The National Reinsurance Corp. of the Philippines (Nat Re) is aiming to generate enough profits and net assets which will allow it to declare dividends again for the stockholders.
Nat Re President and CEO Allan R. Santos said during an annual stockholder meeting on Wednesday that the company has to meet the requirements set by the Securities and Exchange Commission (SEC) and the Insurance Commission (IC) prior to dividend declaration.
While the reinsurer already met SEC’s required retained earnings, Santos said it has yet to meet the adjusted net-worth threshold set by the IC.
“Rest assured, we are working hard to generate additional earnings and grow our net assets to exceed the threshold and restart paying dividends.”
Last year, the national reinsurer saw its net profits fall by 24 percent to P120 million from P157 million in 2019 due to lower investment income.
Economic recovery may be “slower than initially expected” with the “intermittent surges in Covid-19 infections and delays in the arrival of the vaccine,” Santos said. The reinsurer said its clients may find it challenging to generate new business.
Still, the Nat Re chief said the company continues to identify growth opportunities from the need for capital relief solutions, further health insurance coverage, collaboration with foreign firms and crafting of reinsurance facilities.
“As we face 2021, we assure you that we will continue to pursue profitable growth,” he added.
Meanwhile, Santos said Nat Re is closely monitoring its investment portfolio amid the uncertainties in the market. He said the company, along with its investment fund managers, is balancing the risk and optimizing the returns of the investments.
“The market volatility brought about by the pandemic has adversely affected our equity investments, but favorably impacted our fixed income assets,” he said.
The reinsurer holds P8.6-billion worth of investment portfolio, bulk or 60 percent of which are accounted for by government bonds. The remaining 40 percent include corporate bonds and equities.
Santos also discussed the Philippine Catastrophe Insurance Facility (PCIF), which is a collaboration among Nat Re, IC and the Philippine Insurers and Reinsurers Association.
He said this will “enable insurers to more efficiently manage their catastrophe exposures and boost their capacity to take in more catastrophe risks.”
“In doing so, the PCIF will provide the public with more inclusive access to catastrophe insurance protection which will ultimately increase our country’s resilience to catastrophes and allow faster recovery of the communities from a natural disaster.”
Just last year, the Philippines was devastated by the Taal Volcano eruption in January and three typhoons in the last quarter.
Credit rating agency AM Best affirmed this month Nat Re’s financial strength rating of B++ and the long-term issuer credit rating of “bbb” with stable outlook. The ratings were based on the company’s balance sheet strength, operating performance, neutral business profile and appropriate risk management.