Non-life insurer Paramount General Insurance Corp. is poised to become one of the country’s 10 biggest general insurers next year following its acquisition of a foreign company’s local client base.

Hong Kong-based Union Insurance Society of Canton Ltd., closed early this month the sale of its Philippine client portfolio to Paramount General. Union Insurance is a wholly owned subsidiary of France’s AXA Group, the world’s largest life insurer.

Insurance brokers interviewed by BusinessWorld said the combined potential gross premium earnings of both companies will make Paramount General the country’s 10th biggest general insurer among 113 non-life companies.

The Insurance Commission (IC) ranked Paramount General the 21^st largest non-life company in terms of gross premium collections last year, just a notch above Union Insurance’s Philippine branch.

Year 2000 IC figures show Paramount General and Union Insurance collected P272.6 million and P262.8 million in gross premiums, respectively. With Union Insurance’s client base now under Paramount General, the latter can potentially generate more than P540 million in gross premiums which will enable Paramount to clinch the 10th or 11th spot.

"If you add their premiums, they (Paramount General) will now be a P500 million company and so they’re gonna go up to number 10 or 11," noted one insurance broker, who requested not to be named.

The non-life industry is dominated by four insurers which easily account for close to 30% of gross premium collections. These firms include Yuchengco-owned Malayan Insurance Co., Coyiuto-controlled Prudential Guarantee & Assurance Inc., and Ayala-owned FGU Insurance Corp.

The broker said the portfolio acquisition will also enable Paramount General to diversify its operations and include corporate clients apart from its traditional retail client base.

"This is gonna open up new channels for Paramount in the corporate market because they used to be concentrated on small to medium clients," added the broker.

Other brokers, however, were skeptical about the positive impact of the portfolio purchase on Paramount General’s market share.

To significantly improve its market share, they said Paramount General will face the challenge of convincing most if not all of Union Insurance’s clients to retain their accounts. Non-life insurance policies or contracts are renewed annually.

"They (Paramount General) will be lucky if they will be able to retain 50% of Union’s business. Compared with Union, Paramount is still a medium sized insurance company. When it comes to size, clients not only look at the volume of an insurer’s business but also its long track record and its readiness to assume liabilities," one broker said.

Hong Kong-based Union Insurance was originally established in Canton, China in 1835. Through its underwriting agent, Union Insurance sold the earliest marine cargo insurance policy in the Philippines in 1904, the insurer opened its Philippine branch.

In 1960, Union Insurance was acquired by British insurer Guardian Royal Exchange (GRE). France’s AXA Group bought GRE in 1999, making Union its wholly owned subsidiary. The AXA group, considered the world’s biggest life insurer, operates in more than 60 nations worldwide.