PHILIPPINE NON-LIFE
INSURANCE BUSINESS
TRENDS & DEVELOPMENTS
- A Reinsurer’s Perspective
10 th Philippine General Insurance Summit,
24 April 2013
Hotel Intercontinental, Makati City
National Reinsurance Corporation of the Philippines

3.
4.
1.
2.
Major Losses in 2012
Snapshots of 2013 Treaty Renewals
Analysis of Selected Industry Trends 2001 to 2011
Steps Moving Forward
2
National Reinsurance Corporation of the Philippines

1. MAJOR LOSSES IN 2012
3

Major Losses in 2012
A. Insured Loss (in excess of PHP 100M)
Event / Assured
1.
Est. Loss (in PHP)
Habagat Flood Loss
(est. 70% Property, 23% Motor, 7% other Lines)
3 – 4 B
2.
3.
4.
5.
Ever Gotesco Fire Loss
Triple Star Packaging Fire Loss
Deco Arts Marketing Fire Loss
Tutuban Properties Fire Loss
6.
Trans-Manila Fire Loss
B. Economic Loss
1.
Typhoon Bopha ( mostly Agricultural loss )
732 M
470 M
419 M
386 M
121 M
36.9 B
4
National Reinsurance Corporation of the Philippines

2. SNAPSHOTS OF 2013
TREATY RENEWALS
5

Event Limits Under Fire Treaties
YEAR
2010 2011
Number of Fire Treaties
- Without Event Limit 52 46
- With Event Limit 14 10
2012
11
45
A) Gross Earthquake
Aggregates (in PHP) 491 B 359 B 395 B
B) Gross Earthquake Aggregate
After Event Limit (in PHP) 338 B 222 B 179 B
B/A 69% 62% 45%
Note: as of Jan 2013 100% of the Treaties have Event Limit
National Reinsurance Corporation of the Philippines
6

Breakdown of EQ Accumulation by Zone
Zone 1
Zone 2
Zone 3
Zone 4
Zone 5
Zone 6
Zone 7
Zone 8
Zone 9
Zone 10
Zone A*Total
Zone B Total
2010
3%
12%
0%
1%
36%
29%
11%
3%
3%
4%
80%
20%
Percent of Total
2011
2%
9%
0%
1%
34%
31%
12%
3%
2%
6%
77%
23%
National Reinsurance Corporation of the Philippines
* Zone A excludes Zone 10
2012
2%
10%
0%
0%
28%
34%
11%
4%
2%
9%
75%
25%
7

Rates on Line for Fire XOL Covers
ROL Range
2012
YEAR
High : 48%
Low: 0.245%
2013
High: 52%
Low: 0.359%
Average ROL 5.08%
Range of Decrease - Increase
5.71%
-18.55% to 10.75%
8
National Reinsurance Corporation of the Philippines

3. ANALYSIS OF SELECTED
INDUSTRY TRENDS
(2001-2011)
9

Number of Policies (in 1,000s)
Total Fire and Allied
Perils
Fire Only
Earthquake
Typhoon
Flood
Extended Cover
Marine
Motor
Accident
Fidelity and Surety
2011 2010 2009 2006 2001
1,204 1,359 1,156
806 857 764
109
106
136
124
137
92
949
744
72
55
729
590
46
35
96
87
104
138
86
77
43
36
21
36
175 170 138 158 157
5,790 6,550 5,520 4,010 2,250
420
346
511
341
542
319
394
356
422
267
10
National Reinsurance Corporation of the Philippines

Total Gross Direct Premiums Written (in PHP Billions)
Total Fire and Allied
Perils
Fire Only
Earthquake
Typhoon
Flood
Extended Cover
Marine
Motor
Accident
Fidelity and Surety
2011 2010 2009 2006 2001
12.41
9.05
1.85
0.71
0.46
0.33
4.20 3.52
13.51 11.79 10.09
2.25
1.77
10.52
7.36
1.86
0.63
0.40
0.28
3.83
2.41
1.56
9.86
7.43
1.39
0.51
0.29
0.24
2.12
1.23
8.67
7.04
0.93
0.30
0.17
0.22
3.05
8.33
1.38
1.04
7.04
6.00
0.55
0.20
0.10
0.19
2.41
6.85
0.81
0.74
11
National Reinsurance Corporation of the Philippines

2001-2011 Graph: Total Gross Direct Premiums Written
(in PHP Billions)
Total Gross Premiums Written (in PHP Billions)
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Total Fire and Allied Perils
Fire Only
Earthquake
Typhoon
Flood
Extended Cover
Marine
Motor
Accident
Fidelity and Surety
12
National Reinsurance Corporation of the Philippines

Total Direct Liabilities/Exposures (in PHP Trillions)
Total Fire and Allied
Perils
Fire Only
Earthquake
Typhoon
Flood
Extended Cover
Motor
2011 2010 2009 2006 2001
15.94 14.03 12.91 12.11
7.66
2.22
5.80
2.15
5.64
2.02
6.92
2.16
2.23
1.87
1.96
1.67
2.29
1.90
1.88
1.44
2.01
1.66
1.58
1.26
1.18
0.83
1.02
0.80
3.93
2.33
0.51
0.38
0.30
0.40
0.58
13
National Reinsurance Corporation of the Philippines

Average Premium Rate by Class/Line of Business (Direct)
Total Fire and Allied
Perils
Fire Only
Earthquake
Typhoon
Flood
Extended Cover
Marine
Motor
Accident
Fidelity and Surety
2011 2010 2009 2006 2001
0.078% 0.075% 0.076% 0.072% 0.179%
0.118% 0.127% 0.132% 0.102% 0.258%
0.083% 0.086% 0.069% 0.043% 0.106%
0.032% 0.027% 0.025% 0.025% 0.053%
0.025% 0.021% 0.018% 0.021% 0.033%
0.017% 0.015% 0.015% 0.022% 0.047%
0.082% 0.088% 0.087% 0.084% 0.217%
0.809% 0.818% 0.798% 1.045% 1.187%
0.061% 0.104% 0.057% 0.036% 0.163%
0.656% 0.628% 0.333% 0.710% 0.637%
14
National Reinsurance Corporation of the Philippines

Average Premium Rate by Class/Line of Business (Direct)
Average Premium Rate
1.400%
1.200%
1.000%
0.800%
0.600%
0.400%
0.200%
0.000%
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Total Fire and Allied Perils
Fire Only
Earthquake
Typhoon
Flood
Extended Cover
Marine
Motor
Accident
Fidelity and Surety
15
National Reinsurance Corporation of the Philippines

Loss Ratio by Class/Line of Business (Direct)
Total Fire and Allied
Perils
Fire Only
Earthquake
Typhoon
Flood
Extended Cover
Marine
Motor
Accident
Fidelity and Surety
2011
56%
58%
3%
93%
245%
-12%
37%
43%
27%
10%
2010
42%
39%
2%
141%
117%
78%
87%
44%
36%
2%
2009
69%
58%
10%
288%
326%
74%
34%
50%
40%
2%
2006
52%
45%
8%
444%
65%
22%
33%
47%
48%
20%
National Reinsurance Corporation of the Philippines
2001
34%
36%
10%
33%
68%
29%
33%
54%
27%
18%
16

200%
180%
160%
140%
120%
100%
80%
60%
40%
20%
0%
Total Fire and Allied
Perils
Total Fire Earthquake Typhoon Flood Extended
Cover
Marine Motor Accident Fidelity and
Surety
2011
2010
2009
2006
2001
17
National Reinsurance Corporation of the Philippines

Underwriting Profit Ratio by Class/Line of Business (Direct)
2011 2010 2009 2006 2001
Total Fire and Allied
Perils
Fire Only
Earthquake
Typhoon
Flood
Extended Cover
Marine
Motor
Accident
Fidelity and Surety
22%
20%
64%
-11%
-135%
74%
43%
35%
50%
67%
39%
42%
77%
-66%
-38%
2%
-6%
34%
41%
71%
11%
22%
67%
-202%
-227%
8%
48%
30%
40%
78%
27%
35%
67%
-331%
18%
56%
46%
31%
29%
57%
47%
44%
71%
50%
14%
53%
42%
28%
54%
69%
18
National Reinsurance Corporation of the Philippines

100%
80%
60%
40%
20%
0%
-20%
-40%
-60%
-80%
-100%
Total Fire and Allied
Perils
Fire Only Earthquake Typhoon Flood Extended
Cover
Marine Motor Accident Fidelity and
Surety
2011
2010
2009
2006
2001
19
National Reinsurance Corporation of the Philippines

Average Gross Premiums Written Per Policy
Total Fire and Allied
Perils
Fire Only
Earthquake
Typhoon
Flood
Extended Cover
Marine
Motor
Accident
Fidelity and Surety
2011 2010 2009 2006 2001
10,302 7,740 8,534 9,129 9,664
11,231 8,587 9,722 9,461 10,183
16,911 13,597 10,183 13,001 11,881
6,730
4,795
5,086
3,787
5,524
3,399
5,459
3,978
5,778
4,565
3,815 2,046 3,113 6,262 5,231
24,027 22,494 25,548 19,261 15,292
2,331
5,362
5,106
1,799
4,727
4,592
1,827
3,919
3,848
2,077
3,519
2,909
3,039
1,916
2,794
20
National Reinsurance Corporation of the Philippines

COMPARISON OF
OPERATING RATIOS
ACCORDING TO
COMPANIES’ NET WORTH
21

Companies According to Net Worth, ROE and
U/W Profit, Loss and Acquisition Ratios
YEAR /
NETWORTH (PHP)
DOMESTIC
No. of
Companies
Average
ROE
U/W Profit
Ratio
Loss
Ratio
Acquisition
Ratio
2010 2011 2010 2011 2010 2011 2010 2011 2010 2011
Below 250 M
250 M to
500 M
Over 500 M
39
24
14
34 2.46% 3.77% 36% 37% 32% 33% 20% 19%
22
19
5.92% 4.52%
7.40% 6.09%
29%
33%
31%
28%
42%
41%
39%
43%
20%
19%
18%
20%
FOREIGN
TOTAL INDUSTRY
8
85
8 12.84% 9.87% 45% 37% 29% 33% 15% 17%
83 7.0% 6.0% 34% 31% 38% 40% 19% 19%
22
National Reinsurance Corporation of the Philippines

COMPARISON OF FIRE & A. P.
AVERAGE PREMIUM RATES
BY COMPANY CAPITALIZATION
23

Companies by Paid Up Capital
Domestic (PHP) below 250 M
Number of Companies
2011 2010
58 64
250 M to 500 M
Over 500 M
15
2
11
2
Foreign 8
83
8
85
National Reinsurance Corporation of the Philippines
2009
67
8
2
9
86
24

Companies by Paid Up Capital
Average Premium Rate : Fire and Allied Perils
2011 2010 2009
Domestic (PHP) below 250 M 0.115% 0.071% 0.066%
250 M to 500 M 0.072% 0.071% 0.059%
Over 500 M 0.067% 0.121% 0.159%
Foreign 0.096% 0.066% 0.083%
National Reinsurance Corporation of the Philippines
25

Companies by Paid Up Capital
Average Premium Rate : Fire only
2011 2010 2009
Domestic (PHP) below 250 M 0.179% 0.119% 0.104%
250 M to 500 M 0.107% 0.123% 0.112%
Over 500 M 0.126% 0.257% 0.231%
Foreign 0.139% 0.084% 0.125%
26
National Reinsurance Corporation of the Philippines

Companies by Paid Up Capital
Average Premium Rate : Earthquake
2011 2010 2009
Domestic (PHP) below 250 M 0.089% 0.114% 0.095%
250 M to 500 M 0.074% 0.066% 0.049%
Over 500 M 0.109% 0.149% 0.086%
Foreign 0.120% 0.098% 0.096%
National Reinsurance Corporation of the Philippines
27

Companies by Paid Up Capital
Average Premium Rate : Typhoon
2011 2010 2009
Domestic (PHP) below 250 M 0.032% 0.027% 0.028%
250 M to 500 M 0.031% 0.026% 0.021%
Over 500 M 0.037% 0.045% 0.023%
Foreign
National Reinsurance Corporation of the Philippines
0.034% 0.026% 0.031%
28

Companies by Paid Up Capital
Average Premium Rate : Flood
2011 2010 2009
Domestic (PHP) below 250 M 0.027% 0.021% 0.019%
250 M to 500 M 0.020% 0.016% 0.012%
Over 500 M 0.032% 0.038% 0.024%
Foreign 0.039% 0.027% 0.038%
National Reinsurance Corporation of the Philippines
29

4. STEPS MOVING FORWARD
30

7.
8.
3.
4.
1.
2.
5.
6.
9.
Establishment of Philippine Catastrophe Facility (Pool or Company).
Flood Accumulation Reporting System.
Flood Modeling.
Proportional vs. Non-Proportional Cover for Natural Perils.
Tax Relief for Natural Perils Policies and Catastrophe Loss Reserves.
Review of Minimum Catastrophe Excess of Loss Protection Required by the Insurance Commission.
More accurate and up-to-date reporting of Catastrophe Claims.
Implementation of major infrastructure projects to mitigate consequences of natural catastrophes.
Relocation of settlements along catastrophe-prone areas like waterways, earthquake faults, volcanoes, etc.
31
National Reinsurance Corporation of the Philippines

1.
2.
3.
4.
Review and rationalization of Fire Rates.
Government incentives for setting up head offices of insurance companies outside Metro Manila.
Tax relief on non-life insurance policies.
Incentives for mergers among insurance companies.
32
National Reinsurance Corporation of the Philippines

Acknowledgements:
• Insurance Commission Annual Reports 2001-2011
• Non Life Underwriting Division – PhilNaRe
• Actuarial and Corporate Planning Department – PhilNaRe
THANK YOU
Presenter:
Roberto B. Crisol
President & CEO
National Reinsurance Corp of the Philippines
33