| THE nation’s largest reinsurer National Reinsurance Corp. of the Philippines has declared a 7-percent stock dividend amounting to P152.7 million to be taken from its unrestricted retained earnings as of end December 2006.
Unrestricted retained earning is a portion of the net income, which is retained by the corporation and can be distributed to its shareholders.
The declaration of the stock dividend was approved by the board in its regular meeting on Tuesday. The decision would be submitted for shareholders’ approval at the company’s annual stockholders’ meeting on July 23.
The stock dividend is taking place against the backdrop of a healthy increase in National Reinsurance’s net earnings, which as of end-December 2006, amounted to P275 million.
“Our decision to declare stock dividends is in line with the dividend policy we disclosed during the pre-public offering period,” said president and chief executive Wilfrido C. Bantayan.
The second company to list this year, PhilNaRe earlier said its net income grew to P 174 million at the end of the first quarter from P102 million in the same period a year earlier.
The growth pace recorded by the company was spurred by a 15.2-percent increase in reinsurance premiums to P723 million from the same period last year.
The top line growth is comprised of a 75.6-percent improvement in net premiums retained at P283 million. Retention ratio increased to 39.2 percent from 25.7 percent for the corresponding period last year.
“We have continuously been keen to the needs of our customers and conscientiously worked to provide them with a range of products and services tailored to their requirements. We believe that this strategy has helped us go above and beyond the mandated 10-percent business we receive from the local insurance companies. And with the success of our recent IPO, we currently have the capacity to retain premiums needed to sustain growth in the medium term,” said Bantayan.
In spite of the low-interest rate environment, investment and other income grew to P187 million in the first quarter of 2007, a 65-percent quarter-on-quarter gain from P113 million in 2006. The 2006 figures already included a one-time gain of P51 million arising from the merger between National Reinsurance and the BPI- and Yuchengco-led Universal Malayan Reinsurance Corp., which was completed in March 2006.
On the other hand, interest income increased by P16.3 million as a result of better yields on investment and fixed income securities.
In contrast to revenue performance, general and administrative expenses were modestly higher at P29 million, up 12 percent over the first quarter 2006. The combined performance of revenue and general and administrative expenses enabled a robust increase in net income to P174 million.
National Reinsurance listed on the first board of the stock exchange on April 27 and traded strongly on the first trading day, rising 18 percent to close at P4.50, from the initial public offering (IPO) price of P3.80.
At P4.40, National Reinsurance’s market capitalization is estimated at P9.9 billion.
The company raised a total of P2.8 billion from its IPO. The proceeds will be used to expand its retention capacity, which the company hopes will earn it an international rating as an acceptable reinsurer.
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