State-run Government Insurance Service System (GSIS) posted a lower audited net income for the year 2013 on the account of its higher expenditure in claims and benefits of its members.
In a press briefing on Tuesday, GSIS President and General Manager Robert Vergara announced that the insurer’s net income for the year amounted to P49 billion, which is lower compared to the P60-billion net income in 2012.
GSIS total revenues for 2013 reached P139 billion, P1.5 billion or 1 percent higher compared than the prior year’s P137.4 billion.
Vergara noted that the insurer’s total revenues include income from investments, interest income from loans, dividend income, realized gains from financial transactions and contributions from members.
“Our fixed income portfolio just continues to generate income. There were no system-wide adjustments in compensation last year, so there was no significant move in the amount of premium that we generate. Dividend income on equities is largely the same. Our loan book [extended to 1.4 million members]only move marginally higher. That is why there is no significant change in the revenue generated,” he explained.
However, Vergara highlighted that a significant change that can be noted in the performance of the GSIS was its higher expenditure last year. GSIS total expenses for the year reached nearly P90 billion from the P75 billion recorded in 2012.
“The bulk of our expenses are the claims and the benefits that we pay out to our members—retirement, lump sum, pensions and other benefits, insurance proceeds, investments expenses, insurance expenses, the cost of running our resources and operating expenses,” he said.
Vergara noted that the largest contributor to claims was the benefits the GSIS paid out to its members, which jumped by nearly P17 billion in 2013.
He said that part of the reasons of the higher claims for benefits was the rationalization plans that government agencies implemented in 2013, which are going to continue in this year.
Vergara also explained that historically, GSIS processes about 36,000 applications for retirement, or an application of 8,000 a month. Last year, that number reached 49,000, or 40 percent higher than the previous year.
“Whenever there’s a surge in the retirement, the lump sums have a significant impact in the claims that we pay out. That’s really been the reason,” he said.