Against the backdrop of a weak economy and political uncertainty in 2003, your company withstood these challenges and again delivered solid results, cementing its stature as one of the pillars of the country's non-life insurance industry.
While the Philippine economy grappled with domestic security problems and external threats, your company reinforced its business initiatives by strengthening relationships with its partners and clients, optimizing costs, and aggressively pursuing operational enhancements.
In 2003, the business environment was hounded by nagging political jitters, a ballooning foreign debt, and the general perception of government's inability to contain the budget deficit.
Moreover, the Philippines, like many other countries in the region, was hit hard by negative developments overseas, particularly the US-Iraq war and the outbreak of the Severe Acute Respiratory Syndrome (SARS), which left Asia's travel and tourism industry severely battered.
But while most Asian economies eventually picked up, the country still lagged behind as the local economy was weighed down by non- economic issues such as the failed Oakwood mutiny by junior military officers, a rash of kidnapping and bombing incidents, and early political posturings for the May 2004 national elections.
These factors conspired in further eroding business confidence in the country, affecting the inflow of serious investment activities. Thus, the peso-dollar exchange rate deteriorated to an average of P54.21:$1 from P51.61:$1 and the country's local and foreign currency debt ratings suffered downgrades.
Showing its resilient nature, however, the local economy managed to post a modest 4.5% growth in gross domestic product or GDP, the broad measure of the total value of goods and services produced during the year-period, partly buoyed by the multiplier effects of overseas Filipino worker remittances, which rose by 5% to $7.6 billion.
The country's economic managers also succeeded in reining in the fiscal and balance of payments deficit and keeping consumer prices stable, as the budget deficit was brought down to a better-than-expected P200 billion on tight expenditure controls and improved revenue collections. Inflation -- the gauge of how fast prices of basic commodities are moving -- settled at 3.1%, considerably lower than the government target of between 4.5% to 5.5%.
Interest rates, as measured by the benchmark 91-day Treasury bill rate, likewise remained low, averaging 6.03%, lower than the the target range of 8% to 9%.
After three years in the doldrums, the Philippine stock market similarly came back to life, along with the rebound in the major markets abroad. The Philippine Stock Exchange emerged the third best performer in Southeast Asia, trailing Thailand and Indonesia.
Even with the prospects of another difficult year for the economy in 2004, we remain confident that your company will be able to continue improving on this year's performance and creating greater value for our stakeholders. As always, we face the next year with much optimism as we relentlessly pursue our goals to achieve further growth in our core businesses.
In behalf of the board of directors, we wish to take this opportunity to thank our clients for their faith and confidence in us, and our partners for being one with us in our vision and efforts to deliver the best value to our customers.
We also wish to thank management and employees for their zealous quest for excellence and continuous improvement. We look forward to your steadfast support in the coming years as your company navigates through challenges and exploits opportunities, while we wait for the demanding business conditions to ease.
Thank you for your continued trust.
Robert Coyiuto Jr.
Chairman and Chief Executive Officer
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