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The year 2012 may not have been the most flourishing of years for some health insurance companies around the globe, but data for the first quarter of 2013 looks promising for many of the world’s largest, most well-established medical insurance providers. Among those releasing encouraging figures, Cigna, AXA, Munich Health and Allianz, some of the biggest players in the industry are all showing healthy signs of growth.

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For those living in the Middle East, asthma and other respiratory problems continue to be a constant issue and topic of discussion. Statistics indicate that about 13% of adults and 25% of children in the United Arab Emirates suffer from a form of asthma. The World Asthma Foundation has released data suggesting that the number of people with asthma will increase by about 70% in the next 25 years in the region.

Some of the biggest factors contributing to these statistics are the annual sandstorms and the ongoing construction works taking place. The continuous construction in the area has created large amounts of dust and pollution in the air and PM10 levels, the measurement of small particles that can penetrate lungs and create respiratory problems, tend to be consistently high, often above the recommended level suggested by the World Health Organisation.

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The distribution of offshore International health plans to wealthy individuals in South America has been a successful and lucrative market for many decades. IHI Denmark in particular, had built a considerable amount of its success in this part of the world over the years. In 2012 however, a combination of location regulation and poor plan performance has resulted in most key offshore providers pulling out of Latin America.

Bupa and IHI Bupa, who had perhaps the biggest offshore portfolio in South America, have stopped selling offshore plans into the market. In 2004, Bupa took over the IHI portfolio after acquiring IHI Denmark. The insurer then went on to purchase US-based AMEDEX Insurance in 2005 which serviced 100,000 people in 42 countries throughout Latin America.

Bupa are now looking to push the Latin American product range, citing reasons for the change being driven by compliance requirements. Several countries in Latin America have raised the stakes as international insurers are now exposed to draconian punitive fines for selling health policies within their country without a license. These potential fines are measured in sizeable percentages of global revenue. Bupa’s response is understandable; as they try to fill the gap with onshore Bupa Latin America plans (Bupa LA is now available in Brazil once more). However, Globalsurance analysts believe that Bupa’s offshore plans were better value for money, and that clients can now find deals from local onshore providers who have become competitive. That said, clients in the region are sensitive to branding, and the Bupa brand remains strong, thereby enabling it to access a large part of the market.

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Globalsurance, with great excitement, can announce that as of November 1^st 2012, Allianz Worldwide Care individual premiums will increase by just 5 percent. This increase rate is all the more impressive when put into context with the 11 percent global average increase over the past 5 years across the Private Medical Insurance sector.

Despite bleak global economic outlooks and rising inflation, Allianz has remained successful in the iPMI sector and in the last five years their average increase has come in at only 8 percent as highlighted within Globalsurance’s latest Insurance Review.

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In a move that has caught agents and brokers off guard, Nordic Healthcare, a provider of international health insurance, has announced that it will cease sales of new individual policies in all but its core markets.  This means that, with immediate effect, Nordic will no longer be issuing new IPMI policies anywhere in the world except Europe, Singapore, Hong Kong, Thailand and Vietnam. The announcement deals mainly with individual clients, it is understood that corporate business will be assessed on a case by case basis. This announcement follows close on the heels of Nordic’s announcement earlier this year to pull out of South America.

Although Nordic will no longer be accepting new business in areas outside of the aforementioned countries, it insists that all existing policies will continue to be renewed and that customers with policies currently in force will not be affected in any way, a move that is warmly welcomed by clients and intermediaries. To date, Nordic has continued to treat its existing customers fairly and  continued to support them even after pulling out of selling new business in a particular market.

The move appears to be an attempt by Munich Re, the owners of Nordic, to make the Nordic Healthcare business more compliant. Historically many international private health insurance providers were prepared to sell a policy to an expatriate in almost any country, particularly to individuals. The nature of the business and associated regional regulation, means that insurers, mostly based and licensed in Europe, have been selling policies to client anywhere in the world in an uncompliant way. All insurers are regulated in their home country, but because international health insurance policies are aimed at non nationals and are sold by foreign brokers or insurance companies, they fall into a grey area (particularly individual policies) which makes it difficult for local regulators to exercise any oversight of their operations. Most regulators require an insurance company to have a local presence before it can sell insurance products to nationals, but it is not always worth the investment for an insurer to open a local office if the IPMI market in a particular country is very small, and in many countries the legal requirements to be registered as an insurance provider represent a large financial commitment.

In the past twelve months, many insurers have been making efforts to become regulated in key markets. Recent moves by Bupa and Allianz in China and Aetna in Singapore are early indicators of an industry wide shift taking place.

This drive to be more compliant  explains Nordic’s actions as far as most of Asia is concerned, withdrawing from poor or developing countries with very small expat populations will not affect Nordic’s balance sheet much. What is puzzling is that they have also stopped selling new policies in China and South America, some of the biggest emerging markets around. Nordic is the only European insurer to have made such a massive exodus, it has obviously deemed the risks high enough to justify pulling out of such potentially lucrative markets. Whether this move is reflective of internally motivating factors for Nordic Healthcare or whether it is more indicative of issues brewing in the wider IPMI market is difficult to tell.

It is possible that Munich Re will follow the lead of Bupa and launch a locally based IPMI product in China, where it is seeing 20% annual growth in its reinsurance business, and is clearing the way for a similar move by pulling Nordic’s operations from the region. It is hard to imagine Nordic have completely abandoned the region since China is such a valuable market for all types of insurance business. While there is bound to be more than regulatory pressure involved, right now, we can only speculate as to what is really happening, whilst keeping an eye out for more developments that are sure to follow soon.

In this article we will first present our findings of the premium increases and premium inflation rates in each region and country we studied, with specific insurance findings to be presented at the end. Overall our findings were that International Private Medical Insurance (iPMI) premium inflation was very high, at roughly 10.8 percent per year over a 5 year average. While variations exist between countries, the reality is that iPMI inflation rates were extremely consistent throughout the world. However, it is important to note that this is medical insurance premium inflation at the high end of the sector, and not necessarily with regards to the mass market.

Even presenting the argument that premium increases are fairly consistent on a global basis, there are some immediate outliers – Hong Kong, for example, runs at an iPMI premium inflation rate of roughly 13 percent per year, while Kenya’s premium inflation rate is approximately 9 percent per year. Although there is a difference in premium inflation rates between Hong Kong and Kenya, the difference is not overly substantial – as will be seen inside this report.

Globalsurance is pleased to reveal the results of our latest study on the international health insurance industry and rates of international medical insurance inflation around the world as of August 1^st 2012.

Using 7,916 data points from 8 different International Private Medical Insurance providers in 10 different countries, Globalsurance has been able to successfully identify a number of trends within Global Medical Inflation for individual International Private Medical Insurance (iPMI) plans during the time period from 2008 to 2012. iPMI is a subsector of the greater health insurance industry which services the global population of expatriates and international High Net-Worth individuals.

The companies sampled in the studies use Age and Geographical Area of Coverage as the main variables in their premium calculations. By selecting a sample which is community rated Globalsurance has been able to efficiently identify the actual rates for premium increases in different parts of the world. Our measure of inflation is based on a sample of policies, ages, and published rates for each insurer included in the study. Globalsurance selected the most common age groups and most common policy types for our data points to achieve realistic measurements in relation to medical insurance premium inflation around the world.

While individual insurance providers and underwriters may disagree with our findings, the figures represented in this report are based on our sample and present baseline figures for all of the regions and companies we chose to consider.

It is important to note that, unlike the recent Towers Watson Report on Medical Trends, the data contained in the Globalsurance insurance review is not survey based. Rather than looking at individual responses and feelings in reference to levels of health insurance premium inflation, which may have some inherent bias dependent on the respondent, Globalsurance is analyzing the actual premium data from insurance companies with exposure to the world at large, over locally based providers operating in a single country.

Additionally, we have analyzed premium data, and not healthcare pricing data. Consequently the figures represented in this report are indicative of the levels of healthcare cost inflation which insurance perceive to be in place in the locations we sampled; profit and operating costs of the individual insurers are assumed to be unchanged. While the increase or decrease in premium values may point to actual rates of medical inflation in the countries which were included in the study they do, in fact, represent the increased costs placed on policyholders.

However, it should be noted that, while the figures contained in this report are the actual rates of iPMI premium increases for the duration of the study, the removal of Age and Policy type means that the figures presented in this study of International Medical Insurance premium inflation can be used as a suitable proxy for rates of actual medical inflation in relation to healthcare costs around the world. It should be noted that the proxy does not represent medical inflation across the entire healthcare sector within a country or region; for example, NHS cost increases in the United Kingdom are not evident in our findings. The rates of iPMI premium inflation are only a proxy for healthcare costs in High-End, private medical facilities in the countries which we considered, due to the basic nature of the international medical insurance products we are studying.

So, without any further ado, here is the Globalsurance International Insurance Review:

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Bank Danamon Indonesia has announced that, in partnership with Asuransi Jiwa Manulife Indonesia, the bank will be offering new insurance and wealth management products.

The bancassurance deal, which is set to run for ten years, is a follow up of a partnership agreement between the two companies in October 2011. The agreement was to grow bancassurance in Indonesia, and has now come into effect a little under a year later.

Speaking about the new partnership, Alan Merten, the CEO and President of Manulife Indonesia was quoted as saying: “I am very pleased that the partnership between Danamon and Manulife is now officially launched! This is another significant step Manulife is taking towards realizing our vision to provide strong, reliable, trustworthy, and forward-thinking solutions to our customer’s most significant financial decisions.”

Read the rest of the Bank Danamon Indonesia Partners Up With Asuransi Jiwa Manulife Indonesia article.

The developing Green Energy Sector requires new products and increased funding from insurance companies in order to reach its full potential, say Mainstream Renewable Power Chief Accounting Officer Eimear Cahalin and Vestas Chief Specialist James Barry.

While some of the more prominent energy systems are sufficiently insured, such as wind and solar power, there have yet to be services to insure the less established technologies, as well as adapt to the growth of existing technologies.

Types of needed developments include multi-year products and weather derivatives, according to Cahalin. Currently, the biggest struggle for insurers regarding weather risk is to determine a proper balance between cost and level of risk transfer.

In broad terms, weather derivatives are a particular type of contract that insure renewable energy businesses against unfavorable weather conditions, which could potentially negatively affect production. For example, with wind and solar energy these conditions would primarily include wind speed and duration of sunshine respectively. A weather derivative product in the Solar energy sector, for example, would therefore offset risk of lowered solar energy production associated with periods of unduly cloudy weather.

Both traditional insurance and weather derivatives act to transfer risk in exchange for premium payment. However, traditional insurance entails high risk-low probability events, while weather derivatives entail low risk-high probability events.

Overall, Cahalin would like to see insurance companies create a “fund for innovation”, and invest in the renewable energy industry without expecting immediate return.

At the Green Power renewable energy risk-management conference she commended underwriters for the health and safety concerns introduced to the industry. Nevertheless, she pointed out that it would be great to see more innovation and products that cover losses during adverse conditions, with coverage paid back through premiums during favorable conditions.

Such services could be a potential solution to European investor’s, for example, reluctance to shoulder the high risks involved with renewable energy investment. In this way, insurance plays an essential role to both initiate successful financing for beginning stages of projects and protect future potential losses.

Besides a current lack of innovative products, many green energy companies have also been forced to shift their focus from banks to institutional funds (held by insurance companies) for financing, due to the erosion of banks’ financial strength resulting from the economic crisis. Institutional capital markets on the other hand, provide secure and long-term loans, generally spanning from 5 to 20 years, which is exactly the sort of investment up and coming renewable energy companies need.

James Barry, Chief Specialist at Danish wind turbine manufacturer Vestas, noted that in the United States they are beginning to use capital markets instead of the banking market to fund projects. Pension and life insurers investment funds are two potential sources of financing for renewable energy projects, because risks can be structured for these types of investors. However, if these funds are to invest in such projects, governments will have to provide some sort of financial security to them.

According to PricewaterhouseCoopers (PwC), many European insurance groups have already displayed interest in renewable energy projects.

Previously, the auction of energy firm E.ON’s gas transmission company, Open Grid Europe, attracted the likes of Germany-based Allianz and France-based CNP Assurances. The final acquisition, however, was made by a Macquarie Infrastructure and Real Assets (MIRA) association, which includes Munich Ergo Asset Management (MEAG). MEAG is the investment-management firm of reinsurance giant Munich Re and insurance group ERGO.

As the renewable energy industry continues to develop, insurers need to adapt their existing products, innovate, and look to invest in green technology. However, recent events like the Solyndra scandal have caused potential investors to rethink their current positions.

Controversy surrounding the scandal, in which the Obama administration approved a USD535 million loan to solar panel manufacturer Solyndra, is, of course, subject to debate, and much of it political.

But looking at the facts, it is evident that energy-loan guarantees are not a flop, the private market is under-investing in energy technology, and solar is not a “doomed industry”. The reasons are as follows: The U.S. Energy Department’s loan-guarantee supported close to USD38 billion in loans to 40 projects all over the country ever since its inception in 2005 – Solyndra is only 1.3% of the entire project, and so far is the only investment that has failed; an American Energy Innovation Council’s (AEIC) report resolves that “Energy innovation should be a higher national priority,” and also encouraged increased public spending for “all aspects of the innovation process.”; and finally, one year ago an Ernst & Young report indicated that within a decade, cost-competitive, commercialized solar power could emerge – not to mention ever improving solar storage technologies (molten salt storage) and a projected 24 Gigawatts worth of operations underway in the United States.

While PwC stated, quite correctly, that renewable energy assets are “stable, long-term and predictable returns,” especially in a time of poor interest rates and investment ambiguity, a change in attitude of institutional investors towards the growing industry is crucial if it is to move forward.

Insurance Companies Mentioned

Allianz

Allianz is a leading financial service provider worldwide. It maintains its leading position in the German market and strong international presence as an insurer through its 142,000 employees worldwide, and 78 million customers in over 70 countries.

CNP Assurances
CNP has lead France in personal insurance since 1991 with over 150 years experience. It strives to provide each of its 24 million customers high quality services to protect them against risk.

Munich Re
Munich Re offers all lines of insurance with roughly 47,000 employees globally. The company centers itself around a business model that comprises of three key aspects – Reinsurance, primary insurance, and Munich Health.

ERGO
ERGO is one of the largest insurance groups in Germany and Europe. With focus in Europe and Asia, ERGO still has representation in over 30 countries internationally. ERGO is a part of reinsurance giant Munich Re.

Despite many other European insurers straying away from traditional guaranteed-return saving insurance policies, Allianz Leben’s, the company’s German insurance unit, chief executive, Markus Faulhaber said that the company remained committed to traditional life insurance plans that offer guaranteed returns to holders. Speaking to the Financial Times Deustchland, Faulhaber said that “the criticism of the life insurance policy based on the traditional backup capacity is unjustified.”

Faulhaber’s comments come on the back of the European Insurance and Occupational Pensions Authority (EIOPA) releasing their biannual financial stability report. The report surveyed 20 of Europe’s biggest insurers and revealed that premiums from ‘traditional’ life insurance products fell by ten percent in 2011.

All of this comes at a time where European life insurance firms are experiencing incredibly low interest rates. In previous years, interest rate guarantees on contracts were, on average, 3.3 percent higher than they are now. Due to these low interest rates in the capital market combined with tough new capital rules, many insurers are finding it harder to make enough to cover the guaranteed payments they owe to their clients.

While remaining supportive of traditional methods, Faulhaber did admit that Allianz’s life insurance unit is testing out new products slated to be released in mid-2013. While not divulging any specifics, Faulhaber did mention offering levels of guarantee that the client would be able to adjust at different points during the policy’s life span was a possibility. Speaking on the idea, he said that it would “be very attractive to a customer who expects that in 20 or 30 years interest rates, including the guaranteed interest rate, will be higher than they are today.”

In spite of the financial climate, Faulhaber believes Allianz are in a relatively strong position thanks to its “financial strength and low administrative costs” While Allianz’s competitors are spending approximately 2 to 3 percent on administrative costs, he stated that the German company was only spending 1.1 percent.

Throughout the past five years, Allianz Leben’s market share has increased from 16.3 to 17.5 percent and despite low interest rates and challenging times, Faulhaber remains adamant that the company can “meet all the guarantees for our customers.”

While revealing the decline of the traditional insurance premium, the EIOPA report showed that premiums from Unit Linked Insurance Plans (ULIPs), where the client holds the investment risk, have risen by three percent. It also reported that the average solvency ratio, basically a measure of capital strength, reduced from 211 percent in 2010 to 199 percent in 2011. The EIOPA concluded from the report that “the relatively positive development of insurers experienced in recent years has started to reverse.”

Low interest rates and solvency ratios aren’t the only things that have European life insurers concerned. The Solvency II proposal currently making its way through the European Parliament is causing many, including Faulhaber some worry. Claiming that the “currently proposed rules are not sufficient”, he went on to say that “unless it is substantially changed, Solvency II will lead to very strong swings up and down in the capital needs of life insurers.”

Insurance Firms Mentioned

Allianz

German company, Allianz are the world’s 12th largest financial services group in the world. Formed in 1891 it specializes in insurance but also deals with other financial services.

European insurance markets are looking increasingly bleak amid news of UK health insurance premiums climbing by 10 percent, and fears of expat health insurance premiums doubling in Greece. The bad news in the Euro Zone’s health insurance market comes at the same time European life insurers are nervously awaiting the outcome of the Solvency II proposal’s passage through the European Parliament. The proposal, which has been ten years in the making, has been designed to ensure insurers have capital reserves proportional to the risks underwritten.

The unprecedented rise in health insurance premiums, specifically in the UK, has left both insurers and their customers worried. In an effort to stop the 10 percent price increases that have been seen in the past couple of years, international health insurers have been trying to reduce costs by pinpointing where they’ve been going wrong. William Russell, an international insurance firm based in the UK, has pointed the finger at surgeons who it claims have radically varying surgical prices.

The firm mentioned an example where a surgeon in Hong Kong requested US$42,000 to perform a knee replacement operation. According to Nichola Duncan, the company’s international claims manager, “We contacted three other well-known surgeons locally and the average fee was US$24,000.” In light of the hike in prices, a number of insurance firms, including William Russell have implored their customers to contact their insurer prior to treatment to ensure that the client will not have to personally foot the bill. Other reasons that have been stated for the increasing cost of premiums has been fraud, over diagnosis and unnecessary medical treatment.

The bad news in the UK comes at time where British nationals living in Spain and Greece are returning home due to the huge economic problems in both Euro Zone stragglers. One of the biggest potential problems that expats are facing is the prospect of their health insurance doubling if Greece decides to leave the Euro Zone. Their worries are centered around the possibility that if a Greek exit, or Grexit , occurs, hospitals may not reduce their prices. Despite their fears, prominent insurance firms such as AXA are confident that if Greece ditches the Euro for the Drachma, hospitals will reduce their costs. Kevin Melton, AXA international’s sales and marketing director admitted that “Premiums will be expensive” but “the cost of claims should be lower because hospitals services will be cheaper.” However, even if hospitals cut their prices, it is very likely that premium rates will still rise, as expats with international cover would rack up claims beyond the Greek border.

The economic problems in Greece are not only proving harmful to expatriates living in the country, but also to visitors holding the European Health Insurance Card (EHIC). The premise of the EHIC is that an individual holding the card has access to the same amount of public health care than a citizen of the EU country the person is visiting. In the past, many have used the EHIC as their main source of travel insurance while traveling in and around Europe. Due to the immense problems that the public hospitals are having in Greece, they no longer have the resources to deal with foreigners holding an EHIC. This means that even if one has an EHIC card, they are no longer guaranteed healthcare and may end up having to pay for expensive private care out of their own pocket. With the EHIC proving to be ineffective in many cases, the need for proper travel insurance has become greater.

The new ineffectiveness of the EHIC in Greece is part of a growing trend of European countries becoming increasingly cagey about other European nationals using their public health services for nothing. The first country that clamped down on this was France. In 2008, former President Nicholas Sarkozy enacted a law where by non-French non-working individuals under retirement age were made to buy private medical insurance and were no longer allowed to use France’s public health system for ‘free’.

As more and more European countries lose money it seems that they are becoming increasingly stingy about their own healthcare systems and following suit. Soon after France enacted their laws, Spain created similar ones, and while the Greeks didn’t exactly intend to cut expatriates out of their public healthcare system they too have effectively done the same. Those who support these moves argue that it was wrong that expats were getting the benefits of a system that they had not contributed to and that cards such as the EHIC were being abused.

The British have now caught on to the general trend and are pressing their government to make it compulsory for foreign nationals to have health insurance to ensure that the NHS doesn’t become a free treatment ticket and that Briton’s have first priority.

While the health and travel insurance markets ride waves of uncertainty, European life insurance firms are keeping their eyes firmly focused on the outcome of the Solvency II proposal. The proposal is intended to protect insurance companies in case of another crippling financial crisis. As the proposal progresses through the European Parliament in Brussels, German insurance companies such as Allianz and Munich Re, as well as many others, have all expressed an interest in implementing a phase-in process for Solvency II as it is claimed that 40 percent of German companies would have problems complying with the new regulations. They claim an immediate introduction of the Solvency II legislation would be detrimental as they would not have enough time to adjust to the stricter measures and a sudden hike in capital reserves.

Most companies use discount rates based on asset yield to calculate technical provision, and according to Karen van Hulle, the European Commission’s Head of Pension and Insurance, the phase in would allow companies to gradually move towards the risk free discount rate that Solvency II requires.

Insurance Companies Mentioned

William Russell

British firm, William Russell, was founded in 1992 and is an international insurance provider that specializes in health, life and disability insurance.

Axa

AXA is a French insurance firm based in Paris, France. Ranking in as the ninth largest company in the world, AXA specializes in life, health and other forms of insurance.

Allianz

German company, Allianz are the world’s 12^th largest financial services group in the world. Formed in 1891 it specializes in insurance but also deals with other financial services.

The Allianz Group has a rich history dating back to 1890 and prides itself on being able to offer solutions in insurance, banking and asset management areas. Insurance wise, Allianz thrives in Europe and has especially excelled itself in the German market. 2012 has started off in a positive direction for the company and CEO Michael Diekmann sees this trend continuing for the rest of the year.

On May 15^th, Allianz was able to confirm their total profit target of 11.1 billion US dollars (8.7 billion euros) for the end of the year, after results from their first quarter net income showed a profit increase of at least 53%.
Almost all regions have assisted Allianz in this growth but the Australian and Asian-pacific sectors in particular have performed significantly well so far. All three components that make up the Allianz group have contributed to this increase but it is in the insurance sector where such increases are most noticeable and are enabling the company to stay on track towards reaching their set target.

In terms of shares, since December 31^st 2011, Shareholders’ equity reported a growth of 7.4% meaning an increase from 58.2 billion US (44.915 billion Euros) to 61.4 billion US dollars (48.245 billion Euros). Furthermore, as of last week, Allianz will now be welcomed to list their stock on the Chinese markets and thus continue their growth across Asia.

It appears Allianz are benefiting from the impact of the many natural disasters that occurred last year and have been able to push higher prices for coverage in property and casualty insurance – an area of high importance when profit is concerned. The company’s CFO Oliver Baete reported that as the impacts of natural catastrophes appear to be increasing in frequency and damage, Allianz has increased their budget for 2012 as a response.
Aon Benfield, the world’s biggest reinsurance broker has estimated that so far, natural disasters have cost insurers and reinsurers less than US$ 3 billion in losses, an almost insignificant figure when compared to the staggering US$ 53 billion the previous year.

2011 definitely deserves the title of most costly year on record with earthquakes, tsunamis, floods and tornadoes all making for a very difficult time for the entire insurance industry. This time last year, both the New Zealand and Japan earthquake with its tsunami aftermath had already struck massive blows to the insurance industry and contributed to a massive total of 60 billion US-dollars in losses.

By contrast, 2012 has experienced a lesser impact from natural catastrophes and as a result, Allianz has shown significant improvement in Property and Casualty as well as Life and Health insurance with a 50% increase in net income. This has enabled the company to reach their second-highest revenue level in history and brought in an impressive figure of 38.3 US dollars (30.1 billion euros) compared to 38 billion US dollars (29.9 billion) the same time last year.

Of course natural disasters are not the company’s only concern. Volatile Markets continue to decrease interest rates and the sovereign debt crisis remains an ongoing issue but Allianz prioritises the monitoring and analyzing of such challenges and believes they can continue to expect an operating profit of 8.2 billion euros to ensure a profitable growth.

Allianz has clearly managed to keep their head above water even when faced with disasters of huge proportions and their confident solutions in times of crisis are amongst the number of factors enabling them to stay ahead of their European competition.

Expatriate employees around the world will soon have access to a new highly-flexible international health insurance product. Allianz Worldwide Care and Pacific Prime Insurance Brokers have teamed up to develop a brand new ‘Dormancy’ policy option, which for the first time will enable Allianz international health insurance policyholders to freeze their individually funded health cover whilst they are enrolled in a separate employer provided company medical insurance policy. These same policyholders will then be given the ability to reactivate their policy at a later date, if they so choose, with no further medical underwriting required. In addition to ensuring continuing coverage over a long period of time, any adverse health conditions the policyholder may have developed while their health insurance plan was paused will be fully covered, up to the existing policy limits, once their plan is reactivated.

The Dormancy option was created by Allianz Worldwide Care in collaboration with Pacific Prime Insurance Brokers and is now exclusively available to Pacific Prime customers in the Asia-Pacific region.

This news is a particularly welcome development for expatriates as it provides a safety net for a highly-mobile community in terms of their future employment and healthcare situations. Compared to a more conventional local workforce, the average expatriate is expected to cycle between three to four jobs every 15 years. As most expatriate employees are offered international medical protection through their company while on assignment overseas, this frequent upheaval from employer to employer can pose significant problems to international families who are looking for a consistent level of health insurance benefits on a globally competitive basis. Previously, if an employee left a company providing them health insurance, their cover would cease soon thereafter, leaving them without medical cover and searching once again for a comprehensive expatriate medical insurance policy. This search for a replacement or stop-gap health insurance plan could often pose its own problems, especially if the expatriate employee developed any medical conditions while enrolled on their previous employer’s health coverage. Traditionally, if an expatriate employee developed any serious medical condition under a former employer’s plan, like cancer or diabetes for instance, any new health insurance policy they obtained going forward would classify these events as ‘pre-existing conditions,’ and would consequently not be covered.

Now, with the introduction of a new Dormancy health insurance option, Allianz World Wide Care members no longer have to sacrifice their individual coverage when moving between employer-provided health insurance or, if indeed, they are forced to join a national healthcare scheme while stationed in certain countries overseas. For only 30 percent of their full annual premium, applied on a pro-rata basis, policyholders can park their customized health insurance benefit scheme for up to 5 consecutive years while they receive medical cover through an employer.

The dormancy option ensures that, in the event the expatriate client leaves their company, for whatever reason, they will not have to reapply for health insurance protection but can instead just reactivate their existing, dormant Allianz Worldwide Care policy. During the dormancy period, the policy remains in force but all medical treatment taking place will not be eligible for reimbursement by Allianz. When the policy is reactivated no additional medical underwriting will applied unless a higher level of cover has been selected going forward.

Perhaps most importantly for Allianz Worldwide Care health insurance policyholders, any chronic medical conditions which developed while their plan was suspended will be fully covered once again upon reactivation, subject to the policy’s original terms and conditions. This clause looks to address any long term concerns policyholders might have about how ongoing medical conditions or adverse family healthcare history may effect their treatment options going forward. Prior to the development of the dormancy option by Allianz and Pacific Prime Insurance Brokers Co. Ltd, employees who left a company medical insurance plan with documented health issues would find their coverage options severely restricted afterwards.

The chances of an employee receiving coverage for a serious medical condition under an individual or family health insurance plan after their move is traditionally quite low without added riders, such as an exclusion of the condition or a moratorium period. This industry-wide occurrence had been particularly cruel on older expatriate clients, who are both more prone to developing these chronic conditions and, thanks to their experience and senior career positions, more likely to pursue varied job opportunities abroad as well. Many of these more globally-mobile employees were thus often reduced to holding multiple health insurance plans over the course of their careers to cover for each specific change in employment and medical condition overseas. Allianz now can offer a substantial long-term commitment benefit to clients with their Dormancy health insurance option. Expatriate clients can now hold onto a single international health insurance policy for the duration of their working life overseas if they want to. Whether this option and the peace of mind it can bring proves popular with Allianz policyholders of course now remains to be seen.

The introduction of this innovative new insurance option comes on the back of a particularly productive year for the Allianz Group. According to their year end financial report released this past week, the international insurance giant achieved its underlying operating profit targets for 2011 in the face of volatile financial market challenges, stubbornly low interest rates and an unusually high level of natural catastrophe losses. The company’s health and life insurance operations have been a particular highlight, achieving€52.9 billion (US$71.1 billion) in statutory premiums in a challenging market environment, the second highest level recorded in company history. The value of their new health and life insurance business meanwhile grew to €940 million (US$1.26 billion) in 2011. The insurer could be set to build upon this strong growth momentum into 2012 if their innovative new international health insurance products, like the dormancy option, prove a success.

Insurance Companies Mentioned

Allianz Worldwide Care

Allianz Worldwide Care is the specialized international health insurance arm of the Allianz Group. Founded in 2000, Allianz Worldwide Care works to provide competitive health insurance products to expatriate clients and their families all around the world. Headquartered in Ireland, Allianz Worldwide Care now has regional offices in Africa, the Middle East, Europe, and Asia. This robust network provides clients with the most comprehensive support network available.

Pacific Prime Insurance Brokers Co. Ltd

Founded in 1999, Pacific Prime is a leading global international health insurance intermediary with over 60,000 clients worldwide. Pacific Prime works with over 60 prominent international insurance companies out of it’s offices offices in Hong Kong, Shanghai and Singapore to offer a wide variety of health care plans and travel insurance policies to clients – with medical benefit packages including dental, maternity, inpatient, outpatient, specialist consultation services, and many more.

As medical services grow more and more costly around the world, international private medical insurance providers are trying to ensure that their policies provide good value for money while maintaining high levels of benefits.

In many countries, including such places as the US and the UK, the cost of medical services has been rising throughout recent years. In the US, the S&P Healthcare Economic Composite index showed an annual growth rate of 5.11 percent for the fiscal year that ended in October, outstripping the 4.74 annual growth rate reported in September by a significant margin. S&P’s Healthcare Commercial Index, which takes into account only healthcare costs covered by commercial insurance, saw its fourth consecutive month of rising annual growth rates to arrive at 6.91 percent for the year ended October.

Across the pond in the UK, there are similar stories with healthcare company Bupa releasing a study that predicts the costs of cancer treatment will rise steadily in the future. The report Cancer Diagnosis and Treatment: A 2021 Perspective was aimed at trying to make predictions about the cost of treating cancer over the next 10 years. The results estimated that the cost of treating cancer will rise by approximately 62 percent, meaning that while cancer treatment for someone in 2010 may cost on average around £30,000 (US$46,487), it will cost £40,000 (US$62,007) on average by 2021.

With premium costs over the last decade being pushed up by almost 10 percent a year due to medical inflation, insurers globally are recognizing that while everyone may like policies with extraordinary benefits, cost is a point of consideration for many. As 2011 comes to an end, some international health insurance companies are beginning to introduce changes to services or flexibilities to payment structure and cost-sharing to ensure that customers get value for money while maintaining high levels of benefits.

International private medical insurance provider, MediCare International, has introduced new excess structures that clients may select if they so choose that give policy discounts of up to 50 percent. The new options allow for four levels of excesses, offering discounts that range from 10 percent, 20 percent, 35 percent and all the way to 50 percent depending on the selected size of co-payment.

Another company that is reevaluating their products is Allianz Worldwide Care, which has revealed that it is trailing a new system of medical evacuation. Typically, if a policyholder finds themselves in a situation which necessitates medical evacuation, they are put on an air ambulance and either transferred back to their home country, or to the nearest center of medical excellence, depending on the particulars of the policy. The new option for transport will transport medically stable policyholders on commercial flights while they are accompanied by one of Allianz’s own doctors.

Allianz Wordlwide Care’s Medical Director, Dr. Ulriche Sucher, explained that “Many of our corporate clients have employees working in remote regions within Eastern Europe, Asia, Africa and Latin America, where sparse medical facilities means a greater reliance on evacuation services following a medical emergency. Plus, advancements in medical treatments and medical specialism in specific countries means that sometimes patients need to be brought to another country to receive the care that they need. Added to this is the increase in natural disasters such as storms, earthquakes and floods which can result in people needing medical treatment at a time when the closest medical facilities may have been damaged,”

While air ambulances will still be used in cases where the policyholder is in an emergency situation which requires emergency evacuation to the nearest quality medical facility, the new medical escort service is expected to bring large cost savings with it, especially for large corporate clients. The service is expected to be introduced after a 12 month trial proves successful.

Companies Mentioned

Allianz

Allianz Group is one of the leading global services providers in insurance and asset management. With a worldwide network of 153,000 employees, the Allianz Group serves 75 million customers in over 70 countries. Allianz offers a wide variety of insurance products to both private and corporate customers, including motor, accident, general liability, fire and property, legal expenses, credit and travel insurance. Allianz provides life and health insurance products on individual and group basis. Allianz is the market leader in the German market and has a strong international presence in insurance.

MediCare International

With 25 years of providing expatriates top quality international health insurance, Medicare International has grown by ensuring quick and easy access to their services 24 hours a day. The company currently covers clients from 86 nationalities in 114 countries around the world.

German insurance giant Allianz SE has decided to withdraw from the Japanese life insurance market, effective from next year, in a bid to refocus on more profitable ventures elsewhere. From January 1, 2012 onwards, Europe’s largest insurer will halt the sale of new life insurance policies in Japan and focus only on managing existing contracts in the country.

In a statement released September 30, Allianz outlined its plans to terminate life insurance sales in Japan by year-end. The company reassured all existing policyholders in Japan that their service contracts would remain intact for the duration of their tenure. “There will be no changes for customers that hold an existing contract with Allianz Life Japan. Allianz Life Japan will fulfill all contractual agreements and continue to provide services for all existing insurance products,” the news statement read, adding that the company remained in a strong enough capital position to honor all outstanding obligations. Allianz’s five other units in Japan, including Allianz Fire & Marine Insurance Japan Ltd, will continue to operate as before, the company said.

Read the full article here.

New figures released this month by Malaysia’s insurance authorities have provided ample evidence of the country’s continued development into one of Asia’s most promising general insurance markets.

Malaysia’s economy grew at 7.2 percent last year, the highest rate experienced since the year 2000. The Malaysian government has continued to aggressively pursue substantial investment programs with the explicit goals of doubling GDP per-capita and turning Malaysia into a high income country by 2020. New parliamentary initiatives such as the New Economic Model (NEM), Economic Transformation Program (ETP) and the Tenth Malaysian Plan will, according to industry analysts, eventually contribute to a growth in demand for insurance products and services. However, despite these initiatives, the insurance industry in Malaysia currently faces numerous challenges as customers tighten their belts and become more skeptical toward the importance of protecting assets through insurance. The industry believes that general insurance agents must now play a greater role in order to weather the volatile economic and financial challenges.

In response to these challenges, the Malaysian Insurance Institute (MII), one of the country’s three insurance associations, organized the General Insurance Agents Convention for all general insurance agents in Malaysia on September 13, 2011 in Kuala Lumpur. The event was attended by 500 participants and encouraged discussion amongst industry professionals about how to best address the issues facing Malaysia’s emerging general insurance market going forward.

Speaking at the conference, Khadijah Abdullah, MII Chief Executive Officer, revealed that Malaysia’s general insurance agency force is projected to grow by over a quarter this year, up from the roughly 35,000 registered agents active in the country in 2010. This promising forecast is based on new MII data, which showed than an average of 800 new candidates per month had taken the insurance agents exam during the first half of the year. Not only are more Malaysian citizens realizing the importance of adequate insurance coverage, many are clearly now looking to the industry for employment opportunities. “A career as a general insurance agent is still attractive and very much sought after,” Khadijah Abdullah told convention attendees.

An increased agency force is vital to the future development of the Malaysian general insurance sector. Together with bancassurance, agents remain the most effective distribution platform for insurers in the Asia Pacific country. According to the General Insurance Association of Malaysia (PIAM), total general insurance gross premium amounted to MYR13 billion (US$4.1 billion) in 2010, of which agents contributed MYR7.4 billion (US$2.35 billion). In lieu of more technologically advanced distribution and promotion platforms, more agents will continue to be required throughout Malaysia as demand for insurance solutions escalates.

The changes in consumer attitude towards insurance in the Asia Pacific region have become more readily apparent. A new study released last week by ING Insurance Berhad showed that 83 percent of all Malaysian consumers believe that there is now a much greater need to protect their lifestyles now than compared to just 12 months ago. Rising healthcare costs and lifestyle expectations has enabled the attitude towards and awareness of insurance to change very quickly. Overall, the rise in income, healthcare, education and housing opportunities across most of Asia, have given families in the region greater access to a lifestyle they would now like to protect.

As the insurance industry continues to develop in Malaysia more regulatory measures are expected in the near future to update the market and more closely match international standards. For example, The Malaysian Central Bank (BNM) has recently come out with revised guidelines on motor insurance, aimed at curbing fraud and ensuring consumers understand the appropriate market value of their motor vehicle when applying for comprehensive coverage. The new measures came into effect on August 1st 2011 and have already worked to address many grievances in the motor insurance sector. In addition, Malaysia’s government has committed to the gradual financial liberalization of its Islamic finance sector and plans are also underway to introduce compulsory travel insurance cover for all Malaysians flying overseas by year’s end.

The MII advised that while these measures could do much to improve insurance awareness and coverage in Malaysia, their goals will not be realized without an adequately trained agency force, and this will take time and resources to achieve. “This requires the agents to have an in-depth knowledge and ability to advise their clients,” Khadijah Abdullah said, adding that further collective action would need to be taken to ensure best business practices are consistently maintained in Malaysia’s general insurance market “As an industry as a whole, we are driving higher professionalism as well as quality standards and in this respect, all stakeholders have to work together to achieve aims and objective.”

While both the numbers of agents and clients in the general insurance market are poised to grow, premium levels, with the exception of government subsidized motor and fire insurance lines, are expected to remain relatively stable due to intense competition amongst both domestic and foreign insurance players in the country. Malaysia has already proven to be an attractive location for several of the world’s most prominent insurers and they are bringing their expertise to the country to great effect. Prudential Assurance Malaysia Bhd (PAMB), a local joint-venture operation with the UK’s largest insurer by market value, posted a 13 percent increase in new business sales in the first half of 2011 and are now confident of surpassing last year’s totals. Indeed, Prudential now believes that the strength of its Asian business will continue to protect the insurer against the worst of another potential financial crisis in the West. These same sentiments were echoed earlier in the year by Allianz, who are themselves undertaking numerous initiatives to improve their distribution capabilities in the region.

Companies Mentioned

Allianz

Allianz Group is one of the leading global services providers in insurance and asset management. With a worldwide network of 153,000 employees, the Allianz Group serves 75 million customers in over 70 countries. Allianz offers a wide variety of insurance products to both private and corporate customers, including motor, accident, general liability, fire and property, legal expenses, credit and travel insurance. Allianz provides life and health insurance products on individual and group basis. Allianz is the market leader in the German market and has a strong international presence in insurance.

Prudential

Prudential has been in the insurance and financial services business since 1848. Today they operate throughout the UK, US and Asia offering international health insurance and retirement planning services, supported by 27,000 employees worldwide.

ING

ING provides banking, investments, life insurance and retirement services and operates in more than 50 countries. It serves more than 85 million private, corporate and institutional customers in Europe, North and Latin America, Asia and Australia.

Bank Negara Malaysia

Bank Negara Malaysia is Malaysia’s central bank, tasked with overseeing the nation’s economic and financial systems.

Nippon Life Insurance Company, Japan’s largest life insurer by revenue, has announced plans to expand overseas and invest €500 million (US$725 million) in a unit of Allianz SE, with the transaction expected to close later in the week. This deal marks the Japanese company’s first investment in a European peer, and it is also the first time that the German insurance giant has issued contingent capital through 30-year convertible bonds, an asset class known commonly as cocos.

The purchased Allianz subordinated bonds can be converted into equity within 10 years (and under certain undisclosed conditions apparently even earlier), which would give Nippon Life between a 1.5 to 2 percent stake in the German insurer. Nippon Life also has a venture with Schroeder’s of the United Kingdom, but this would be its first direct investment into a company in Europe.

Speaking on the deal, Nippon Life president, Yoshinobu Tsutsui, told reporters that the transaction was part of Nippon Life’s long-term business strategy to establish more robust overseas alliances as the traditional Japanese life market shrinks: “The objective of this investment is to establish a long-term partnership that is mutually beneficial for both companies,” Mr. Tsutsui said, adding “We are very pleased to have the opportunity to strengthen our relationship with Allianz, which shares similar values and beliefs with Nippon Life regarding the insurance business.”

This considerable acquisition reflects the pressing need for all Japanese insurers to search out alternative sources for growth and extend international operations, given the limited prospects in their domestic market due to both saturation and an aging population. The currency exchange rate would particularly favor acquisition activity in Europe, where the Euro has fallen against the yen by 30 percent since 2007. Despite these market conditions, consolidation efforts in Japan’s life insurance sector have remained relatively slow because most insurers are structured as mutual companies, and can thus be overtly conservative as they are owned, and held accountable, by domestic policyholders

Nippon Life has long recognized the need to generate new premium income outside their home market and have been involved with a series of overseas acquisitions in the past few years. In March, the Japanese insurer agreed to purchase a 26 percent stake in India’s Reliance Life Insurance, a unit of Reliance ADA Group, for US$680 million, which still represents the most significant foreign direct investment in the Indian insurance industry. This followed a period of interest in US-based companies, which included a US$250 million investment in Northwestern Mutual Life Insurance Co. last year, and a US$500 million venture in a Prudential Financial Inc unit in 2009.

Of Nippon Life’s Japanese life insurance rivals, only Dai-ichi Life Insurance have demonstrated similar ambitious expansion plans, recently acquiring a controlling stake in Tower Australian for US$1.2 billion in a move to gain access to the Australian life insurance market. Dai-Ichi has also invested in several emerging Asian markets, including a competitor in India. Non-life insurers from Japan have also been actively expanding their global reach. Last year, MS&AD Insurance Group acquired a 30 percent holding in Malaysia-based Hong Leong Assurance Bhd. and NKSJ Holdings acquired a majority stake in Fiba Sigorta Anonim Sirketi in Turkey, both for about US$35 million (¥27 billion).

For Allianz, the successful sale of €500 million worth of 30-year convertible subordinated notes to Nippon Life will enable the insurer to better prepare itself for the upcoming Solvency II rules, which will require EU-based insurers to hold more capital to match outstanding risks by 2014. Cocos, bonds that can be converted into equity pending pre-approved financial circumstances, are now becoming increasingly popular because they enable the issuers to raise capital reserves and benefit from a better solvency ratio without necessarily forfeiting equity. Michael Diekmann, CEO of Allianz, lauded the insurer’s deal with Nippon Life as a forward thinking move for the company: “With this transaction, we are among the first companies to participate in the growing market for contingent convertible notes,” he said in a statement. More insurers may soon test this new asset class.

Despite ongoing concerns about the economic future of the Euro zone and a fresh €300 million commitment to a second Greek rescue, Allianz Group, as a whole has continued to grow following its sound 2010 performance figures. The financial services conglomerate reported in February that annual net income for Allianz in 2010 had increased by 22.4 percent to total €5.2 billion (US$ 6.94 billion), with revenues reaching €106 billion (US$ 151 billion) and total assets under management of €1518 billion (US$ 2.17 trillion), cumulatively representing the best figures in the 120 year history of Allianz. The company has maintained itself at the forefront of the international insurance and worldwide asset management industry while looking towards mitigating policyholder risks and exploring new opportunities, despite operating in a difficult global economic environment.

While investment from Japan is welcome, other Asian countries have become pivotal markets for European-based international insurers to enter into themselves. Allianz Group has established a presence in several key emerging Asian economies through joint ventures including: Bajaj Allianz in India, Allianz China Life, PT Asuransi Allianz Utama in Indonesia, Ayudhya Allianz in Thailand and most recently, Allianz Lanka in Sri Lanka. These operations give The Allianz Group prime access to the rapidly developing Asian markets that are driving, in particular, the demand for protection, savings and investment products as the wealth of the substantial populations in these nations grow further.

Insurance Companies Mentioned

Nippon Life Insurance

Nippon Life Insurance – Japan Nippon Life Insurance Company was established in 1889 in Japan and through its subsidiaries offers various life and non life insurance products and services. Nippon Life operates in North America, Europe, Oceania, Asia, Central and South America, and the Middle East.

Allianz

Allianz Group is one of the leading global services providers in insurance and asset management. With approximately 153,000 employees worldwide, the Allianz Group serves approximately 75 million customers in about 70 countries. On the insurance side, Allianz is the market leader in the German market and has a strong international presence.

Reliance Life Insurance

Indian life insurance company, Reliance Life Insurance, is an associate company of Reliance Capital. Reliance Capital is one of India’s top 3 financial services companies by net worth. Both Reliance Life Insurance and Reliance Capital are part of the Reliance – Anil Dhirubhai Ambani Group.

Dai-Ichi Life Insurance

Dai-Ichi Life Insurance Company was founded in Tokyo in 1902 and operates in the life insurance market in Japan and overseas. Dai-Ichi Life offers whole life, term insurance, annuities and endowment products. The insurer has operations in Asia, Europe and North America offering saving and protection products for individuals and groups.

Allianz Lanka Ltd., a wholly-owned Sri Lankan subsidiary of financial services conglomerate Allianz Group of Germany, has posted good results for its 2010 operations. The new annual report details the company’s substantial growth in both the life and general insurance trade on the island nation despite being the only Sri Lankan insurer currently without a captive insurance business.

The Sri Lankan economy has become one the fastest growing markets in Southern Asia. Since the end of the protracted civil war in 2009, the country has emerged as an attractive prospect for outside investment. The government of Sri Lanka has been working hard to develop the domestic economy. Per capita income has been steadily rising and the reported GDP of the nation grew to US$ 104.7 billion for 2010. The South Asian country has entered a period of pronounced stability and is now well positioned for further growth.

The insurance industry in Sri Lanka has been improving steadily despite the global economic downturn. Out of the 18 private insurance companies operating in Sri Lanka, 5 are presently involved in foreign joint ventures. Allianz Insurance Company Lanka Ltd. is a wholly owned subsidiary of Allianz Group of Germany. Other joint venture insurance companies operating in Sri Lanka include Aviva NDB, formerly known as Eagle Insurance PLC, Life Insurance Corporation (Lanka) Ltd., and Hayleys AIG, of which the major shareholders are Aviva, the Life Insurance Corporation of India Ltd., and AIG respectively. Takaful Malaysia holds a 15 percent equity sharing in Amana Takaful PLC.

Surekha Alles, CEO and Director for Allianz Lanka confirmed that Sri Lanka was becoming an attractive market for insurers: “The optimism that followed the cessation of hostilities in the country created a healthy environment for growth in insurance business. We are very pleased with the performance of both our General Insurance as well as Life companies, having surpassed our plan in all areas.”

Allianz Lanka began its general insurance business in Sri Lanka in 2005. Incorporating the robust global presence and solid capitalization of the Allianz group, together with a strong regional management team with expertise on the Sri Lankan market has enabled Allianz Lanka to become one of the fastest growing insurers in the country. In 2009, Allianz Lanka became the first local insurer to achieve LKR 1 billion (US$ 9.06 million) in premium income within the first 5 years of operation. For 2010, a year that saw a substantial increase in claims due to adverse weather conditions on the island, gross written premium for general insurance increased 25% to LKR 1.47 billion (US$ 13.3 million) and underwriting profit doubled from 2009’s results to LKR 126 million (US$ 1.14 million). Net assets grew 39% and pretax profit for general insurance was a reported LKR 221 million (US$ 2 million), a 40% growth over 2009’s figures.

Allianz Lanka’s success in the general insurance business in Sri Lanka prompted the company to expand its investment portfolio and enter the life insurance market. In July 2008 the company received certification from the Insurance Board of Sri Lanka to begin providing life insurance products. In the two years since beginning operations, the insurer has likewise achieved remarkable growth in the life insurance sector, with the amount in gross written premiums doubling in 2010 to LKR 205 million (US$ 1.86 million). The successful performance and proactive investment strategy executed by Allianz Lanka’s life insurance division has enabled the company to provide participating life insurance policyholders with a 14 percent dividend yield, which was the largest dividend declared in the Sri Lankan insurance industry for 2010.

Allianz Lanka is currently the only insurer in Sri Lanka that is appropriately structured to meet upcoming insurance industry regulatory requirements that mandate the maintenance of separate businesses for domestic life and non-life insurance operations.

The current penetration rate for insurance services in the Sri Lankan market is low at around 10 percent of the populace. Through an expansive promotion strategy, leveraging Allianz as a renowned global brand, the company has been gaining momentum and has become one of the most recognized insurers on the island. Surekha Alles explains: “Word of mouth has been Allianz Lanka’s main marketing tool, and we will continue to ensure that our products and service standards will be talked about in the years to come.”

Allianz Lanka is able to integrate with the international affiliations of parent company, Allianz S.E., to incorporate global economies of scale that ultimately provide a high quality of service and competitively priced coverage products for the Sri Lankan market. Allianz’s AA accreditation from Standard and Poor further provides confidence to prospective customers, individuals and corporate clients interested in insurance services.

Surekha Alles concludes: “Year over year, we are proud of having created value for all our stakeholders in every area in which we do business. We are also pleased to continue to provide our customers with international standards of risk management advice to mitigate business losses, with the technical expertise of our parent company.”

Allianz Group, as a whole, performed well through 2010. The financial services conglomerate reported in February that annual net income for Allianz in 2010 had increased by 22.4 percent to total €5.2 billion (US$ 6.94 billion), with revenues reaching €106 billion (US$ 151 billion) and total assets under management of €1518 billion (US$ 2.17 trillion), cumulatively representing the best figures in the 120 year history of Allianz. The company has maintained itself at the forefront of the international insurance and worldwide asset management industry while looking towards mitigating policyholder risks and exploring new opportunities, despite operating in a difficult global economic environment.

Asia has become a pivotal market for international insurers. Allianz Group has established a presence in several key emerging Asian economies through joint ventures including: Bajaj Allianz in India, Allianz China Life, PT Asuransi Allianz Utama in Indonesia and Ayudhya Allianz in Thailand. These operations give The Allianz Group prime access to the rapidly developing Asian markets that are driving, in particular, the demand for protection, savings and investment products as the wealth of the substantial populations in these Asian nations increase.

Insurance Companies Mentioned

Allianz Lanka

Allianz Insurance Company Lanka Limited operates as a wholly owned subsidiary of Allianz SE. Since the company’s inception in 2005, Allianz Lanka has been one of Sri Lanka’s fastest growing insurance providers, setting many industry benchmarks for the country.

Allianz

Allianz Group is one of the leading global services providers in insurance and asset management. With approximately 153,000 employees worldwide, the Allianz Group serves approximately 75 million customers in about 70 countries. On the insurance side, Allianz is the market leader in the German market and has a strong international presence.

Bahrain National Holding (BNH), the parent company of both Bahrain National Insurance and Bahrain National Life Assurance, held its annual shareholder meeting at BNH Tower this past Tuesday, March 29th 2011. Despite the general political tension occurring in the region, BNH’s progress has remained undeterred and the firm plans on continuing the expansion of its operations throughout the Gulf.

BNH announced a net profit of BD 3.814 million (US$ 10.1 million) for 2010, which resulted in a 5 percent increase of the company’ total net assets, now up to BD 42.157 million (US$ 112 million). There was also an increase in BNH’s Net Earned Premium income which rose to BD 13.587 million (US$ 36 million) over the BD 13.395 million (US$ 35.5 million) registered in 2009. Given the positive results, a 20 percent dividend at 20 fils (US$ 0.50) per share was agreed upon and paid to shareholders from company earnings.

Mahmood Al Soufi , chief executive of BNH, has said of the Group’s performance: “We are content with our business strategies which have provided rewarding results in 2010. We will continue with these initiatives to ensure the stability of our business, to provide value for our clients and business partners and to grow our shareholders value,” he later dismissed any possible spillover impact from events occurring in the Middle East or Japan having effect on the company’s business “We are not revising our budgets and there has been no change in our investment plans regionally or our continued investment in our core insurance business.”

Given the stable forecast, BNH is looking to invest more on top of the BD 8 million (US$ 21.22 million) allotted in 2009 for regional expansion in an attempt at enhancing the scale of business available to the company. BNH is particularly keen on establishing a presence in the UAE and Qatari insurance markets. Mahmood Al Soufi explains the current status of BNH’s regional development strategy: “We are in the final phases of establishing a company in Abu Dhabi with major shareholding from the UAE and also the company is positive to get nod from the Qatari authorities to open a branch in Doha.”

In October 2010, BNH established Bahrain Emirates Insurance Company (BEI), their first joint-venture branch in Abu Dhabi. BNH holds a 30 percent stake in the business with an initial paid-up capital investment of BD 10.5 million (US$ 27.9 million). BEI was successfully granted a license to operate in the country and business in Abu Dhabi is expected to progress quickly given the industry expertise available from its investors. The insurance market in the UAE, which incorporates compulsory private health insurance scheme, has significant growth potential for insurers. BEI is expected to expand its operations further throughout the UAE and other Gulf countries.

BNH is presently waiting on the Qatar Financial Centre Regulatory Authority to grant them a license to operate a subdivision in Doha. Qatar is currently developing a national health insurance scheme as part of substantial reforms planned for the healthcare sector in their National Development Strategy 2011-2016. The system would establish a public-private mix whereby a new federal authority would negotiate closely with private insurers over provision of services. A complimentary basic health service package would be introduced but all those able to pay (including expatriates) would be expected to enter the private insurance market. While the full ramifications of these new national regulations can not yet be evaluated, early entrance into the Qatari insurance market for BNH would be an advantage.

Takaful, or Sharia-compliant, insurance has emerged as a powerful niche securities market in the region. Takaful products are mutually beneficial coverage policies that cater specifically to Middle Eastern and Asian Islamic communities. The takaful insurance industry is projected by industry analysts to grow at 15 percent annually over the next 5 years and generate more than US$7 billion in premium income. Major foreign insurers have taken note of the huge growth potential from this brand of products. In 2010, Standard Chartered and Allianz Takaful in Qatar entered into a 5 year agreement to distribute Alliaz Takaful’s insurance services through Standard Chartered Bank. The two insurers partnered again to allow Standard Chartered SME insurance products to be sold through Allianz Takaful in Bahrain. Zurich established a joint venture operation with Abu Dhabi National Takaful and is looking to involve itself further in the region. BNH are likewise interested at getting into the takaful market and predicted they would be involved with acquisitions involving the Islamic insurance industry within the year.

Farouk Almoayyed, Chairman of the BNH, summarized the firm’s situation and predicted upward trajectory for the company: “The proactive approach the Group implemented previously has manifested itself in the positive financials achieved for this year. We strongly believe in our experienced team and effective strategies and are confident to say that today we are well positioned to sustain our growth organically, regionally and internationally.”

The general outlook for the insurance industry in the Middle East and Gulf regions is currently difficult to determine. Prior to the civil unrest and political revolutions in Tunisia, Egypt and Libya, the forecast was very positive throughout. The preexisting low insurance penetration levels, high growth rate in population and emerging economies were all conducive to growth. The degree of increased risk now varies much more from country to country. The three most lucrative markets in the region, UAE, Qatar, and Saudi Arabia, have remained strong with renewed commitment to health infrastructure encouraging further demand for insurance services. Areas under more duress are more likely to suffer from disruption to business activity as well as liquidity issues. The degree to which the current political turmoil will spill over into the economy and become a more substantial long term issue in many Middle Eastern countries is still evolving.

Insurance Companies Mentioned

Bahrain National Holding

BNH, with its subsidiaries, offers a wide range of insurance and risk management solutions in Bahrain. The Company was established in 1998 and is based in Manama, Bahrain.

Allianz Takaful

A fully owned subsidiary of the Allianz Group, Allianz Takaful was established in March 2009 and is headquartered in Bahrain. Allianz Takaful is the Allianz group’s first foray into the Gulf Cooperation Council or GCC, and offers Shariah-compliant products and services.

Standard Chartered Bank Qatar

Standard Chartered Bank first opened a branch office in Qatar in 1950, making it the oldest foreign bank in Qatar. It operates 3 branches and 6 ATM machines in the country, employing 167 employees from 30 different countries. Their two core divisions of Wholesale and Consumer Banking have given them a 27% market share in Qatar.

Zurich

Headquartered in Zurich, Switzerland, Zurich Financial Services Group is an insurance-based financial services provider with a network of subsidiaries andoffices in North America and Europe and also in Asia-Pacific, Latin America and other markets. Zurich is one of the world’s largest insurance groups, and one of the few to operate on a truly global basis. With 60,000 employees serving customers in more than 170 countries, our business is concentrated in three business segments: General Insurance, Global Life, and Farmers.

Projections foresee growth in 2011 topping 12% across the Malaysian insurance industry. The Malaysian government has unveiled stimulus plans and other legislative initiatives which together with an historically low interest rate environment have lead to very favorable conditions for growth in the insurance sector. All forecasts however need to be tempered by an awareness of uncertainties about the outlook for a number of western economies and the possible resulting downward pressures on overall performance of the global insurance industry.

Malaysia’s economy grew 7.2 percent last year, the highest rate experienced since the year 2000. The Malaysian government has aggressively pursued substantial investment programs with the explicit goals of doubling GDP per-capita and turning Malaysia into a high income country by 2020. New parliamentary initiatives such as the New Economic Model (NEM), Economic Transformation Program (ETP) and the Tenth Malaysian Plan will, according to industry analysts, lead to a growth in demand for insurance products and services.

The Life Insurance Association of Malaysia (LIAM) held that in addition to these numerous initiatives announced in the Economic Transformation Program, including the private pension plan and worker insurance scheme, economic conditions in the country are ripe for further life insurance development. Consumer confidence in Malaysia has shown marked improvement, rising to 107 points on the latest Nielsen Global Consumer Confidence Index, its highest score since the third quarter of 2006. Around 41 percent of the Malaysian population is currently insured, according to the LIAM. This level of life-insurance penetration is low by a developed economy’s standards and will be an important factor in the further growth of the sector. The current low interest rate environment will act as an impetus to consumers seeking high-yielding products like insurance in Malaysia.

The LIAM reported that new business sales for life insurance rose 19 percent on a weighted premium basis during the first three quarters of 2010. This growth was accredited to strong performances in regular premium sales which were up 21 percent compared with the identical period in 2009. Single premium business, however, registered a small 1 point decline.

The LIAM’s views were supported by the General Insurance Association of Malaysia (PIAM), the Malaysian Takaful Association (MTA) and Allianz Malaysia Bhd (AMB).

The General Insurance Association of Malaysia (PIAM) executive director Mr. Lim Chia Fook reported that, in absence of any further adverse impacts on the world economy, the insurance association foresees the outlook for the general insurance industry this year to be very positive with an increased demand for insurance in all areas expected. The general insurance industry recorded that for the third quarter of 2010, gross direct premium estimates were 3.16B$, demonstrating a growth of nine percent over the same three quarter period during the previous year.

The Malaysian medical and health insurance sector (MHI) is likewise expected to sustain powerful development, driven by upward trends in consumer awareness coupled with an increasing want for cover against escalating healthcare costs. Mr. Lim added that the introduction of the health insurance plan designated for foreign workers would further drive growth in the MHI sector. PIAM anticipated new areas of industry growth through micro-insurance products, especially considering the rapidly developing small and medium enterprise and biotechnology sector in Malaysia.

The Malaysian Takaful Association (MTA) expects the Islamic insurance industry to continue to improve on its 10% market penetration, particularly by expanding into rural areas. The Islamic insurance market has grown due to more interest in shariah-compliant investments. The industry has experienced substantial growth after the Malaysian central bank issued takaful licenses to four established consortiums in 2006, which included HSBC, Malaysia’s Hong Leong Bank and Prudential Holdings. Malaysia currently has eight takaful operators and trusts that the inclusion of new insurance players would increase industry competition, pushing players not only to capture new market share but also to develop fresh takaful products. Similar to general insurers, the islamic insurance sector operates through correlation with macro economic performance; hence the positive outlook for the Malaysian domestic economy will affect the development of both sectors.

MTA chairman Datuk Syed Moheeb Syed Kamarulzaman reported: “The significant growth in retail credit financing, especially in relation to home financing in 2010, may be curbed to some extent in 2011 and this should encourage takaful operators to diversify their business focus away from financing protection products to agency driven products.”

Allianz Malaysia CEO Jens Reisch remarked that apart from the initial low insurance penetration rate in the country, increase in consumer knowledge, greater demand for retirement savings, together with growing Bancassurance and takaful businesses from a more liberalized insurance industry, are some of the other factors that would advance the insurance sector. Mr. Reisch added that Allianz: “is undertaking numerous initiatives to improve its distribution capabilities and we hope to continue to strengthen the top line and sustain profitability.”

Mr. Reisch highlighted that the major challenges facing the insurance trade would be the provision of long-term assets for packaging insurance products, the low interest environment for insurers failing to manifest attractive guaranteed return products and the requirement to offer high guaranteed products into the long term future.

The LIAM assert that global economic uncertainty could restrain the growth potential of the industry: “While it is an external factor, the quagmire prevailing in the established economies of the United States, Japan, Europe and the reaction of the local share market towards such sentiments may have an indirect impact on the industry. It can cause a slowdown on external demand that will eventually influence consumers in terms of decision-making, thus making sales more difficult.”

The association’s president, Md Adnan Md Zain, believes the best actions to take to overcome these peripheral obstacles would be through prudent domestic policies, active oversight, working closely with regulators and better integrating as an industry. The Life Insurance Association doesn’t discount the potential for inclusion of new foreign insurance players that could invigorate the market as well as the continued implementation of the financial inclusiveness programs undertaken by both the authorities and financial institutions.

Insurance Companies Mentioned:

Allianz: Allianz Group is one of the leading global services providers in insurance and asset management. With a worldwide network of 153,000 employees, the Allianz Group serves approximately seventy five million customers in about seventy countries. Allianz offers a wide variety of insurance products to both private and corporate customers, including motor, accident, general liability, fire and property, legal expenses, credit and travel insurance. Allianz provides life and health insurance products on individual and group basis. Allianz is the market leader in the German market and has a strong international presence in insurance.

The multi-national German insurer the Allianz Group – Europe’s largest insurer by gross premium income – reported that annual net income in 2010 increased by 22.4 percent to total €5.2 billion (US$6.94 billion), driven by substantial growth in Allianz’s life and health insurance businesses.

Allianz’s year-on-year net profit rose by 11 percent in the fourth quarter of 2010 to reach €1.13 billion (US$1.54 billion) on the back of improved business in the property-casualty sector, together with the life and health insurance segments against the background of tough global trading conditions.

Revenues for Allianz reached €106.5 billion (US$145.9 billion) in 2010 – the first time in 5 years that the German insurer’s yearly income has surpassed €100 billion (US$137 billion). Operating profits totaled €8.2 billion (US$11.23 billion), an increase of 17 percent over 2010. The German’s insurer’s yearly profits were partly influenced by favorable foreign currency fluctuations.

Speaking on Allianz’s annual results, the CEO of Allianz, Michael Diekmann said: “We are proud of having achieved substantial growth in 2010. Revenues were above our historical best and our operating profit exceeded our own expectations. Allianz has managed its risks well and emerged highly profitable and financially stronger from the financial crisis years 2008 and 2009. This is the foundation for the resilience and stability our customers, investors and employees expect from us.”

One of Allianz flagship health insurance brands – Allianz Worldwide Care – which has over 75 million customers globally – helped the German insurer’s total life and health insurance premiums to reach €57.1 billion (US$78.2 billion) in 2010, reflecting a 12.5 percent increase year-on-year. The high demand for investment-oriented and traditional life insurance products helped operating profit in this segment to grow by 7.4 percent to €2.9 billion (US$3.97 billion) in 2010 despite prevailing low interest rates.

“Our strong performance in Life/Health exceeded our expectations. Increasing customer demand for Allianz products and solutions fueled double-digit growth in revenues. This shows that our customers want the attractive returns and stability Allianz can offer. Operating profit beat our annual target. Our new business value and margins also improved, despite the tough low interest rate environment,” said Oliver Bäte, member of the Allianz Board of Management.

There was improved business in Allianz’s property and casualty line, with total gross premiums reported at €43.9 billion (US$60.1 billion) – a 3.2 percent increase on results achieved in 2009. The rise in this category was partly down to positive pricing trends in Allianz’s core markets, coupled with efficient underwriting practices during the year.

Operating profits jumped by 5.9 percent to generate €4.3 billion (US$5.9 billion) for the property and casualty business, which was due to improved results despite some exposure to a high volume of natural catastrophe claims in 2010. However there was a significant increase in new business and renewals of contracts, especially among customers in Australia, France, Italy and the UK.

Allianz’s Asset Management business grew by 26.2 percent to reach a record of asset values amounting to €1,518 billion (US$2,079 billion ) in 2010. Allianz’s operating profit from asset management jumped by 47 percent in 2010 to report a record total of €2.1 billion (US$2.8 billion) up from 2009’s total of €1.4 billion (US$1.9 billion). Allianz’s asset management business has become more profitable as the inflow of business increased and higher margins were achieved.

However, while Allianz were able to report strong profits in 2010, the impact of the new regulations being introduced by the European Union for capital requirements to protect company solvency is expected to impact on insurers operating in this major sector of business activity from 2013. While uncertainties exist surrounding how capital requirements under the European Solvency II regulations will influence insurers in Europe, Allianz has stated that it will not be entering into large acquisitions until they know the full extent of the impact of the new regulatory requirement.

While multi-national insurers have been reporting mixed financial results for 2010, with Allianz’s European rival, AXA recording a 24 percent decline in profits, Allianz has been able to overcome the tough market conditions reporting profits in all segments of insurance activity. This has been achieved by applying strict underwriting practices to business transactions, with relatively minimal exposure to losses for claims arising from natural disasters.

Allianz has a global presence stretching from the mature markets of Europe and North America to the emerging markets in the Middle East, North Africa, Latin America, and Asia, which are presenting the best opportunities for new premium growth in the future.

The Allianz group’s presence in key developing Asian economies exists through joint ventures such as Ayudhya Allianz in Thailand, PT Asuransi Allianz Utama Indonesia, Allianz China Life and Bajaj Allianz in India. These networks offer Allianz prime access to rapidly expanding Asian economies which are driving, in particular, the demand for protection and saving products as the wealth of the massive populations in these nations increases.

Insurance Company Mentioned:

Allianz

Allianz Group is one of the leading global services providers in insurance and asset management. With approximately 153,000 employees worldwide, the Allianz Group serves approximately 75 million customers in about 70 countries. On the insurance side, Allianz is the market leader in the German market and has a strong international presence.

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