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Philippines Insurance Report Q2 2009Published by: Business Monitor International Published: May. 21, 2009 - 92 Pages Table of Contents
AbstractAlthough real GDP growth surprised on the upside in Q408, with a 4.5% year-on-year (y-o-y) expansionbeating a consensus forecast of a 3.5-3.8% increase and bringing full-year growth for 2008 to 4.6%, wesee no reason to alter our 2.8% growth forecast for 2009. The slowdown is expected to be led by declinesin private consumption and investment, with government spending forecast to accelerate and thecontribution of net exports to be negligible.Economic growth in the Philippines surprised on the upside in Q408, beating consensus expectations of a3.5-3.8% y-o-y expansion to register real growth of 4.5%, bringing full-year growth for 2008 to 4.6%.However, while this has underlined the resilience of the Philippine economy in the face of the currenthostile environment, we remain sceptical concerning its ability to escape the unfolding global recessionunscathed. As such, we retain our below consensus 2.8% growth forecast for 2009. Private consumption remained buoyant in Q408, expanding by 4.5% y-o-y having posted growth of 4.1%and 4.4%, respectively, in the second and third quarters of the year. This added some 3.4pp to headlinegrowth, and was driven in large part by the ongoing strength of remittances from Filipinos workingoverseas, which grew by 3.3% y-o-y and 10.5%, respectively, in October and November. However, thesefigures dragged year-to-date growth down to 15.0% y-o-y having reached a peak of 18.2% in July, andwith global economic activity forecast to continue slowing over the coming quarters, remittances are setto follow suit. Indeed, given that US$7.19bn of a total of US$15.02bn sent back to the Philippines by overseas workerscame from the US, and that the world's biggest economy is forecast by BMI to contract by 2.3% in 2009,the likelihood of persistent remittance strength this year remains slim. This in turn bodes ill for theprospects of private consumption being able to support headline growth in 2009, as it has done inprevious years and, as such, we are expecting private consumption - which accounts for around 77% oftotal GDP - to add just 0.8pp to full-year GDP growth this year as it registers just 1.0% growth in realterms. To put this in context, private consumption has grown on average by 5.3% over the past five yearsand has contributed on average 4.2pp to overall growth over the same timeframe. In the Asia Pacific, we profile 23 companies. These are AEGON, AIG, Allianz, Aviva, AXA, Cardif,Fortis, Generali, Groupama, HDI-Gerling, HSBC Insurance, ING Group, Liberty Mutual,Manulife, MetLife, Prudential Financial, Prudential plc, QBE, RSA, Sun Life Financial, TheHartford, Principal Financial Group and Zurich Financial Services. We also look at various local firms that are active in the region; some of these companies rank, in termsof the premiums that they write, among the largest in the world. In 2008, total premiums in the Philippines rose by 25% to PHP123,607mn. Non-life premiums rose by7% to PHP42,889mn, while life premiums rose by 38% to an estimated PHP80,719mn.Between now and the end of the forecast period, we expect that annual non-life premiums will grow byPHP33,909mn, while annual life premiums should grow by PHP192,999mn. Growth in non-life premiums should be driven by the general growth of nominal GDP plus a rise innon-life penetration from the current level of 0.56% to 0.75%. Growth in life premiums should be drivenby the change in the overall population and a rise in life density from US$21.44 to US$70.00 per capita.BMI’s Insurance Business Environment Rating is 53.5. Get Full Details About This Report >> |
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