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THE Philam Group of Companies said it may enter the
real-estate business and develop its assets for higher returns in
the face of dwindling returns from its investments in government
debt papers.
In a briefing, Jose L. Cuisia,
Philam Life president, said the biggest challenge the industry is
facing right now is the low yields from government securities, which
is one of the main investment instruments of the insurance and
banking industries.
The group’s subsidiaries used
to buy long-term government bonds or IOUs at 11 percent, but the
interest rates has dipped to 6 percent, Cuisia said. Due to this
contraction of returns on government bonds, the company has to look
for other ways of enhancing its earnings like investing in equities
and corporate bonds.
Cuisia said the company may start
to develop its two lots at the Cebu Business Park. The properties
have an aggregate lot size of 3,000 square meters.
“We have assets that we can
develop ourselves [and the] lots in Cebu, we are considering of
putting up a building. But we need to do a market study to justify
an 8-story or 10-story [building],” he said.
The company is also considering
joint ventures with other institutions, with its real-estate group
taking the lead in identifying the type of projects to pursue.
Besides developing its existing
properties in its portfolio, the company may also acquire buildings
that may generate a steady income, with a prospective return on
investment of 15 percent.
Cuisia said the company has just
added two floors to the PhilamLife building in Cubao, Quezon City,
which would be completed by August this year. The group plans to
relocate its three Philippine-based call centers that include AIG
credit card (part of the AIG-Philam Bank), AIG Business Process
Inc., and Philam Life to the Cubao building.
Unit Philam Plans Inc. said it
has captured the top spot in the local preneed industry last year
based on the latest data from the Securities and Exchange Commission
(SEC).
The SEC report showed that Philam
Plans led the industry in terms of sales at over P3.46 billion with
a market share of 17.5 percent.
Last month, Philam Plans launched
a new product called iPLAN, which is a forfeit-free plan wherein
planholders would not lose their cash value due to the lapse or
cancellation of their policies.
The preneed company has a liquid
trust fund of P29.1 billion as of end-December with the amount set
aside in cash, cash equivalents and liquid assets like government
securities.
Capitalization stands at P700
million in paid-up capital, which is seven times larger than the
regulatory minimum. Last year, Philam Plans paid out over P786.8
million to 20,410 planholders, 88 percent of which are education
planholders.
--Likha C. Cuevas
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