Unsure of the Insurers; The Declining Pre-need Industry

[Horsepower]

Think of AIG and its local subsidiary, PhilAm. Both were percieved as strong and big insurance companies.

AIG fell.
Philam fell and got sold.

[tidus1203]

AIG is as insolvent as it gets. Its just on life support from the taxxpayers without the life support matagal na walang AIG.

[Galactus]

Philam didn't fall, it remained liquid. Its parent firm, AIG, went bankrupt, and to raise capital to pay off its debt to the federal government and counter-parties, it simply had to sell assets worldwide.

There is no comparison between AIG and Manulife. The former went bankrupt because it was heavily deep into credit default swaps, whereas Manulife was not (at least, going by press reports). More on traditional insurance products kasi sila.

[uls]

a few weeks ago there was an article on the WSJ that revealed more of AIG's wrong bets that led to its downfall

(sorry, i'm too lazy now to look for the article hehe)

aside from credit default swaps sold by AIG unit AIGFP (aig financial products)

another AIG unit called AIG Investments had a side business

AIG Investments manages the funds of AIG's insurance business

the unit invests the funds in securities

to squeeze a bit more out of their investments, they lent out the securities

the securities borrowers in turn give AIG collateral and pay fees

then AIG used the fees, leveraged it, and bought subprime mortgage backed securities

ang galing no?

we all know what happened next...

[tidus1203]

Well said Gen. Miting especially your last sentence there. I scratch your back, you scratch mine! Those who deny that reality is doomed to mediocrity. So learn to invest your own money!

[Horsepower]

*Galactus, it seems they didn't but as early as three years ago, news about its bankruptcy spread.

But for me, I won't really feel that comfortable if the company I invested my money (and effectively my future financial power) to gets advertised as for sale in the market.

[jeDi13]

IMO, there's nothing wrong with the Pre-need plans. What's wrong is how the insurance companies designed the pre-need products. Actuarials and Product Development members of those Pre-need companies are also partly to blame, aside from the executives, for designing a product that would pay the tuition fee that keeps on rising every year. There are some Pre-need companies that offer plans that are fixed (e.g., college plan for 100K). So if the 100K can't cover the full tuition fee, the balance will be shouldered by the plan owner.

Oh well, ganyan talaga pag gusto ng mga easy money. Sorry nalang sila.

[tidus1203]

I wouldn't call it easy money. I rather call it ASA SA IBA money Wala talagang mapapala kung asa ka sa iba.

[jpdm]

BDO, Ayala and Metro Pacific will bid for Philamlife.

Finally, some good news to our battered pre-need industry.

[jpdm]

Good news for the pre need industry!

[SIZE=3]House Ok'd Pre need Bill[/SIZE]


Business Mirror
August 13, 2009
by Fernan Marasigan



THE House of Representatives, in plenary session, approved on third reading on Wednesday night the Preneed Code of the Philippines.


Laban ng Demokratikong Pilipino Rep. Juan Edgardo Angara of Aurora, principal author of the bill, said one of the major features of the bill is the establishment of a “Benefit Fund” that will guarantee benefit payments in case a preneed firm collapses.


A portion of the installment payment collected under a preneed plan contract shall be deposited by the preneed company in the Fund. The use of the funds shall be for the sole benefit of plan holders and shall be approved by the regulatory body based on the provisions of the proposed law.


The Securities and Exchange Commission (SEC) was supposed to be the regulatory body. However, at the hearing of the House Committee on Banks and Financial Intermediaries, it decided to give the mandate to the Insurance Commission when several members pointed out that a preneed plan is a form of an insurance contract.