INSULAR LIFE Assurance Co., Ltd. (InLife) saw its new business annual premium equivalent (NBAPE) more than double in the first half, putting it on track to exceed the insurer’s annual target.
InLife’s NBAPE more than doubled (127%) to P1.706 billion in the first half from the same period a year ago, it said.
“We will exceed our NBAPE (sales) target this year. As of the first half this year, we are at 127% increase already over the same period last year. And we see this growth momentum being sustained,” InLife President and Chief Executive Officer (CEO) Raoul Antonio E. Littaua said in a statement on Thursday. However, InLife did not disclose its NBAPE target for the year.
He said during a briefing in Makati City on Thursday that he expects that the firm’s NBAPE will end the year “almost double.”
However, InLife’s net income will “not necessarily follow the same growth rate,” Mr. Littaua said.
“Profit emergence for a life insurance company does not happen in the first year, and it will take some time before the remarkable topline growth we are currently experiencing significantly impacts net income,” he said.
“So, for this year at least, the parent company’s net income will not be too far off from last year’s,” he added.
InLife’s consolidated net income stood at P5.2 billion in 2022, up around 35% from 2021.
InLife Chief Operating Officer Efren C. Caringal, Jr. said they will “definitely not hit” the same level of net income last year, but they will exceed their planned income for the year. InLife did not specify its income target.
“We will meet our target for the year, but even coming into 2023, we knew it’s going to be difficult to replicate or sustain that (2022 level),” Mr. Littaua added.
InLife’s income will be lower amid one-off gains last year and the nature of “long-term business” in insurance, Mr. Caringal noted.
“In life insurance, you notice that the emergence of profit is different. Generally, at the start of the product, there’s higher distribution cost, etc. and your profit will emerge over at a later (period),” he said.
“Therefore, short-term profits would be lower, but long-term profitability is going to be good. That’s our strategy now.”Meanwhile, Mr. Caringal added that elevated interest rates work in favor of insurers.
“With the high interest rate environment, insurers are able to introduce much higher yielding investment products. That’s where we see significant growth, at least, in the last year for us. We offer what we call endowment products. These are not just pure protection — there are benefits that we pay basically when they’re alive. We’re able to give higher yields, higher coupon, for them because of the high interest rate environment,” he added.
The Bangko Sentral ng Pilipinas (BSP) raised borrowing costs by 425 basis points (bps) from May 2022 to March 2023. This brought the key interest rate to a near 16-year high of 6.25%.
Meanwhile, elevated inflation has affected insurance demand, Mr. Caringal added.
“Insurance is not really top of the basket of goods that a consumer would buy. Generally, when inflation is high, you would see a smaller savings rate in general. But still, the reality in the Philippines is that the insurance penetration is very low, so there’s really room to grow. It’s a matter of increasing the financial literacy of Filipinos,” he said.
Headline inflation accelerated to 6.1% in September from 5.3% in August and 6.9% in the same month a year ago.
This marked the 18th straight month that inflation breached the central bank’s 2-4% annual target. — Luisa Maria Jacinta C. Jocson