UnionBank, Insular Life deal gets BSP approval
ABOITIZ-LED Union Bank of the Philippines (UnionBank), along with its thrift banking arm, City Savings Bank Inc., have bagged regulatory approval to sell the insurance products of Insular Life Assurance Co., Ltd. (Insular Life).
In a filing to the local bourse on Thursday, the listed lender announced that it has received the Bangko Sentral ng Pilipinas’ (BSP) green light for its bancassurance collaboration with Insular Life.
“Please be informed that we have received today a letter from the Bangko Sentral ng Pilipinas dated April 4, 2017 granting Union Bank of the Philippines and its wholly-owned subsidiary, City Savings Bank, Inc. the authority to engage in cross-selling activities with Insular Life Assurance Company, Ltd.,” UnionBank said in the disclosure.
Sought for comment, Omar T. Cruz, chief bancassurance executive of the partnership between UnionBank and Insular Life, told BusinessWorld in a phone interview yesterday: “I think the approval coming from the BSP and after the IC (Insurance Commission) approval, it’s a way for us to implement this strong partnership of UnionBank and Insular Life.”
According to Mr. Cruz, the collaboration received the IC’s approval “some time in late February or early March... a few weeks before the BSP’s approval” on April 4.
“With this approval, it paves the way for us to provide the right product at the right time in the stage of life of UnionBank’s clients to address their savings and investment needs, but hand in hand with the protection of their families’ educational, health, estate management and retirement needs, especially after retirement and specifically in providing liquidity,” he said.
Last January, the Aboitiz-led lender announced that it has inked a 15-year bancassurance agreement with Insular Life, which UnionBank President and Chief Operating Officer Edwin R. Bautista said he expects to be a “major contributor” to the bank’s business and bottom line.
The bank had said that through the collaboration, the local insurance company will be able to benefit from UnionBank’s total branching network of 300 branches and offices and with its over six million clients.
UnionBank saw its net income surge to P10.1 billion in 2016, 67.3% higher from the P6 billion it earned in 2015, on the back of an expansion in its total loan book.
Meanwhile, Insular Life Chief Executive Officer Nina D. Aguas had said they have seen “significant growth” in their bottom line in 2016 — “a 100%-plus growth” — compared to the figures seen in 2015.
Insular Life saw its net income reach P1.77 billion in 2015, 40% lower than the P2.95 billion it booked in 2014 mainly due to the decline in profit from the sale of property and equities, and lower equity in net earnings of associates.
Bancassurance refers to the selling of insurance products within bank branches. Under Republic Act No. 10607 or an “Act Strengthening the Insurance Industry,” also known as the amended Insurance Code, banks are no longer required to have a 5% equity in insurance companies to enter into a bancassurance deal.
Any lender can now get into the bancassurance business as long as it complies with the requirements set by the Insurance Commission and the central bank.
Shares in UnionBank lost five centavos or 0.06% to close at P79.65 apiece on Thursday.