The  Ka'punan  Bank  Experience      Zaldy Pacificar

Managing  Director  

2012 RBAP-MABS National Roundtable Conference June 7-8, 2012

Hyatt Hotel & Manila  

Session  7:            Transforming MI from Service to Business  

Passing  on  the  risks  

Zaldy  Wong  Pacificar  June  8,  2012,  Hya=  Hotel,  Malate,  Manila  

Ka@punan  Bank  •  Organized  by  Businessman  Gregorio  P.  Alano  and  his  wife,  Mrs.  Bienvenida  T.  

Alano  in  1978  to  provide  Financial  services  in  the  municipality  of  Ka@punan,  Zamboanga  Del  Norte.  

•  On  January  29,  1979,  Bangko  Sentral  ng  Pilipinas  (BSP)    authorized  “Rural  Bank  of  Ka@punan  Inc.”  to  open  its  doors  to  the  public  

•  Consolidated  with  Plaza  Rural  Bank  of  Carcar,  Cebu  on  2008  •  A[er  consolida@on,  “Rural  Bank  of  Ka@punan  Inc.”  changed  its  name  to  

“Ka@punan  Bank  (ZN)  Inc.”  •  Has  more  than  1  billion  resources  as  of  May  31,  2012  •  Has  a  camel’s  ra@ng  of  4  (BSP  Examina@on  for  the  year  2011)  •  Has  more  than  200,000  clients,  42,000  of  whom  are  Microfinance  

KB  Mutual  Benefit  Associa@on  Inc.    (KB-­‐MBAI)  •  Approved  by  SEC  on  September  8,  2008  •  Approved  by  IC  on  October  20,  2009  •  Organized  by  Ka@punan  Bank  Inc.  as  its  primary  Microinsurance  provider  •  Offered  Life  insurances  to  KB’s  MI  clients  (Dependents  not  covered)  •  Ini@ally  offered  health  benefits  to  both  the  Principal  &  their  dependents.  •  Stopped  offering  health  benefits  in  2011  due  to  Fraudulent  claims  •  A[er  3  years  of  opera@on,  the  associa@on  is  being  dissolved    

The  Lessons  1.)  50%  of  the  premium  the  client  paid  is  returned  as  an  equity  of  the  payor  a[er  resigning  from  the  associa@on.  

2.)  Health  insurance  has  high  fraudulent  risks.  

3.)  Turnaround  @me  of  processing  claims  is  quick  but  very  costly.  

4.)  The  allowable  expense  for  Administra@ve  work  is  not  financially  viable  (IC  only  allowed  25%).  5.)  More  of  a  service  than  a  business.  

Microinsurance  is  not  something  that  we,  as  social  entrepreneurs,  can  consider  as  our  core  business.  However,  Ka'punan  Bank  acknowledges  its  importance.    Hence,  we  opted  to  pass  on  the  risks.  

The  Strategy  

Determined  the  right  Partner  

Ini@ated  the  comple@on  of  all  Statutory  requirements  

Mapped  out  the  Transi@on  strategy  

Implementa@on  

•  TAT  to  process  •  Financial  Status  •  Industry  impression  •  Market  reach  •  Flexibility  

•  Compliance  •  To  –  be  process  •  People  readiness  •  System  readiness  •  Risk  mi@ga@on  

•  Stabiliza@on  •  Governance  

Our  Partners  

Case  Study:  The  Sendong  Experience  was  the  BOD’s  cri@cal  case  study  in  deciding  for  the  right  partner.    

•  Flexible  to  offer  some  health  benefits  •  Flexible  to  Profit  sharing  •  Quick  to  respond  to  our  needs  •  Quick  to  train  our  people  •  Helped  us  from  Day  1  

Case  Study:  The  capacity  of  Globe  is  the  BOD’s  deciding  point.  Hence,  KB  chose  Globe  for  its  Ka@punero  card.  

•  Flexible  to  our  terms  •  Trained  our  people    

Commercials  

#  of  Clients   KBMBAI   PIONEER  

30,000++   PhP  90,000++   Above  PhP  400,000  

* KBMBAI amount was computed based on previous agreement * Received by the bank for April 2012

Thank you! I welcome your questions later!