Insurance industry books higher assets, net worth and payouts in the 1st quarter

THE INSURANCE SECTOR’S total assets, net worth, and benefit payouts grew in the first quarter, the Insurance Commission (IC) reported on Thursday.

The IC said in a statement that data from 129 out of 135 licensed life and nonlife insurers and mutual benefit associations (MBAs) showed their total assets increased by 12.21% year on year, while their total net worth and total benefits paid likewise grew by 24.27% and 19.48%, respectively

In real terms, total assets, net worth, and benefits paid of these three sectors stood at P2.12 trillion, P392.51 billion, and P33.32 billion, respectively, in end-March.

Total invested assets also grew by 9.94% to P1.84 trillion, while total paid-up capital and guaranty fund increased by 9.75% to P75.9 billion.

“Life and nonlife insurers and MBAs are steadily recovering from the adverse economic effects of the pandemic, as evidenced by these numbers for Q1 2022. Moreover, the year-on-year increase in total benefits paid during the same quarter highlighted the continuing commitment and responsiveness of our insurers and MBAs to the needs of the insuring public despite the challenges posed by the pandemic,” Insurance Commissioner Dennis B. Funa was quoted as saying.

The life insurance sector’s assets grew by 10.94% to P1.65 trillion, which was attributed to the “increase in its segregated fund assets by 22.37%, which comprised more than half or 55.05% of the sector’s total assets.”

While total liabilities of the life insurance sector rose by 7.77% in the first quarter, its total net worth grew by 37.26% on the back of a 130.71% increase in its reserve accounts.

The total paid-up capital of the sector also expanded by 2.74% year on year to P26.6 billion.

Invested assets of the life insurance sector increased by 10.19% to P1.59 trillion on the back of investments in financial assets at fair value through profit or loss, as well as investment property, which recorded growths of 27.99% and 14.54%, respectively.

However, the industry’s total premium income contracted by 5.51% to P78.61 billion in the first quarter, driven by a 19.78% decline in single premium variable insurance products and a 19.86% drop in single premium traditional life insurance products.

Premiums from variable life insurance policies, which comprised 75.17% of life insurers’ total premium income, decreased by 9.80% over the previous year’s sales. This was offset by a 10.38% increase in premiums from traditional life insurance policies.

New business annual premium equivalent also saw a decrease of 1.21%.

The total net income of the life insurance sector also declined by 20.85% quarter on quarter, primarily due to a 5.51% decrease in total premium income and a 27.18% increase in benefit payments.

The total number of policies rose by 7.6%, while total estimated insured lives went up by 11.08% in the first three months of 2022.

NONLIFEOn the other hand, total assets of the nonlife insurance sector rose by 21.31% to P343.46, with 56.42% of it belonging to the top 10 nonlife insurance companies.

Total liabilities increased by 26.38% to P222.37, bringing the sector’s cumulative net worth to P121.09, accounting for a 12.35% increase against the same period last year.

Total invested assets in the nonlife insurance sector jumped by 9.16% to P138.89 billion in the first quarter, attributed to “the growth in values of the sector’s time deposits, debt securities (bonds) in government, equity securities, investments in property, UITF, and other investments, which accounted for 84.72% of the total invested assets.”

Net premiums written (NPW) also recorded an expansion of 15.45% to P15.59 billion in the first quarter.

“The Fire Insurance line of business saw a huge gain in Q1 2022, rising from P2.45 billion in Q1 2021 to P3.63 billion in Q1 2022, or by 48.03%. The Motor Car line of business, which contributes the most to the total NPW per line of business with 41.32% share increased the sector’s NPW to P6.44 billion in Q1 2022 from P6.14 billion in Q1 2021,” the IC said. “The Aviation line of business is now gradually recovering from a negative P74.10 million in Q1 2021 to P7.70 million in Q1 2022, rising by 110.38%.”

“Except for the Health and Passenger Personal Accident Insurance lines of business, almost all other business lines experienced growth in Q1 2022,” it added.

However, net premiums written of nonlife companies’ health insurance business dropped to just P610 million from P1.10 billion year on year as one firm posted a 56.59% decline.

The total net income of nonlife insurers decreased by 9.88% to P1.07 billion  in the first quarter as 16 companies reported net losses amounting to P420 billion.

MBAsMeanwhile, MBAs’ total assets increased by 6.33% to P125.66 billion in the first quarter, with four MBAs accounting for 80% of the industry’s total assets.

Total invested assets amounted to P111.85 billion, which is 7.42% higher year on year. The figure is also equivalent to 89% of MBAs’ total assets.

“As in Q1 2021, most of the MBAs’ investments were placed in long-term investments, which stood at P49.27 billion and in loans at P34.08 billion, increasing by 12.05% and 2.80% year on year, respectively,” the IC said.

Total liabilities of MBAs jumped by 5.58% to P74.58 billion due to “the year-on-year increase in their optional benefit reserve from P22.15 billion to P24.38 billion, which comprises 32.69% of the sector’s total liabilities.”

The sector’s total fund balance likewise increased by 7.43% as equity grew to P51.08 billion from P47.54 billion year on year.

MBAs’ total premium income, or contributions from their members, stood at P3.28 billion in the first quarter, with the top two MBAs contributing 74% to the total.

The sector’s aggregated net surplus rose by 13% year on year to P1.39 billion, which the IC said “can be attributed to an 18.53% increase in members’ contributions collected, an increase in net returns from investment by 4.57%, and the decrease in benefit expense by 20.70%, year on year.” — D.G.C. Robles