Philippines Insurance Report Q2 2016
BMI View: We retain our positive view of the Philippines' insurance sector, which offers significant growthpotential. Life insurance should benefit from higher household incomes. Good pricing power on the part ofproperty insurers (and increased volumes) will drive growth in that sub-sector and for the non-life segmentas a whole. Both the life and the non-life segments should benefit from the generally favourable economicenvironment.
Key Updates And Forecasts:
We remain upbeat about the prospects for the life segment, and forecast steady growth in premiums ofaround 7% annually. The latest results indicate that the leading life companies have been enjoyingprofitable growth, in part because of improved investment income relative to 2014. Various driversshould support the continued expansion of the life segment. These include growth in the number andwealth of households that can afford life insurance. In the meantime, life insurers themselves willcontinue to exploit strengths such as brand names, multi-channel distribution strategies, ease of access tothe capital that they need and product innovation know-how.
We have significantly increased our forecasts for the premiums to be written by the non-life segment. Inparticular, we are more positive about the prospects for the property insurance sub-sector, which is thelargest element of the segment that can be identified separately. The Philippines' economy has performedreasonably well through 2015, and should continue to do so. In addition, we believe that property insurersshould be able to pass on higher claims (and other) costs to their customers.
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