Jul
19
AIA Names New Chief Executive
Filed Under AIG, Hong Kong, Insurance Company, Life Insurance | 4 Comments
AIG has named former Prudential Chief Executive Mark Tucker as the head of AIA, the company’s Asian life insurance business. The move sees the replacement of existing CEO Mark Wilson, who was instrumental in stabilizing the company when AIG was on the brink of collapse.
While no comment was available from AIA with regards to the replacement of Wilson, reports from individuals familiar with the internal situation of the company say that Wilson had threatened to resign his post if the Prudential deal had gone forward. Despite the failure of the Prudential acquisition, Wilson’s position placed him in a contrary position to that of AIA’s upper management and may be a key reason for his replacement.
The ousting of Wilson comes less than a week after AIG Chairman, Harvey Golub, resigned the company following a disagreement with AIG’s CEO, Robert Benmosche.
Analysts are speculating that the nomination of Mark Tucker as the head of AIA is the latest incident of Benmosche asserting his control over the AIG group of companies. Reports of heightened Boardroom friction following the collapse of the US$ 35.5 billion deal with Prudential have been rife, leading to concern about the company ahead of an estimated US$15 billion AIA IPO, scheduled for later this year.
Benmosche is optimistic about the nomination of the new AIA Chief Executive, stating; “Mark Tucker has the public company experience, track record, relationships … that will help us accomplish our ambitious goals of not just taking a company of AIA’s size and scope public, but building on this great platform for the long term to create Asia’s pre-eminent, publicly traded insurance company.”
Mr Tucker is 53 years old. A certified chartered accountant, he initially joined Prudential in 1986 as part of Prudential Portfolio Managers Limited. Becoming Chief Executive for Prudential Corporation Asia in 1993, Mr Tucker held the post for a decade, during which time he evaluated the acquisition of AIA by Prudential. However, that deal ultimately fell through without the backing of AIG. Mr Tucker left the prudential group for HBOS Plc in 2004, where he took a position as the company’s finance director. However, that position was short lived as he returned to Prudential in 2005 as CEO. Mr Tucker left Prudential in 2009 when he resigned from the company.
Jul
16
AIA IPO Plans Moving Forward
Filed Under AIG, Hong Kong | 2 Comments
According to recent reports citing an unidentified source, American International Group Inc. (AIG) plans to go ahead with an Initial Public Offering (IPO) of its AIA Group life-insurance unit, later on this year.
After the collapse of the deal by which Prudential would have acquired AIA from AIG, there were expressions of interest for AIA by Generali, whilst at the same time AIG was considering the possibility of reviving its original plans for the AIA IPO.
During the latest AIG board meeting earlier this week, directors discussed the steps necessary to prepare for a listing of AIA in the Hong Kong stock market. At present, the US government holds a majority stake in AIG.
Depending upon the valuation of AIA, a sale of about half of the company could raise between US$15 billion (EUR 11.8 billion) and US$20 billion (EUR 15.8 billion). The proceeds of the AIA IPO would go towards repaying part of the many billions of US dollars owed to the US government.
Taking into account the time that would be required to prepare the AIA listing prospectus for a planned launch by year-end, it should be completed by the end of September.
Insurance Companies mentioned:
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
AIA is a Hong Kong-based life insurance company doing business across Asia that has been in business since 1919. They service over 20 million policies through 23,000 employees and 300,000 agents throughout markets in Asia, including; Vietnam, Thailand, Taiwan, South Korea, Singapore, Philippines, New Zealand, Malaysia, Macau, Indonesia, India, Hong Kong, Mainland China, Brunei and Australia.
Jul
13
Given that the current self-regulatory regime is not up to international standards, the Financial Services and the Treasury Bureau of Hong Kong is proposing to establish an independent insurance authority to increase the strength of regulation over the industry.
It is envisioned that the establishment of an independent regulator with supervisory powers will help maintain stability in the insurance market. This proposed independent insurance authority would have regulatory powers to issue licenses, conduct routine supervision, inspections, and impose disciplining sanctions against breaches, among other functions currently undertaken by the current self-regulatory regime. The new regulatory powers would apply not only to insurers, but also to insurance intermediaries, covering insurance agents and insurance brokers.
The Financial Services and the Treasury Bureau wants the Hong Kong government to inject US$64.1 million (EUR 50.9 million) as initial funding get the new organisation up and running. Up to US$44.9 million (EUR 35.6 million) would be initially allocated to cover operational costs during the first five years, with the remaining balance set aside as a contingency reserve.
Meanwhile, a 3-month consultation has been launched by the bureau and it is expected to conclude by the 11th of October, with a bill introduced to the Legislative Council of Hong Kong next year. The earliest targeted date for setting up the proposed new insurance authority is the year 2013.
The Hong Kong government proposes a fee structure to cover the operating costs of the proposed new insurance authority, guaranteeing that it remains financially independent.
Jun
25
Allianz to Revamp Asian Property, Casualty Business
Filed Under Allianz, Health Insurance, Hong Kong, Insurance Company | 2 Comments
Allianz will reorganize their Hong Kong and Singapore based companies to come under the management structure of Allianz Global Corporate and Specialty (AGCS) as of August 1st, 2010, which allows them to share resources and expertise in order to increase profitability in the Hong Kong and Singaporean markets.
Both Allianz Insurance Company of Singapore (AICS) and Allianz Insurance Hong Kong Limited (AZHK) have developed strong presences in their respective markets; their local knowledge and relationships with sizable numbers of international clients have created considerable corporate and specialty portfolios. Allianz announced it will apply for credit ratings for both Allianz Insurance Hong Kong Limited and Allianz Insurance Company of Singapore.
Allianz intends to combine AICS and AZHK’s local capabilities with Allianz Global Corporate and Specialty’s expertise in processes and underwriting on a global scale to expand profitability in the Asian markets, while opening up access to AGCS’s full range of services and worldwide network. Allianz Global Corporate and Specialty’s services include risk consulting and claims processing as well as specialist products such as Directors and Officers Liability Insurance (D&O insurance) and International Insurance Programs.
The CEO of Allianz Global Corporate and Specialty, Axel Theis said “Hong Kong and Singapore are core markets for our clients in Asia, and we want to grow strong expertise here as part of our global network. This follows the strategy we’ve successfully developed in other locations such as Japan and Brazil – supporting our clients by combining local service delivery with global expertise and resources.”
Bruce Bowers, the CEO of Allianz Asia Pacific, also commented that “This strengthening of Allianz’s expertise in Asia underlines our commitments to our clients in these important markets. Across 15 countries in the Asia Pacific region, we are continuing to offer innovative products and solutions to serve the needs of our customers. This applies not only in corporate and specialty insurance but right across our portfolio throughout the whole of Asia – including private and commercial property and casualty insurance, life and health insurance, and asset management.”
Insurance Company Mentioned:
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.
Jun
17
The China Insurance Regulatory Commission (CIRC) appears to be in the latest stages of discussions to ease the restrictions on some types of investments made by insurance companies in China. The proportion of the capital from insurance companies invested in the stock market will be increased to a 25 percent from the current 20 percent limit.
Other restrictions currently imposed on insurance companies under review include the policies governing investments in bonds, the Hong Kong stock market, and the threshold for debt investments – which is expected to be lowered.
One area that will not be modified pertains to property investments made by insurance companies. At present, insurance companies are not allowed to invest in residential buildings, be involved during the property development stage or do direct investments in the commercial property sector. The rules addressing property investment are expected to be finalised at a later time, although it is anticipated that the current investment restrictions will remain largely unchanged.
Analysts anticipate that the new rules will procure about US$1.5 billion (EUR 1.2 billion) of capital into the Chinese stock market.
The new regulations are expected to be released soon.
Regulatory Body mentioned:
The China Insurance Regulatory Commission (the “CIRC”), established on November 18, 1998, is authorized by the State Council to conduct administration, supervision and regulation of the Chinese insurance market, and to ensure that the insurance industry operates stably in compliance with law. In 2003, the State Council upgraded the CIRC from a semi-ministerial institution to a ministerial institution directly under the State Council, and to expand the size of the CIRC in terms of staff, internal setup, and local offices.
Jun
15
Purchaser of Nan Shan Agrees to Escrow Funds Request by AIG
Filed Under AIG, China, Hong Kong, Insurance Company, Life Insurance | 6 Comments
The buyers of Nan Shan Life Insurance, the Taiwanese life insurance unit of AIG, have agreed to amend their purchase agreement to include a escrow funds clause, in order to strengthen the bid for regulatory approval of the transaction.
Under these amended terms, US$325 million (EUR 266.4 million) of the purchase price will be isolated for a 4-year period under escrow, as an additional measure to improve the capital ratio of Nan Shan. This effectively means that AIG will not receive the full purchase price of the deal until 2014.
According to regulations effective in Taiwan, insurers are required to have a risk-based capital ratio of at least 200 percent. The escrow funds would be used to boost the capital ratio of Nan Shan should the need arise during the 4-year special funds lock-up period.
The Taiwan Ministry of Economic Affairs is currently reviewing the sale of Nan Shan to the Hong Kong-based consortium comprising China Strategic and Primus Financial Holdings. There are various concerns related to the transaction which are currently under scrutiny, including the shareholding structure of the consortium, source of capital and future commitments to employees and policyholders to ensure that their interests are safeguarded.
Under the original deal reached last October, AIG had agreed with the said consortium to sell a 97.57 percent stake of Nan Shan for US$2.15 billion (EUR 1.76 billion).
Insurance Companies mentioned:
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
Nan Shan Life Insurance Company, Ltd. was established in July 1963. After its restructuring in January 1970, Mr. K.K. Tse, the then Chairman of American International Underwriters, became the first Chairman of the company. In forty years, Nan Shan has become a super insurance company with the most professional management, the best operational performance, and a solid financial foundation. Its agency force has been recognized as the best in Taiwan’s life insurance industry.
Jun
4
AIA appealing to Generali
Filed Under AIG, China, Hong Kong, Insurance Company | Leave a Comment
The third largest insurer in Europe, Assicurazioni Generali SpA of Italy, has expressed interest in acquiring part of the Asian operations of American International Group (AIG), should the latter opt for selling units rather than pursuing an initial public offer for AIA Group Ltd, the current holding company in control of all Asian businesses.
At the end of 2008, Generali weighed a bid for the Chinese business of AIG, and is nowadays expanding in emerging markets, including both China and the Middle East as an strategy to neutralise the effects of the financial tsunami.
According to analysts, Generali would need to sell shares to be able to proceed with an acquisition of such magnitude. This would be subject to a decision by AIG on whether or not to breakup its units in Asia, as a possible move to repay part of the US$182 billion (EUR 149.2 billion) bailout AIG received from the US government.
All eyes continue to be focused on the next move taken by AIG in relation to AIA, after the failed bid by Prudential.
Insurance Companies mentioned:
The Generali Group is one of the most significant participants in the global insurance and financial products market. The Group is a leader in Italy and Assicurazioni Generali, founded in 1831 in Trieste, is the Group’s Parent and principal operating Company. Generali is one of the leading global players in the assistance sector thanks to the Europ Assistance Group, active in more than 200 countries with services in the motor, travel, healthcare, home and family sectors. In recent years, the Group has made a significant return to 14 central-eastern European markets and has set up offices in the principal markets of the Far East, including China and India.
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
AIA is a Hong Kong-based life insurance company doing business across Asia that has been in business since 1919. They service over 20 million policies through 23,000 employees and 300,000 agents throughout markets in Asia, including; Vietnam, Thailand, Taiwan, South Korea, Singapore, Philippines, New Zealand, Malaysia, Macau, Indonesia, India, Hong Kong, Mainland China, Brunei and Australia.
Jun
1
In a recent announcement, the Office of the Commissioner of Insurance of Hong Kong reported that the total Q1 gross premiums of the insurance industry in Hong Kong grew 16.2 percent to US$1.18 billion (EUR 959 million), compared to the same period last year.
The Q1 growth reported for net premiums reached US$833 million (EUR 678 million), an increase of 14.4 percent year-on-year, whilst the overall underwriting performance declined in profit to US$71.7 million (EUR 58.3 million).
Gross and net premiums on direct business grew by 6.9 percent and 6.4 percent, to US$897 million (EUR 730 million) and US$666.7 million (EUR 542 million), respectively. Leading this growth were the accident and health business.
The underwriting profits of direct business fell 26.1 percent from US$61.9 million (EUR 50.3 million) to US$49.1 million (EUR 39.2 million) mostly due to a worsening of the overall claims experience during the first quarter. The medical business profit decreased from US$11.28 million (EUR 9.17 million) to US$2.1 million (EUR 1.67 million), whilst general liability business (non-statutory) shrank from US$10.5 million (EUR 8.6 million) to US$3.97 million (EUR 3.23 million).
The Q1 total revenue of long-term in-force business premiums increased 9.3 percent to US$5.18 billion (EUR 4.21 billion), compared to the same period last year.
May
27
Manulife and Munich Re Jointly Offer New Group Medical Insurance Product to Hong Kong
Filed Under Health Insurance, Healthcare, Hong Kong, Insurance Company | 2 Comments
Manulife (International), based in Hong Kong and Munich Health, a unit of the global re-insurer Munich Re, have recently decided to form a long-term business partnership to capture a share of the group life and medical insurance market created by the ongoing government-driven medical reforms, plus other factors created by an ageing population, increasing medical costs and the effects caused by the global financial tsunami.
The medical insurance business in Hong Kong during the past year has surged as a results of stronger domestic employment. The employer-provided medical benefits have become the main source of healthcare for the majority of the working population in Hong Kong. The perception of medical and health protection is gaining importance, together with the concept of public healthcare and preparation for retirement among the topics of importance created by changes to the social structure stirred by the public consultations and media coverage.
The market opportunities have been duly noted by the providers of health insurance.
The cooperation between Manulife and Munich Health aims to contribute to the evolution of the health insurance environment in Hong Kong by offering an option to tackle challenges such as the increasing needs of the elderly, management of lifestyle conditions and in turn, offer a product to the working public in line with the proposed voluntary private healthcare insurance scheme.
Munich Health brings on the table worldwide knowledge of medical insurance, spanning data analysis, risk management, bespoke underwriting tools and techniques, whilst Manulife contributes with local experience in dealing with the local market for employee benefits products, knowledge of which the partnering German re-insurer will most readily assimilate.
For Manulife the partnership with Munich Health is a first, and from the perspective that its local customer in Hong Kong have the appetite for trying new things, there is confidence that the new group medical insurance product will find acceptance.
Insurance Companies mentioned:
Manulife (International) Limited is a member of the Manulife Financial group of companies. Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 22 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners.
Munich Re stands for exceptional solution-based expertise, consistent risk management, financial stability and client proximity. This is how Munich Re creates value for clients, shareholders and staff. It operates in all lines of insurance, with around 47,000 employees throughout the world. Especially when clients require solutions for complex risks, Munich Re is a much sought-after risk carrier. The primary insurance operations are mainly concentrated in the ERGO Insurance Group. ERGO is one of the largest insurance groups in Europe and Germany and 40 million clients in over 30 countries place their trust in the services and security it provides. In international healthcare business, Munich Re pools its insurance and reinsurance operations, as well as related services, under the Munich Health brand.
May
26
Asian Markets Lukewarm about Launch of Prudential Shares
Filed Under Hong Kong, Insurance Company, United Kingdom | 5 Comments
The response by investors to the first trading day of Prudential shares in Hong Kong and Singapore has been tepid, in part due to the current slump in the markets in Asia, the which augurs a possible undesired response to the big rights issue planned by Prudential with which to finance the US$35.5 billion (EUR 28.9 billion) takeover of AIA.
This teaser listing, intended as a first step before the approximately US$21 billion (EUR 17.1 billion) rights issue, was made to test the market waters and appetite of investors in Asia for what promises to become a combined company to lead the life insurance business in the region.
Having overcome challenges thrown by the Financial Services Authority in the UK and an impending challenge by Prudential shareholders during the upcoming Extraordinary General Meeting on 07 June 2010, it would appear that the anticipated sunny market forecast is showing signs of some black clouds formation, given the global sentiment in regards to the health of the European Union bourses and the overall state of the global economy.
Based on other recent media reports, the head of AIA, Mark Wilson has indicated his intention to step down should the Prudential acquisition succeeds.
As it stands now, the initial public offerings (IPO) climate present in major markets around the world paints a scenario where other large companies have either postponed their IPO plans or underperformed upon their launch.
Going forward, Prudential may need to work on overdrive to wet the appetites of investors in order to achieve drumming up demand of their shares.
Insurance Company mentioned:
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.
AIA is a Hong Kong-based life insurance company doing business across Asia that has been in business since 1919. They service over 20 million policies through 23,000 employees and 300,000 agents throughout markets in Asia, including; Vietnam, Thailand, Taiwan, South Korea, Singapore, Philippines, New Zealand, Malaysia, Macau, Indonesia, India, Hong Kong, Mainland China, Brunei and Australia.