Yuchengcos to invest more in infra

The Yuchengco Group of Companies is injecting more funds to support the government’s commitment to spend P9 trillion for crucial infrastructure projects under the Build Build Build program.

Joji Basa, department head at Malayan Insurance Investment Management, said the Yuchengco-owned company is seen participating in the Philippine Development Plan (PDP) after the Insurance Commission issued a circular allowing investment companies to invest in government infrastructure projects.

“With some sort of government guarantee, it benefits investors since there is a very low probability of default both in the short and long term. This type of investment is typically less volatile compared to conventional financial market assets which makes it ideal for long-term investing,” Basa said.

Insurance commissioner Dennis Funa issued IC Circular Letter 2018-74 last year, giving insurance and reinsurance firms the prerogative to invest in debt or equity security instruments for infrastructure.

This move will enable insurance firms to diversify their investment portfolio while consolidating efforts to strengthen the country’s position as an emerging economy.

Encouraging this activity provides a new investment channel for insurers, giving them improved performance in terms of returns, all while positively contributing to the country’s economic growth.

This kind of stimulation provides insurers with objective reasons to pursue investments with public infrastructure projects.

“With the government’s trust in the insurance sector’s ability to generate significant amounts of cash flow and liquidity through premiums, investment in infrastructure projects will become more viable, such that excess liquidity can be used for long-term investments or (to) fund PDP projects,” Basa added.

While insurance firms have traditionally helped with infrastructure projects through joint private-public partnerships, the new circular now encourages independent and straightforward investment with public projects.

This means that insurance firms like Malayan Insurance, the country’s leading nonlife insurance company, are now granted a new privilege for long-term engagements, especially given how current infrastructure projects often lack sufficient funding.

Malayan Insurance, a member of the Yuchengco Group of Companies, has gross premiums written amounting to P10 billion, making it the top non-life insurer of Philippine businesses and families consistently for nearly 50 years.