Groups vying for Philamlife submit their bids

By Ted P. Torres, The Philippine Star

Posted at Feb 23 2009 11:02 PM | Updated as of Feb 24 2009 07:02 AM

Expected to submit their competitive bids for the acquisition of the Philippine American Life and General Insurance Co. (Philamlife) and its subsidiaries are the following groups:

  • Banco de Oro Unibank – Assicurazioni Generali SpA
  • Ayala Group of Companies and Prudential Life of the UK
  • Manulife Financial of Canada.

A dark horse rumored to be participating is Hong Kong’s First Pacific Co. Ltd., which is represented in the Philippines by the Metro Pacific Investment Corp.

The winning bidder is expected to be announced by next month.

The entire process has been shrouded in secrecy such that, except for the prospective bidders, no one is certain who is bidding, who or what the composition of bidders represent, the minimum bid price, and the like.

Unconfirmed reports indicate that the American International Group (AIG), the parent company of Philamlife, wants at least P36 billion. Others are saying that the amount has since gone up forcing other interested bidders to withdraw from the race.

From the original 10 prospective buyers, it has been trimmed to only four groups.

“It (Philamlife) is such a gold mine that no one wants to give away critical information,” officials of the Insurance Commission (IC) said.

The winning bidder will get the largest and most prestigious life insurance company in the country, along with its strong subsidiaries in the mutual funds and pre-need industry.

“Whoever wins the bid, automatically becomes number one in the life insurance industry,” analysts said.

Industry sources said the winning bidder will acquire a financial institution that would not only compliment its insurance business, but in fact, make it a leader in its respective sector.

For Manulife, it will solidify its position in the life insurance and pre-need industry, and open its doors to the mutual fund industry. The Philam Asset Management Inc. (PAMI) has the largest retail base in the industry.

It will, however, need to form a strategic alliance with a commercial bank to maximize the bancassurance expertise and products acquired from Philamlife. Next year, Philamlife has expiring alliances with several banks.

The race for Philamlife has also resulted in a surprise alliance between the Ayala Group and Prulife UK.

Acquiring Philamlife will give each the missing ingredients to bring it on top of the heap.

But industry experts are now saying that should the Ayala-PruLife group win, a unique three-way merger is in the horizon. The surviving entity will likely be the one who shelled out the most cash for the acquisition of Philamlife.

However, industry sources said that if the SM Group bags Philamlife, it will be a conglomerate nearly unmatched or at least at par with its peers, in terms of the scope of influence in the economy.

It is ranked the leader, or among the leaders, in the retail-mall sector, in the banking industry with BDO and China Banking Corp., and in the property sector.

Metro Pacific on the other hand, has substantial investments in telecommunications, utilities, property development, health, media and media outlets, and infrastructure. It has an authorized capital stock of P21.55 billion and a reported net income of P660 million in the first nine months of 2008.

“Acquiring Philamlife will give the group a major financial institution for cash flow and investments in both short- to long-term,” industry sources said.