LISTED National Reinsurance Corp. of the Philippines (PhilNaRe) will be spending P150 million to upgrade its technology infrastructure despite the crisis which has hurt many insurance companies, considered primary clients for PhilNaRe.  

At the sidelines of the PhilNaRe shareholders meeting on Monday, senior vice president John Huang said the company will implement over the next five years upgrades to automate most functions to improve efficiency. He said the move will eventually translate to improvements to the firm’s bottomline.

“This will allow us to operate more efficiently and more importantly to proactively analyze our [data].  The reinsurance business is heavily based on information and analysis,” said Huang.

A reinsurer, PhilNaRe is in the business of insuring other insurance companies, by taking some or all of the risk from insurance contracts in return for a fee.

Coming from a difficult year in 2008 and weak first-quarter figures, Huang said he expects the company to return to profitability by the second half of this year.

In the first quarter, the company saw a net loss of P124 million reversing a net income of P110 million in the comparable period last year. Reinsurance premiums, meanwhile, increased 13.6 percent to P824 million from P726 million in the first three months of the year.

Despite this, net premiums—or the portion of gross premiums that the company retains for its own account—fell 2.9 percent to P336 million from P346 million a year ago.

Meanwhile, investment income saw an increase by over 45 percent to P124 million due to the increase in trading and foreign exchange gains, offsetting interest income which grew slightly by 1.7 percent. “For the second quarter, I think the trend of the first quarter will continue,” said Huang.

He said the return to profitability is expected this year as the company adopts more conservative underwriting standards owing to the higher level of claims and losses in the previous year.

In 2008, the company reported an 85-percent drop in consolidated net income to P94.4 million owing in part to natural calamities and marine hull losses.

PhilNaRe president Roberto B. Crisol said the company was able to absorb much of the losses in 2008 mainly because of a strong capital base. In its previous filings, paid up capital rose to P2.18 billion from P614 million from 2007 to 2008.

Crisol said the company will continue its conservative stance this year. “Although this initiative may not produce dramatic growth in our underwriting profitability immediately, we are confident that the company will produce more stable underwriting results in the long run,” said Crisol.

PhilNaRe provides life and nonlife reinsurance to insurance markets in the Philippines and neighboring countries.

The company, currently headed by Government Service Insurance System chief Winston Garcia, was incorporated in 1978 pursuant to Presidential Decree 1270 and went public in April 2007.