Philippine American Life and General Insurance Company (Philamlife) is acquiring a 51% stake in Ayala Life Assurance, the life insurance subsidiary of Bank of the Philippine Islands (BPI), for an undisclosed amount. The acquisition will pave the way for a bancassurance joint venture between Philamlife, the Philippines' largest life insurance firm in terms of assets, and BPI. The joint venture is subject to regulatory approvals.

Ayala Life is the seventh largest life insurance company in the Philippines in terms of assets, with gross premiums of more than Ps1.8 billion in 2008 and Ps2.6 billion in the first seven months of 2009. That 140% gain in gross premiums so far this year was largely thanks to bancassurance sales. Ayala Life has more than 129,000 policies in force.

Philamlife will bring insurance distribution, product development, and innovation to the joint venture, particularly in the area of bancassurance, while gaining exclusive access to BPI's customer base through its extensive branch network.

Philamlife's president and CEO Trevor Bull says the partnership is in line with Philamlife's strategy to focus on the core life insurance and wealth management business. He expects the partnership to significantly increase Philamlife's distribution network in the Philippines.

For BPI, the partnership is in line with its goal of offering a full range of financial products and services to customers, says BPI president and CEO Aurelio Montinola III.

"We believe that there are significant cross selling opportunities on both sides. We feel that in the same way that Philamlife will have access to our customer base for life insurance products, BPI will have reciprocal access to Philamlife's customers for banking products," says Montinola.

Philamlife is currently in the process of becoming part of the AIA Group, subject to regulatory approvals. In March this year, AIG abandoned plans to sell Philamlife and instead decided to fold it into its Asian unit, AIA. The AIA Group has more than $60 billion in assets and a base of over 20 million customers worldwide.

BPI is one of the largest universal banks in the Philippines. It has more than three million customers through its network of over 800 branches and 1,500 automated teller machines (ATMs) nationwide.

BPI Capital and ING acted as financial advisors to BPI, while Deutsche Bank acted as sole financial advisor to Philamlife and AIA for this transaction.