MANILA, October 8, 2008 (STAR) By Zinnia B. Dela Peña - The Ayala Group, the country’s oldest and biggest conglomerate, has joined the growing list of companies that have signified interest to acquire American International Group’s Philippine assets in a move aimed at securing a dominant position in the multibillion peso insurance industry. “The financial services arena has always been of great interest to us. If you look at our history, Bank of the Philippine Islands and Ayala’s history we have over the last two or three decades been part of the consolidation that’s taking place in the industy. Obviously if there are opportunities that crop up we will be interested,” said Jaime Augusto Zobel de Ayala II, chairman of Ayala Corp. during the Management Association of the Philippines’ 7th International CEO Forum.

“AIG and Philamlife are exceptional institutions that have served this country for many years. Obviously for different reasons they decided to put that product in the market. It makes sense that the Ayala Group would be interested,” Zobel de Ayala said.

Philamlife, the country’s largest insurer is up for grabs after its parent firm American International Group (AIG) included it among the assets to be disposed of to repay up to $85 billion debt to the US government.

Philam life president and chief executive officer Jose L. Cuisia said nearly 10 local and foreign groups including the Yuchengco family and private equity funds, have expressed interest to acquire Philamlife, one of AIG’s crown jewels.

AIG has tapped Blackstone Group LP and J.P. Morgan Chase & Co as global coordinators for the divestment program.

It remains unknown whether Philam life’s assets will be sold as a block or per unit.

The Ayala group owns the Ayala Life Assurance, a full-service life insurance company, offering a wide-range of life insurance plans for individuals and corporate clients. Its portfolio of products has evolved from pure protection to savings and protection, then to investment products.

Ayala Life offers financial solutions to address the different needs of the Filipinos, may it be basic protection, saving for college education, building capital for entrepreneurial venture, or accumulating funds for retirement.

Philamlife, on the other hand, is the undisputed market leader in the local life insurance sector for more than six decades, offering pre-need plans (Philam Plans), bancassurance (Equitable Life Assurance Co.), healthcare (PHIlam Care), banking (AIG Philam Savings), credit cards, asset management (Philam Asset Management), property and casualty insurance, property management and development (Philam Properties), and business process outsourcing.

The Philamlife Group, the Philippines’ largest insurer, has an asset base of P170 billion and consolidated stockholders equity of P49.5 billion, policies-in-force worth P143 billion, and a work force of over 1,500.

Going by the AIG’s criteria, mega conglomerates like the San Miguel group, and the Ayala Group, are among a few local groups that are in a position to make an acceptable offer.

The San Miguel group has the money and an infrastructure for a financial arm, but not the expertise while the Ayala group has both the money and the expertise. The Ayala group has Ayala Life Assurance Corp., ranked in the top 10 players in the life sector, and BPI/MS, one of the biggest non-life firms in the country.

Philamlife has over one million policyholders or roughly one third of all the life insurance policyholders in the Philippines. It has a sales force of over 8,000 against a little over 2,000 for its nearest competitors.

So far, Cuisia said several local banks have approached him for AIG Philam Savings Bank. Philamlife holds a 45-percent equity in the bank, while AIG holds another 45 percent. The remaining10 percent is held by the Philamlife Employees Retirement Fund.

Based on 2007 data from the Insurance Commission, the other members of the top 10 life insurers in the Philippines in terms of assets are Sun Life of Canada (Philippines), Insular Life Assurance Co., AXA Philippines, Manufacturers Life Insurance (Manulife),

Ayala Life, Pru Life Insurance of UK, Great Pacific Life Assurance (Grepalife), Generali Pilipinas Life Assurance, and Pioneer Life.

SunLife of Canada is affiliated with Sunlife Financial of Canada, Insular Life is a domestic mutual company,

AXA is affiliated with AXA of France and reportedly among the biggest in Europe, Manulife is affiliated with Manulife Financial said to be among the biggest in Canada and the US, Ayala Life is of course an affiliate of the Ayala Group, Grepalife is a member of the Yuchengco group, Generali Pilipinas is affiliated with Generali Spa of Italy, and Pioneer Life has connections with Allianz of Germany.

Experts say that whoever bids for Philamlife and subsidiaries must be ready to commit huge, long-term capital.

Cuisia reiterated ythat Philamlife remains “strongly capitalized” and would be able to meet all its commitments to depositors, investors and policy holders.

REUTERS 5:37 p.m. September 23, 2008

WASHINGTON – The FBI is investigating Fannie Mae, Freddie Mac, Lehman Brothers Holdings Inc. and insurer American International Group Inc. and their senior executives for potential mortgage fraud, CNN reported on Tuesday. The FBI did not provide specifics but said the inquiries were part of a broader probe, CNN said.

Advertisement The bureau is trying to determine whether anyone in those financial institutions, including their senior executives, had any responsibility for providing “misinformation,” CNN reported. A federal law enforcement official confirmed the FBI is now looking at 26 cases of potential corporate fraud related to the collapse of the U.S. mortgage lending industry.

FBI Director Robert Mueller told the U.S. Congress a week ago that 24 cases of potential corporate fraud were under investigation, up from 21 disclosed by the bureau in July.

In testimony before the House Judiciary Committee, the FBI chief also vowed to pursue corporate executives if necessary in mortgage fraud cases.

Mueller said the FBI was looking at all levels of the mortgage systems. With respect to the corporate probes, which could result in federal charges, “the allegations would be there were misstatements of assets,” he said.

(Writing by Joanne Allen; editing by Mohammad Zargham)

Chief News Editor: Sol Jose Vanzi

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