Insurance firms’ total premium income declines
THE INSURANCE industry saw its total premium income decline in the first half of the year as persisting market volatility prompted clients to invest cautiously, the head of the Insurance Commission (IC) said.
Preliminary data based on quarterly reports submitted by the life and non-life companies to the insurance regulator showed the industry’s total income from premiums for the January to June period fell by 9.12% to P105.52 billion from P116.11 billion posted during the same period in the preceding year.
“Based on the submission of the industry players, the decline in the total premium was mainly due to the lower sales performance by the life insurance sector. In particular, there was a significant drop in the premium production in variable life insurance products of the major players in the life insurance sector,” IC Commissioner Emmanuel F. Dooc was quoted as saying in a statement yesterday.
Broken down, the life insurance sector’s premium income dropped by 16.83% to P82.20 billion from P98.83 billion while the non-life insurance sector saw total net premiums written rose by 13.95% from to P19.69 billion from P17.28 billion.
In the first quarter of the year, the insurance sector’s total premium income was also lower by 15.21% at P47.725 billion from P56.288 billion a year ago as market jitters due to volatilities and issues involving some banks prompted clients to defer their investments.
The Insurance Commissioner noted that premium income production could pick up in the second half of 2016 allowing the industry to hit the lower end of the full-year target earlier set.
“Despite the dip in the premium income of the industry, [I am] very optimistic that the premium income of the industry players will post a growth by the end of the year. Based on past experiences, the industry performs better in terms of premium production in the second half of the year,” Mr. Dooc added.
Meanwhile, the insurance industry recorded higher net income for the period at P19.17 billion, a 76.52% growth from P10.86 billion in the same period in 2015. The non-life sector, on the other hand, posted an increment of 18.23% year on year to P2.14 billion from P1.81 billion.
“The life sector posted a 68.73% increase in its net income during the first half of the year from P9.05 billion to 15.27 billion. This increase can be attributed to the significant increase in capital gains, as well as increase in the commissions earned and other miscellaneous income of some insurance companies. The same can also be attributed to the decline in underwriting expense of some companies,” the IC said.
The industry’s total assets expanded by 20.56% at end-June. As of the end of the first half of the year, its asset base reached P1.29 trillion from P1.07 trillion as of the end of the same period last year.
Total investments stood at P1.13 trillion as of end-June, up by 21.51% from P0.93 trillion in the same period in 2015. Mr. Dooc said the consistent increase in the total investments of the insurance industry proves that the industry is a major force in capital market development.
Total net worth, meanwhile, stood at P262.51 billion as of endJune, which is 40.70% higher than P186.58 billion during the comparable period last year.
The industry reported a total premium income of P224.33 billion in 2015, higher by 18.71% from the P188.96 billion posted in 2014. Mr. Dooc said the industry is expected to sustain its expansion, with premium income seen to reach about P500 billion by 2019, almost double current levels.