January 15, 2014

PNB insurance unit expects losses from natural disasters last year

The Philippine Daily Inquirer reported that the nonlife insurance unit of the Philippine National Bank (PNB, Buy) is expecting to post losses from property damage claims following the various natural disasters last year.
PNB General Insurers, a wholly owned unit of PNB, said that the losses were mainly due to last year's disasters and it estimates this to be around P700m to P800m in losses due to property damage claims. Aside from this, PNB said that it is still assessing the impact of Yolanda to its properties and loans.

Our Take:Being a wholly owned unit of PNB, losses sustained by PNB General Insurers may negatively affect the bank’s profitability. The estimated losses account for ~14% of our FY14 net income estimates for PNB. It remains to be seen, however, what the final numbers will be. We also have yet to clarify if such exposure may be mitigated by any reinsurance.– WealthSec