GT Capital's insurance arm sees drop in 1Q premium income

AXA Philippines today announced its premium income in the first three months of year fell as the weakness of the single premium contracts weighed on the insurer.

AXA Philippines president and chief executive officer Rien Hermans told reporters that premium income dropped 26 percent year-on-year to P3.5 billion in the first quarter of 2014.

“The market volatility experienced in the second half of last year has made investors more cautious going into this year, especially those investing in single premiums,” Hermans said.

"It is not to be expected that we will still grow if the market is not growing. The market will be 30 percent less than what it was last year and we will be affected by that as well," he added.

Year-on-year, single premium contracts fell 43 percent to P2 billion at end-March, while renewal premium contracts jumped 34 percent to P925 million.

Hermans attributed the decline in single premiums to a high-base effect after money released from the special deposit accounts (SDAs) of the Bangko Sentral ng Pilipinas found its way to the market last year.

"We saw a peak last year [in terms of the single premium contracts]. I think it will sustain its normal growth curve. The level [for 2014] will be higher than 2012 but lower than 2013," he said.

First-year premiums jumped 19 percent year-on-year to P508 million, buoyed by AXA's health insurance products. Since January's launch of three new products – Health Exentials, Health Max and SME Employee Protexion – the health insurance segment has contributed sales amounting to P56.3 million, accounting for nearly a tenth of total first-year premiums for the quarter.

"With the rise in the incidence of critical illnesses such as heart disease, stroke and cancer and with the rising costs of healthcare, more Filipinos are beginning to understand how important it is to be financially prepared for the unlikely," Hermans said.

Despite a possible contraction in total premium income for the entire 2014, AXA Philippines is confident it can increase its market share of nearly 11 percent to over 12 percent by yearend.

"We are very bullish about our prospects in 2014. We have a lot of new innovations to look forward to in the next several months in terms of new products and funds as well as new distribution channels," Hermans said.

"This year, we will be expanding our business with PSBank, and we will be launching a new online sales portal for life insurance, the first of its kind in the country. Aside from this, we will also be introducing new funds that will give customers access to global markets," he said.

"With all these initiatives, along with several others, we look forward to a strong year ahead of us," he added.

AXA is also set to launch other technological innovations beginning the second half of the year. These include AXA iON, a secure platform that allows consumers to purchase insurance online; myAXA Partner, a portal where consumers can select an AXA financial partner to meet and discuss their needs; and the second phase of myAXA Biz, a cloud-based digital sales tool.

AXA Philippines is the life insurance unit of George Ty-owned GT Capital Holdings Inc, whereas Philippine Savings Bank is the thrift arm of Metropolitan Bank and Trust Co, which Ty also controls.

- Interaksyon