bid to acquire a stake in Philippine American Life and General Insurance Co. (Philamlife).

At the sidelines of SM Investment Corporation's briefing for analysts, chief finance officer Jose Sio told reporters that the Sy's holding company is partnering with the Italian parent company of Generali Pilipinas Life Insurance Company, Inc. and Hongkong-based Kuok Group.

“Kuok and Generali are our existing partners in Generali Pilipinas. They would serve as our partners for the undertaking,” said Sio.

The three groups -- SM, Generali, and Kuok -- have close business relationships.

The SM group, a mall and banking conglomerate, owns 40 percent of Generali Pilipinas, the local unit of Generali Group and one of the leading insurers in the Philippines.

The Kuok and Generali groups control the balance of 60 percent of Generali Pilipinas, which registered premiums amounting to P2.1 billion as of the end of the third quarter.

Generali Pilipinas provides financial planning services to clients of Banco de Oro Universal Bank (BDO), the financial services flagship of the SM group, using insurance products and services.

Generali Pilipinas' parent company, the Generali Group, is Italy's largest corporation, the fourth largest insurance group in Europe, and the belongs to the top 5 largest insurance companies in the world. The multinational insurance company has over 100 insurance companies operating in over 40 countries in 5 continents.

Its wide range of products and services include life, accident, travel, property, and casualty, as well as employee benefit insurance needs

The Asian partner of the Generali Group is Jerneh Asia Berhad, a member of the Kuok Group and one of Asia's most diversified conglomerates.

Hongkong-based Kuok has investments in the Philippines, including the chain of Shangri-La Hotels and Resorts. Recently, Kuok also engaged in an agricultural project under a partnership with Ramon Ang, the president of San Miguel Corporation.
Philamlife was put on the auction block in September after its parent company, American Insurance Group (AIG), run into financial troubles when a unit's investments in subprime assets were virtually wiped out. The US Federal Bank extended emergency loans, which were recently restructured and increased to $150 billion. 

The proceeds from the sale of Philamlife and other AIG assets will be used to pay AIG's loans. 

Philamlife, the country's market leader in the life insurance sector for 60 years and was considered AIG's "crown jewel" in Asia, has consolidated assets of P170 billion in 2007.

Considered too big for a single local group to digest and afford, the potential bidders are expected to forge partnerships or form consortiums with other foreign investors.

In an earlier disclosure, SMIC said that they were eyeing to buy Philamlife and its subsidiaries to the tune of at least $500 million. 

“We are still waiting for AIG to announce details on the sale. Hopefully, in two months we would know,” Sio added.

Other groups that have expressed interest in buying a stake in Philamlife include the largest and second largest lenders, Metrobank and Bank of the Philippine Islands, the Yuchengco Group, and cash-rich pension fund Government Service Insurance System. -- with reports from Judith Balea, abs-cbnNEWS.com

as of 11/12/2008 6:05 PM