Country Philippines

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					Country: Philippines

1.   Geographic information
     (a) Capital: Manila
     (b) Area of national land: 300,000 sq. km.

2.   Demographic information

     (a)     Data

                                             Actual          Projected Figures               (Unit)
                                             2000         2005      2010      2015
           Total population
             Total                              76.5           85.3       94.0     102.9      Million
                    Male                        38.5           42.9       47.3      51.7      Million
                    Female                      38.0           42.4       46.7      51.2      Million
           Active population
             Population aged 15 and over        48.2           55.4       62.9      70.3     Million
           Population growth rate               2.36           2.05       1.95      1.62     Percent
           National population mortality
           Life expectancy
                 Male                           66.9          64.11      66.11     67.61
                 Female                         72.2          70.14      71.64     73.14
           Total fertility rate                                3.41       3.18      2.96

           Active population                                           Actual
                                                2003           2004       2005     2006        (Unit)
                Population in labor force
                 Employed rate                   89.8           89.1      92.6      92.7      Percent
                 Unemployed rate                 10.2           10.9       7.4       7.3      Percent
           Crude birth rate                     25.16          24.63     24.09                    Per
           Crude death rate                      5.72           5.66      5.60              thousand

       Projected Population by Single-Calendar Year
                                                              Projected Figures
                                              2002        2003       2004     2005            2006
           Total population
             Total                              80.2           81.9       83.6      85.3          87.0
                   Male                         40.4           41.2       42.0      42.9          43.8
                   Female                      39.8.           40.7       41.5      42.4          43.2

     Demographic composition by age group for the projected 2005 figure.
                                                                                         Unit: ( Million )
     Age          0-9    10-19   20-29      30-39     40-49    50-59   60-69     70-79     80 +      Total
     Male        10.3      9.4     7.5        5.8       4.5      2.9     1.5       0.7      0.2        42.8
     Female       9.9      9.1     7.5        5.8       4.4      2.8     1.7       0.9      0.3        42.4
     Total       20.2     18.5    15.0       11.6       8.9      5.7     3.2       1.6      0.5        85.2
     Sources : NSCB

3.     Economy

       (a)   Data

                                           2003           2004      2005        2006       (Unit)
 GNP               [At Current Prices]    4,631,479   5,248,064    5,885,050   6,570,310Million
             [At Constant 1985 Prices]    1,171,431   1,252,331    1,319,107   1,399,527Pesos
 GDP               [At Current Prices]    4,316,402   4,871,555    5,437,905   6,032,624Million
             [At Constant 1985 Prices]    1,085,072   1,154,295    1,210,497   1,276,435Pesos
 Currency exchange rate U.S. Dollar         55.5690     56.2670      53.0670     49.1320Philippine
 Balance of payments          [Overall]        115         (280)      2,410       3,769 Million
 Inflation rate              [Headline]         3.5          6.0         7.6        6.2 Percent
 Purchasing power of the Peso
 (2000 = 100)
 Long-term interest rate on government
         ο 10 year treasury bonds            11.81         12.31      11.69         8.06 Percent
         ο 20 year treasury bonds            12.23         13.00      12.13         9.69 Percent
Sources : NSCB, BSP, BTR

       (b)   Topics

             ο The country has experienced positive real GNP and GDP growth rate in the last
               5 years. First quarter 2007 GDP expanded at an unprecedented pace of 6.9%,
               the highest since 2005.

             ο Inflation rate was steady at 2.4% in May 2007, bringing the average for the first
               five months of 2007 to 2.7%.

             ο The peso continued to appreciate versus the US Dollar.

4. Insurance (Enter information for life insurance and non-life insurance separately if

(a)   Number of insurance companies

      Composite (Life and Non-Life Insurance Companies)
       Domestic                               2
       Foreign Domestically Incorporated      1
       Total                                  3

      Life Companies
       Domestic                                 25
       Foreign Domestically Incorporated         7
       Foreign Branch                            1
       Total                                    33

      Non-life Companies
       Domestic                                 84
       Foreign Domestically Incorporated         5
       Foreign Branch                            5
       Total                                    94
      Source : IC Annual Report

(b)   Product range

      i)   Insurance contracts in force by product type: Number of contracts in force,
           amount, gross premium

           Life Insurance

           Insurance policies in force as of December 31, 2005 decreased by 26.75%
           from 4,566,927 in the previous year to 3,345,132. Amount of Insurance for
           these in force policies totaled P1.49 trillion pesos with corresponding
           premium income of P46.99 billion pesos.

                          Category                     Amount               Unit
            Number of Total Policies In Force           3,345,132
            Total Premium Income                            46.99     Billion Pesos
            Total Volume of Insurance                        1.49     Trillion Pesos
            Number of First Year Policies                 296,629
            First Year Premium Income                       15.76     Billion Pesos
            First Year Volume of Insurance                 230.26     Billion Pesos
           Source: IC Annual Report

Insurance type                  2003        2004         2005      Unit
  Number of policies in      3,556,246     3,599,604   2,826,207
  force as of yearend
  Amount of Insurance           1,399.34     1,240.6       807.5 Billion
  in force as of yearend                                           Pesos
  Number of policies in         992,061     965,698      517,802
  force as of yearend
  Amount of Insurance            650.19       637.7        678.8 Billion
  in force as of yearend                                           Pesos
  Number of policies in           2,705       1,623        1,123
  force as of yearend
  Amount of Insurance            22,211      11,963        6,339 Thousand
  in force as of yearend                                           Pesos

Non-life Insurance

Gross Premiums Written by non-life insurance companies in 2005 grew by
P1.87 billion or 7.06% from P26.49 billion in 2004 to P28.36 billion in 2005.
The net premiums written improved by P0.88 billion, from P15.04 billion in
2004 to P15.93 in 2005.

 Insurance type                  2003        2004        2005 Unit
   Premiums Earned               2.85        3.02        3.17 Billion Pesos
   Losses Incurred               1.08        1.21        0.94 Billion Pesos
   Loss Ratio                   37.75       39.89       29.56 %
   Premiums Earned               1.31        1.31        1.45 Billion Pesos
   Losses Incurred               0.40        0.29        0.48 Billion Pesos
   Loss Ratio                   30.44       21.92       32.92 %
 Motor Car
   Premiums Earned               6.82        7.11        7.53 Billion Pesos
   Losses Incurred               3.72        3.95        3.88 Billion Pesos
   Loss Ratio                   54.62       55.48       51.54 %
   Premiums Earned               2.28        2.28        2.58 Billion Pesos
   Losses Incurred               0.88        0.94        1.15 Billion Pesos
   Loss Ratio                   38.45       41.71       44.44 %
   Premiums Earned               0.71        0.75        0.79 Billion Pesos
   Losses Incurred               0.11        0.15        0.12 Billion Pesos
   Loss Ratio                   15.27       20.23       15.19 %

            Source : IC Annual Report

      ii)    New insurance contracts by product type: Number of new contracts, amount

             Life Insurance

             Total new business policies issued for the year 2005 registered a decline of
             39,731 policies from 336,360 policies to 296,629 policies. Of the policies
             issued in 2005, 22,199 came from the sale of unit-linked products.

              Insurance type                       2003          2004          2005 Unit
                Number of new policies         335,532        332,038      292,833
                Amount of Insurance of          111.67         104.35       101.03 Billion
                new policies                                                       Pesos
                Number of new policies            3,224         4.322         3,796
                Amount of Insurance of            45.97        119.59        129.23 Billion
                new policies                                                        Pesos

            Source : IC Annual Report

(c)   Regulations

      i)     Pricing regulations

             The company has freedom in setting premium rates. However, premium
             rates for policies other than group insurance require prior approval by the
             Insurance Commission. For group insurance, companies may adjust
             approved rates in consideration of the emerging experience of said group.

             In August 26, 2005, the Office of the Insurance Commissioner implemented the
             Expeditious Approval Process of Traditional Plans. Regulatory approval of filings
             on Traditional products is expedited provided the filing company adheres to a
             proposed expanded set of documentary requirements, which include among others,
             a deed of undertaking certifying to compliance with all published IC regulations
             signed by the president or his designate, and an actuary’s certification on product

      ii)    Valuation of reserves

             The net premium method is the prescribed valuation method. The actuary
             selects the valuation basis, provided the valuation is made upon the net
             premium basis according to the standard adopted by the Company. Such
             standard of valuation, whether of the net level premium, full preliminary
             term, any modified preliminary term, or select or ultimate reserve basis,
             shall be according to a standard table of mortality with interest rate at not
             more than 6% per annum. When the preliminary term basis is used, the
             term insurance shall be limited to the first policy year.

             Standard mortality tables often used for valuation are CSO Tables and
             tables published by the ASP called Philippine Intercompany Mortality

      iii)   Solvency

             A life insurance company doing business in the Philippines shall maintain a
             margin of solvency which shall be an excess of the value of its admitted
             assets exclusive of its paid-up capital over the amount of its liabilities,
             unearned premium and reinsurance reserves in the Philippines of at least
             two per thousand of the total amount of insurance in force as of the
             preceding calendar year on all policies except term insurance provided that
             such margin shall not be less than P500,000 and provided further that the
             paid-up capital shall not include contributed surplus and capital paid in
             excess of par value. Such assets, liabilities and reserves shall exclude assets,
             liabilities, and reserves included in separate accounts established under
             variable accounts.

      iv)    Other

             The industry continues to work for a rationalization, if not abolition, of
             taxes being imposed on life insurance policies. Efforts in 2003 and 2004
             bore initial fruits, with the decrease in documentary stamp tax dues. The
             general view is that the life insurance industry is still heavily taxed, in spite
             of this initial relief.

(d)   Recent topics

      i)     Changes in hot-selling products

             The unit linked products continued to be the hot-selling products in the
             insurance market.

      ii)    Changes in regulations

             In 2006, the Office of the Insurance Commissioner implemented the
             Risk-Based Capital Framework side-by-side with the fixed annual
             capitalization increases from 2006 to 2010 for both life and non-life

      iii)   Other

             ο The perceived thrust of the Insurance Commission is towards
               deregulation of the life insurance industry, with much reliance placed on
               the Philippine Life Insurance Association (PLIA). Key regulations on
               uniform sales illustration, expeditious product approval filing, increased
               paid-up capital requirements, and the risk based capital framework,
               among others, were laid out for the industry by the Insurance
               Commission, in consultation with the PLIA.

ο A general review of the Insurance Code is also being worked on by the
  Insurance Commission and the PLIA. The actuarial profession, either
  through actuarial officials of PLIA-member companies or through
  officers of the Actuarial Society of the Philippines, is well represented
  in these undertakings.

ο The continuous decline in investment returns has prompted some
  insurance companies to revise dividend scales and rates credited on
  dividend accumulations, settlement options and premium deposit funds.
  Many companies re-priced their current product portfolio. It also
  spurred the focus on non-traditional life products such as the variable or
  unit-linked products.

4.   Pension
     (a) System
          i)    Outline of the pension system

                 Social security benefits are currently being provided through government
                 sponsored organizations such as the Social Security System (SSS),
                 Government Service Insurance System (GSIS), Philippine Health Insurance
                 Corporation (PhilHealth) and the Employees’ Compensation Commission

                 The Social Security System was established in 1957 to provide social
                 security protection to salaried employees of the private sector,
                 self-employed persons and professionals and Filipino overseas contract
                 workers. Benefits include:

                     Retirement benefits                 Sickness benefits
                     Death and funeral benefits          Maternity benefits
                     Disability benefits                 Affordable loans

                 The Government Service Insurance System was established in 1936 to
                 institutionalize a social insurance program for government employees.
                 Benefits are similar to those provided by the SSS. Added to these benefits
                 is a compulsory life insurance coverage in the form of a participating
                 endowment insurance policy.

                 PhilHealth took over from the Philippine Medical Care Commission that
                 was established in 1969 to gradually provide medical service to residents of
                 the country in a progressive manner. Benefits under PhilHealth include
                 room and board benefits, medical expense benefits, doctor’s,
                 anesthesiologist’s and surgeon’s fees and applicable operating room fees.
                 Outpatient care such as services of health care professionals, personal
                 preventive services, diagnostic, laboratory and other medical examination
                 services and prescription drugs are also provided under PhilHealth.

                 The ECC, created in 1974, was created to assist workers and their
                 dependents in the event of employment-related injury, sickness, disability
                 or death. Benefits include death benefits, disability benefits, supplemental
                 pension and medical and rehabilitation services.

                 Republic Act 7641, which was enacted into law in 1992, amended the Labor
                 Code of the Philippines by providing for retirement pay to qualified private
                 sector employees in the absence of any retirement plan in the establishment.

                 In essence, this law provides retirement benefits to a covered employee
                 upon reaching age 60 or more, but not beyond 65 (compulsory retirement
                 age), who has served at least 5 years in the establishment in an amount not
                 less than ½ month salary for every year of service. The term ½ month shall
                 be at least equal to 15 days plus 1/12 of the 13th month pay and the cash
                 equivalent of not more than 5 days of service incentive leaves.

ii)   Public pensions

      Social Security System

                           Financial             Financial            Financial
                        Statement as of       Statement as of      Statement as of
                        Dec. 31, 2003          Dec. 31, 2004        Dec. 31, 2005
       Contributions        39,420.4              43,935.8             47,602.1
       Benefits Paid        42,806.4              44,882.5             46,269.8
       Assets              170,875.3             179,084.1            199,833.1
       Reserves            168,137.3             176,386.1            196,407.4

                                        Figures as of December 31, 2006
       SSS Membership                               Number
         Employers (ER)                               781,763
         Employees (EE)                            21,124,512
         Self-employed (SE)                         5,614,770
                                        Number                   Amount
                                                            (in Million Pesos)
       Total Benefits                  2,012,410                P52,122.01
         Social Security               1,949,269                P51,051.57
         Employees’                       63,141                P 1,070.44
       Contributions                      P52,543.60 (in Million Pesos)
       Assets                             P228,444.46 (in Million Pesos)
      Source : SSS

      Government Service Insurance System

                                     2003        2004        2005      2006
       Active Members                       approximately 1.3 Million
       Life     &     Retirement    P28.044    P30.528      P33.10    P32.06
       Benefits      Paid     to
       Members – in Billion
       Assets in SIF (Social P271.249           P280.686        P334.13   P377.34
       Insurance Fund) – in
       Billion Pesos
       Assets        in      AF P28.379          P28.513        P32.88     P33.85
       (Administered Fund) –
       in Billion Pesos
       Reserves – in Billion P241.066          Figure not P337.72 P376.09
       Pesos                                  available in
                                               the report
      SIF – source of the social insurance benefit of GSIS members
      AF – comprise the General Insurance, Employee Compensation and
           Optional Life Insurance Funds

      Source : GSIS

      iii)   Corporate pensions

             1) Defined-benefit plan (DB plan)

                 Number of plans, number of participants, annual premium, annual
                 amount of benefits, reserves

                 Data not available

             2) Defined-contribution plan (DC plan)

                 Number of plans, number of participants, annual premium, annual
                 amount of benefits, reserves

                 Data not available

(b)   Other recent topics

      i)     Changes in regulations

             ο The implementation of the new accounting standards for retirement
               plans (PAS 19) necessitates revision of the Actuarial Standards of
               Practice for Retirement Plan Valuation. The Employee Benefits
               Committee of the society is currently reviewing the standards of

6.   Actuarial organization : Actuarial Society of the Philippines

     (a)   Year of establishment, address

           Originally founded as Philippine Actuarial Society in 1953. The name was later
           changed to the Actuarial Society of the Philippines. It was incorporated as The
           Actuarial Society of the Philippines Inc. and registered with the Securities and
           Exchange Commission in 1969.

           Unit 819 Cityland 10 Tower 2
           H. V. Dela Costa St., Salcedo Village
           Makati City, Philippines

     (b)   Membership (as of July 18, 2007)

            Fellow                   64
            Associate                56
            Affiliate                76

     (c)   Professional activities

           Fellows of the ASP are required to complete a minimum number of credit hours for
           inclusion in the Society’s recommended list for accreditation, particularly allowing
           actuaries to practice in pre-need, insurance and do valuation of pension plans. This
           requirement is assessed year on year. Credit hours may be earned through such
           activities as:

              Attending ASP (or IAA member) annual conventions
              Serving as examiner in ASP exams
              Presenting technical papers
              Pursuing postgraduate courses in actuarial science
              Serving as speaker in ASP (or IAA member) seminars
              Writing technical papers
              Passing actuarial examinations of an IAA member association
              Attending ASP (or IAA member) seminars
              Attending other actuarial meetings, workshops or seminars
              Conducting actuarial research

           Thus, every year the Professional Development Committee organizes seminars and
           forums to address the continuing education of actuaries.

     (d)   Educational activities

           Members of the Actuarial Society of the Philippines are classified either as
           affiliates, associates or fellows. Minimum education requirements for all levels
           include a college degree and passing actuarial examinations administered by either
           the Society of Actuaries (SOA) or the Actuarial Society of the Philippines.

           The required examination for Affiliate is any one (1) of the Associateship or
           Fellowship examination. The examinations for Associateship cover the theoretical

      aspects of Actuarial Science and dovetail the examination requirements of the
      Society of Actuaries. The transitioning SoA exam catalogue has impacted local
      associateship examination requirements as well.

      The Fellowship examinations cover the practical aspects of Actuarial Science and
      topics specific to actuarial practice in the Philippines. These consist of 10
      examinations administered by the ASP:

      Course 510 – Valuation of Liabilities
      Course 520 – Life Insurance Accounting
      Course 530 – Investments and Finance
      Course 540 – Selection of Risks and Reinsurance
      Course 550 – Pre-Need Plans
      Course 610 – Gross Premiums, Asset Shares and Other Pricing Considerations
      Course 620 – Retirement Plans
      Course 630 – Social Insurance
      Course 640 – Group Insurance and Health Benefit Systems
      Course 650 – Life Insurance Law and Taxation

      Another prerequisite for Fellowship is the successful completion of the Fellowship
      Admission Session (FAS) administered by the Professional Standards and Review
      Council of the ASP. The FAS is a discussion among a group of Fellows and the
      applicants for Fellowship regarding Professional Ethics and Integrated Problem
      Solving on actuarial matters. Plans are underway to impose a similar requirement
      before an associate designation is earned.

      A new exam curriculum will be implemented by the society in 2008. The
      Education and Eligibility Council is now studying/developing specialty tracks in
      the actuarial field.

(e)   Future prospects for actuarial professionals: Challenges, issues

      Presently, actuaries in the insurance industry are faced with challenging conditions
      brought about by changing business conditions. With the liberalization of the life
      industry and the entry of a number of foreign insurers, the landscape of the
      insurance industry is fast changing in terms of the introduction of more products,
      including non-traditional ones.          New distribution channels, primarily
      bancassurance, are challenging the traditional agency distribution channel. Added
      to these changes is the generally declining interest rate environment in the country.
      Additional challenges include the keen competition in the group insurance market
      as evidenced by declining group insurance rates.

      On the pre-need sector, actuaries have to respond to the demands of a
      financially-challenged industry.

      On the HMO sector, near cutthroat pricing is a key concern. Profitability of the
      industry continues to suffer as margins are squeezed with increasing medical costs
      and cost of doing business coupled with the inability to pass on the increases in the
      form of premium adjustments.


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