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The Philippine insurance industry had a remarkably successful 2017, with its assets, investments, net worth, net income and premium all growing at double-digit rates from 2016, according to data from the Insurance Commission.

Assets totaled P1.56 trillion by the end of 2017, up 18.95% from P1.31 trillion by the end of the preceding year. That amount is the highest it has ever been. The life insurance sector accounted for the vast majority of the assets — P1.26 trillion or 81% of the total. The nonlife insurance sector held P221.74 billion of the industry’s assets, and the remaining P77.47 billion worth of assets was in the possession of the mutual benefit associations or MBAs.

“The increase in the total assets of the life insurance sector is attributed to the 78.16% increase in reinsurance accounts receivables or those amounts collectible arising from reinsurance transactions to P4.65 billion as of end of 2017 from P2.61 billion as of end of 2016, and the 25.40% increase in the segregated fund assets during the same comparable period,” Insurance Commissioner Dennis B. Funa explained in a statement. Among the 30 life insurance companies, five held assets worth more than P100 billion, while 13 had at least P10 billion.

What explains the surge in the total assets of nonlife insurance companies, meanwhile, is the increase in the receivables from reinsurance transactions, which reached P64.12 billion in 2017, an increase of 65.31% from P38.79 billion in 2016. The premiums receivable of the nonlife insurance sector also rose from P19.60 billion to P25.26 billion. Only five of the 69 nonlife insurance companies had assets of more than P10 billion.

Mr. Funa, who was appointed in 2016 by President Rodrigo R. Duterte to head the Insurance Commission, noted assets worth P1.33 trillion, approximately 85% of the total, were placed in different classes of investments. “Again, as of yearend 2017, the industry recorded the highest invested funds in the total amount of P1.33 trillion compared to those reported in recent years,” he added.

The industry’s total net worth in 2017 reached P320.3 billion, 18.11% higher than the P271.2 billion recorded in 2016. The net worth of the life insurance sector, in particular, rose by 19.48% from P169.5 billion to P202.5 billion. The increase was primarily a result of the growth in investment fluctuation reserves.

Nonlife insurance sector’s net worth also went up by 13.89% from P76.6 billion to P87.3 billion, an increase attributable to the 25.43% increase in the total unassigned surplus/retained earnings and 20.56% increase in investment fluctuation reserves. MBAs likewise saw a substantial 21.76% increase in their net worth on account of the 34.05% increase in their total unassigned surplus/retained earnings.

When it comes to paid-up capital, life insurance companies posted an increase of 26.13% from P16.3 billion to P20.6 billion, and this improvement was a factor in the growth in the companies’ collective net worth. Nonlife insurance companies’ paid-up capital expanded at a relatively slower pace of 9.36% from P28.8 billion to P31.5 billion.

The most remarkable improvement in the Philippine insurance industry’s performance in 2017 was in its net income, which grew from P24.2 billion to P36.4 billion. “After experiencing a slight decline [in] revenue in 2016, the industry posted a 50.44% increase in net income as of yearend 2017,” Mr. Funa said.

Life insurance companies experienced an astounding 55.94% increase in net income from P17.5 billion to P27.3 billion, a welcome consequence of the increase in underwriting income. The MBA sector also posted a substantial net income increase, which was driven by a significant increase in its investment income. The nonlife insurance sector also experienced an increase in net income, from P3.4 billion to P3.6 billion, though at a clip not as remarkable as those of other sectors.

Premiums-wise, the industry performed well, with premiums amounting to P259.6 billion collected in 2017. “In 2017, the life insurance sector accounted for 77.94% of the industry total premiums or P202.5 billion, while the nonlife insurance sector and MBA sector account[ed] for 18.70% and 3.37%, respectively,” Mr. Funa said.

He explained that of the total premiums generated by the life insurance sector, 74% were generated from the sale of variable life insurance products, adding that premiums collected from those products increased by 12.29%, while premiums collected from traditional life insurance products increased by 6.83%.

“The nonlife insurance sector reported a year-on-year increase of 16.74% in net premiums written which can be attributed to the increase of 17.11% in premiums collected from its motor car line and 16.59% in premiums collected from its fire line,” Mr. Funa said. “The combined premiums for the said lines comprise more than half of the premiums collected by the nonlife insurance sector.”

In a BusinessWorld report published earlier this year, Mr. Funa noted that the industry could take a hit from the tax reform law that took effect this year by way of estate tax adjustments. Under the Republic Act 10963 or the Tax Reform for Acceleration and Inclusion Law, estate tax rate is now fixed at 6%. It used to be that the rate varied depending on the value of the net estate.

“I understand that the lower and simplified tax on estates will likely affect the business of insurance, particularly life insurance whose proceeds were previously, commonly used to pay off estate taxes,” Mr. Funa was quoted as saying in the report. “With the new lower tax scheme, resorting to this course may no longer be necessary.”

In another BusinessWorld report, life insurers were said to be expecting insurance premiums to maintain a double-digit rate of growth this year on the back of solid macroeconomic fundamentals and as insurance users seek more protection from risk, despite of the new estate tax rate and the doubling in documentary stamp tax (DST) for insurance policies.

“I look at the tax reform more from a positive point of view. If you look at it from an insurance angle you might say that there are some aspects that are more on the difficult side, like the estate tax, the DST. But overall, lowering the income tax should lead to more money in the pocket and more available assets. That means also lower income classes can start accumulating wealth and protecting themselves,” Olaf Kliesow, president of the Philippine Life Insurance Association, was quoted as telling the media. One of the key provisions of the tax reform program is the lowering of the personal income tax; starting this year, those with annual income below P250,000, for instance, no longer have to pay personal income tax.