When purchasing life insurance or investments, it is important that you check on the life insurance company’s financial strength in order to:
1. To know if the company has a risk for bankruptcy (Having a lot of debts versus assets has a high risk for bankruptcy. It is better to invest in companies with high net worth.)
2. To know if the company is making profit (If the company is having low net income every year for 5 or more consecutive years, then the company’s net worth will decline significantly.)
Net Worth = (Total Assets – Total Liabilities) + Yearly Net Income
The net worth is the value of the company’s total assets minus their total liabilities. To simplify this thought, imagine the company selling all that it owns and then paying off what it owes. What is left is called net worth.
In an insurance provider´s point of view, the net worth allows us to understand whether the company is reliable enough to cover its claims. It also gives us an idea if the company can be able to absord financial shocks caused by economic problems happening in the company / country. The higher the net worth, the better is the company in absorbing financial problems that may occur since it has a lot of assets left after deducting its liabilities.
|Rank||Company||Net Worth (PHP)|
|1||AIA Philippines American Life and General Ins. Co., Inc.||71,179,150,021|
|2||Insular Life Assurance Company, Limited, The||43,921,758,564|
|3||Sun Life of Canada (Philippines), Inc.||32,704,787,938|
|4||Manufacturers Life Insurance Company (Phils.), Inc., The||13,387,114,017|
|5||BDO Life Assurance Company, Inc.||10,544,707,624|
|6||BPI-AIA Life Assurance Corporation||8,178,514,579|
|7||Philippine Axa Life Insurance Corporation||8,171,999,666|
|8||Sun Life Grepa Financial, Inc.||4,645,804,897|
|9||United Coconut Planters Life Assurance Corporation||4,489,364,419|
|10||Pru Life Insurance Corporation of U.K.||3,500,325,002|
This Year’s Net Income = This Year’s Income (Premiums Collected) – This Year’s Expenses
The net income which also may be called as net earnings or profit is referred to the company’s total income (from selling insurance premiums) deducted by the total expenses. These expenses may be broken down into costs of services, operating expenses, depreciation and amortization, interests and taxes. This factor affects your decision making in choosing your insurance provider because a company who frequently reports low net income or net losses for 5 or more consecutive years will see a significant drop of their net worth.
|Rank||Company||Net Income (PHP)|
|1||AIA Philippines American Life and General Ins. Co., Inc.||12,989,797,150|
|2||Sun Life of Canada (Philippines), Inc.||8,386,484,311|
|3||Insular Life Assurance Company, Limited, The||4,671,018,878|
|4||Manufacturers Life Insurance Company (Phils.), Inc., The||3,481,434,346|
|5||Philippine Axa Life Insurance Corporation||2,750,907,186|
|6||BPI-AIA Life Assurance Corporation||1,997,980,539|
|7||BDO Life Assurance Company, Inc.||1,994,401,913|
|8||Pru Life Insurance Corporation of U.K.||1,527,327,215|
|9||Sun Life Grepa Financial, Inc.||597,705,861|
|10||FWD Life Insurance Corporation||493,892,209|
Assets are anything – tangible or intangible, that has value and are expected to provide future benefits to the owner of these assets. This is important because a growing asset will mean a higher net worth for the insurance company. Remember net worth is computed assets minus liabilities.
However, we cannot fully rely on asset alone in determining whether a company is stable or not. This is because some companies have high assets such as buildings but were acquired through a loan / liability.
|1||Sun Life of Canada (Philippines), Inc.||282,776,856,737|
|2||AIA Philippines American Life and General Ins. Co., Inc.||276,307,876,721|
|3||Philippine Axa Life Insurance Corporation||164,817,651,848|
|4||Insular Life Assurance Company, Limited, The||151,020,392,175|
|5||Pru Life Insurance Corporation of U.K.||125,026,023,889|
|6||Manufacturers Life Insurance Co. (Phils.), Inc., The||118,851,740,232|
|7||BPI-AIA Life Assurance Corporation||115,662,867,791|
|8||BDO Life Assurance Company, Inc.||81,054,673,167|
|9||Allianz PNB Life Insurance, Inc.||78,416,721,162|
|10||Manulife Chinabank Life Assurance Corporation||56,787,192,136|
What is the most reliable way to measure a company’s performance or stability?
Net Worth is the most reliable measurement to know whether a company is a reliable company to invest in or not. Just take a look at how the richest people are ranked. They are ranked according to net worth, not according to gross income/gross sales, assets owned, or cash coming in for the year (without deducting cash coming out).
What is the best life insurance company to invest in?
Based on our premise that companies with High Net Worth are less likely to go bankrupt, we suggest that you consider purchasing life insurance only from Top 3 Companies with High Net Worth. Ask your self, if you are shown the top 50 richest people in the world according to net worth, will you have more confidence doing business with the bottom 50 or the top 3? Same applies when purchasing life insurance.
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