The National Reinsurance of the Philippines or “PhilNaRe” initial public offering (IPO) set for April 27 may be the first listing in the Philippine Stock Exchange’s history attributed to the overwhelming support of the local small investor (LSI) program.

The PSE and the PhilNaRe IPO team classify the local small investors as investors purchasing not more than 6,000 shares (25,000 pesos worth). Also, the issue manager according to the PSE cannot refuse these LSI’s.

"These small investors are what drove the impending PhilNaRe issue to over subscription twelve times over encouraging us to exercise its greenshoe option," says BDO Capital and Investment Corp. President Ed Francisco.

“The greenshoe option allowed the company to offer 103.9 million additional shares to the public”, he added.

The majority of the LSI’s wanting to invest in the company was patriotic and wanting to showcase the abilities of the Filipino. According to a 32-year old banking professional who was part of the many who waited in line at the BDO branch in Makati said, “It is a rarity for an opportunity such as this to present itself to the investing public. Supporting a locally owned company with its plans to expand and tackle the regional market is an investment I’m willing to make. I’m all for highlighting the Filipino ingenuity and if PhilNaRe is that company presently wanting to be competitive globally, then so be it.”

The small investor program translated to a total investment in the area of P 200 million representing an estimated 67 million shares. This kind of support for a local IPO is astonishing. 

PhilNaRe is looking to raise additional funds in the amount of P 2.0-2.9 billion to be used to increase the Company’s capital in order to have the capacity to retain more premiums. This translates to an estimated net income of P627 million this year; a 50% gain from 2006 levels.

Gross premiums are also forecasted to increase to P5.21 billion from P3.88 billion in 2006, while investment and other income are seen to hit the P506 million from a P343 million level.

PhilNaRe is the only reinsurance company in the local market today and has the envious status of being the national reinsurer. This status allows PhilNaRe to retain a portion of the reinsurance business from the local insurance industry. This captured market is made sure by Presidential Decree 1270, which states that PhilNaRe is to retain a minimum of ten percent of the local reinsurance business.

Moreover, PhilNaRe is making a commitment to trail blaze the way for the local insurance market to reeducate the investing public of the benefits of insurance products as investment instruments.