The National Reinsurance Corporation of the Philippines (National Re), the Philippines' sole domestic professional reinsurer, expects to record positive underwriting margins and returns in 2017 and 2018, notes Philippine Rating Services Corporation (PhilRatings) in its ratings news.
National Re’s premiums written, gross and net, are projected to grow, driven by its nonlife business. Continued improvement in combined ratio will buoy overall profitability for the projected period. Operating targets will mainly be supported by continued portfolio diversification and technical capability building.
PhilRatings notes that National Re’s profitability was considered weak for the historical period 2011 to 2015, although underwriting profit margin and returns have improved beginning 2014.
The reinsurer has a solid market franchise given its status as the Philippines’ leading professional reinsurer. The company directly competes with foreign reinsurance companies with agents licensed by the Insurance Commission (IC), and to a lesser extent with domestic insurance companies, which are also licensed to sell reinsurance.
National Re, nonetheless, has to its advantage a Presidential Decree, which mandates “all life and non-life insurance and reinsurance companies doing business in the Philippines to cede to the company (National Re) at least 10% of their outward reinsurance placed with unauthorised foreign reinsurers.”
Of the licensed insurance companies in the Philippines as at 31 December 2016, National Re had existing reinsurance agreements with 50 (out of 66) non-life insurance companies, all of the 27 life insurance companies and three (out of four) composite companies.