35th Anniversary - 1978-2013
35th Year Anniversary





Investment environment drops PhilNaRe net income despite 189% underwriting income surge
May 13, 2008

National Reinsurance Corporation of the Philippines (PSE: NRCP) reported net income of P110 million for the quarter ended March 31, 2008, representing a 36.6% decline from net income of P174 million for the corresponding period in 2007. The decline in earnings came even as underwriting income surged 189% during the period.

ln a disclosure to the Philippine Stock Exchange (PSE), the Company, or PhiNaRe, said that reinsurance premiums for the first quarter of 2008 amounted to P726 million, slightly higher than P723 million in reinsurance premiums for the first quarter last year. However, net underwriting income for the first quarter of 2008 shot up to P111 million from P38 million the previous year as the Company’s increased capitalization allowed it to retain more reinsurance premiums for its own account.

The strong performance of the Company’s reinsurance operations was not enough to offset lackluster results from investment operations. John E. Huang, PhilNaRe Senior Vice President and Chief Finance Officer, pointed to a challenging investment environment as a major drag the performance of the Company’s investment portfolio. “At this time last year, the stock market was moving up, as was the Peso, and interest rates were trending down,” he said. “This year, we have the exact opposite. Add to that volatile international markets and you have a situation with limited trading opportunities.” PhilNaRe’s net investment income in the first quarter of 2008 amounted to P86 million, down from P187 million in the first quarter of 2007.

Still, Huang expressed satisfaction over PhilNaRe’s reinsurance operations. “When we went public last year, we said that we would use the increase in our net worth to increase our capacity to accept and retain more premiums and we are beginning to see that happening.”

Net premiums retained rose by 22.2 percent from P238 million in the first quarter of 2007 to P346 million this year as the company’s retention ratio increased to 48 percent in the first quarter of 2008 from 39 percent in the same period last year.

As of March 31, 2008, the Company reported total resources of P11.2 billion and stockholders’ equity of P6.6 billion.


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