UNION BANK of the Philippines (UnionBank) expects its bancassurance partnership with Insular Life Assurance Co. Ltd. (Insular Life) to contribute “significantly” in its bottom line for this year, the lender’s chief executive said.

“Significant enough. Double digit… as a percentage of total, sana (hopefully) [50%,]” UnionBank President and Chief Executive Officer Edwin R. Bautista told reporters on the sidelines of a press conference on Wednesday when asked how much would the partnership would contribute to the bank’s net income this year.

“But the goal is to be one of the top bancassurance partnerships in the country. I think our main advantage is the sales culture that is already existing in the branches,” he added.

Last January, the Aboitiz-led bank sealed a 15-year bancassurance agreement with Insular Life. Bancassurance refers to the selling of insurance products within bank branches.

UnionBank said through the partnership, the local insurance company will be able to benefit from its network of 300 branches, with over six million clients.

The listed lender, along with its thrift banking arm City Savings Bank Inc., bagged the approvals of the Insurance Commission (IC) and Bangko Sentral ng Pilipinas to sell Insular Life’s insurance products last March 8 and April 4, respectively.

Republic Act No. 10607 or an “Act Strengthening the Insurance Industry,” also known as the amended Insurance Code, stated that banks are no longer mandated to have a 5% equity in insurance companies to enter into a bancassurance deal.

Any bank can enter the bancassurance business as long as it complies with the requirements set by the IC and BSP.

Latest data from the IC revealed that Insular Life ranked seventh in terms of premium income by end-2016, with its total premium income at P12.3 billion. Its total assets stood at P131.6 billion last year, bringing the insurer to third place among other life insurance firms.

Insular Life placed second in terms of net income in 2016 after it saw its bottom line reach P3.4 billion last year.

Asked how the bancassurance business will fare this year amid market volatility, Chief Bancassurance Executive of the partnership between UnionBank and Insular Life Omar T. Cruz said: “This business will definitely transcend market volatility because this business is not about trading your portfolio but this business is about addressing the real financial need of the client across time.”

“So I think after one year, we should have very interesting results,” he noted.

In a separate development, UnionBank’s net income in the first three months of the year reached P2.21 billion, 37% higher from the P1.61 billion recorded in the same period in 2016.

According to Mr. Bautista, this was driven by “loan growth and a lot of customer revenue.”

Total deposits likewise booked a double digit growth to P405.1 billion in the first quarter, 28% up from the P376.5 billion in the comparable period a year ago. Its loans to deposits ratio was at 62.5% during the period.

Shares in UnionBank were unchanged at P82.20 apiece on Wednesday.

Source – http://www.bworldonline.com/content.php?section=Finance&title=unionbank-expects-boost-from-bancassurance-partnership&id=145005