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CIGNA Preparing for Indian Joint Venture

International medical insurance company Cigna is planning on opening a joint venture in India in the next couple of years, creating a partnership with local Indian Conglomerate TTK Group in forming a standalone Indian medical insurance company.

According to the WHO’s World Health Survey 2011, around 74.4 percent of private healthcare costs are paid out of pocket in India. Given that India’s middle class is growing at around 10 percent a year, alongside the historically low penetration of medical insurance products in the country, many analysts believe that the private health insurance industry in India will see robust growth in the near future with a projected compound annual growth rate for the industry of around 30% for the next 5 years.

Cigna is the latest foreign investor to commence the establishment of a standalone medical insurance joint venture in India and also the first American company to do so. Having already started the approval process with the Insurance Regulatory and Development Authority (IRDA) in India, Cigna and TTK intend to complete their filing in 2012 and obtain their license in 2013.

Cigna’s local partner TTK Group is a family-owned conglomerate that has business interests in a wide variety of business sectors, including both durable and nondurable goods, biomedical devices and a wide range of business and healthcare services. Based in Chennai and Bangalore, TTK operates retail locations that are soon thought to number over 1,500 throughout the country which would be a great leg up for Cigna in marketing their health and wellness insurance products across India.

If Cigna can enter the market with a portfolio of health and wellness insurance products and solutions that are inviting to relevant market segments then they stand a good chance of doing well in the largely untapped Indian health insurance market. This would further add to Cigna’s burgeoning international business.

Cigna is currently limited to 26 percent ownership of the joint venture with TKK in accordance with Indian regulations, however should the limit on the stake foreign firms can own in Indian-based companies be raised, Cigna may avail themselves of the opportunity to own a greater share.

Companies Mentioned

Cigna

CIGNA Health Insurance is a global health service company dedicated to helping people improve their health, well being and sense of security. CIGNA Corporation’s operating subsidiaries provide an integrated suite of medical, dental, behavioral health, pharmacy and vision care benefits, as well as group life, accident and disability insurance, to approximately 46 million people throughout the United States and around the world.

TKK Group

Founded in 1928 by T. T. Krishnamachari, TKK is an Indian conglomerate that is largely based out of Chennai and Bangalore. It now runs several businesses in different industries including white goods, pharmaceuticals, biomedical devices, consumer products and assorted business services.

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Chinese Insurers See Premium Income Growth Amid Mixed Markets

Despite mixed stock movements in China recently, Chinese insurance companies have seen premium income grow over last year’s results, including China Life which recently begun trading in Hong Kong and Shanghai.

China Life Insurance, China Pacific Insurance Group and Ping An Insurance Group, which includes Ping An Life Insurance, Ping An Health Insurance, Ping An Annuity and Ping An Casualty Insurance, all saw positive growth on premium income over 2010.

China Pacific Insurance Group reported total premium income of CNY 143.8 billion (US$ 22.67 billion), demonstrating year-on-year growth of 12 percent. China Pacific’s life insurance business earned CNY 87.9 billion (US$ 13.86 billion) in the first 11 months of the year, while the property and casualty business reported CNY 55.9 billion (US$ 8.81 billion) for the first 11 months of 2011.

Ping An reported large gains for the first 11 months of the year, with each of its four main insurance businesses reporting over 20 percent year on year growth. Ping An Health Insurance saw the largest rate of growth in premium income of Ping An’s business segments, reporting 92.08 percent year-on-year growth to hit CNY112 million (US$ 17.66 million). Ping An Casualty Insurance grew 34.42 percent, earning CNY 74.68 billion (US$ 11.77 billion). Ping An Annuity earned premium income worth CNY 4.773 billion (US$ 752.48 million) showing a 21.62 year-on-year growth, while Ping An Life Insurance with the highest premium income of the group earned CNY 110.03 billion (US$ 17.35 billion) at 29.36 percent growth year-on-year. The Ping An Insurance Group saw overall premium income reach CNY 189.55 billion (US$ 29.89 billion) for the first 11 months of 2011, demonstrating year-on-year growth of 31.12 percent.

China Life Insurance earned premium income worth CNY 301.2 billion (US$ 47.49 billion) for the first 11 months of the year, showing more meager growth of 0.63 percent over last year’s CNY 299.3 billion (US$ 47.19 billion) for the same period. China Life Insurance has also recently had held their IPO for both the Hong Kong and Shanghai bourses in December, 2011.

So far, China Life has had mixed trading results, with stocks in China growing at 13.7 percent during its first day of trading on the back of a 2 percent rally of the Shanghai Index. China Life’s stock closed at CNY 26.44 (US$ 4.17) on Friday December 16^th. China Life’s Hong Kong listed stocks started trading on Thursday, when they dropped 9.8 percent, although it rallied on Friday in light of Shanghai’s strong percent, rising 2.7 percent to close at HK$26.45 (US$ 3.40). Trading in the near future may be difficult to predict, as stock markets in Asia are already on edge due to the unexpected death of North Korea’s Kim Jong Il.

Companies Mentioned

China Life Insurance

China Life Insurance Company Limited (China Life) is a People’s Republic of China-based life insurance company. The products and services include individual life insurance, group life insurance, accident and health insurance. The Company operates in four business segments: individual life insurance business, group life insurance business, short-term insurance business, and corporate and other business.

China Pacific

China Pacific Insurance (Group) Co., Ltd. (CPIC) is a insurance company providing, through its subsidiaries, a range of life and property and insurance services and pension products to individual and corporate customers throughout the country. CPIC was founded on May 13, 1991, and is headquartered in Shanghai. The company was listed in Shanghai Stock Exchange on Dec. 25, 2007, with the stock code of 601601 and the stock name of “China Pacific”. The Company was listed in the Stock Exchange of Hong Kong Limited on Dec. 23, 2009, with the stock code “02601” and the stock name of “CPIC”.

Ping An

Ping An Insurance is the first integrated financial services conglomerate in China that blends its core insurance operations into services including securities brokerage, trust and investment, commercial banking, asset management and corporate pension business to create a highly efficient and diversified business profile. The group was established in 1988 and headquartered in Shenzhen, Guangdong Province, China.

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India May Soon Let Insurers Form Subsidiaries & JVs Overseas

Indian insurance regulator IRDA (Insurance Regulatory and Development Authority) is currently drafting guidelines which would allow Indian insurance and reinsurance companies to open branch offices, subsidiaries or joint-ventures overseas.

IRDA is currently circulating preliminary draft guidelines on what would be required of Indian insurance companies in order to allow them to open operations overseas. As the drafts circulate among domestic insurance companies, IRDA is asking for feedback from insurance companies before the end of 2012.

Many of the preliminary guidelines appear to be aimed at ensuring that domestic Indian insurance companies seeking to commence overseas operations are on solid financial footing to do so, and that doing so would not pose risks to local business and policyholders. As it stands now, domestic Indian insurance companies are not permitted to expand overseas, either through branch offices or investment in foreign firms, while foreign companies can currently own stakes in domestic insurers of up to 26 percent.

The draft allows for insurance companies of any category to apply to the regulator for permission to open foreign businesses after the insurers have been in operation domestically for 10 years. The proposed regulation would allow domestic insurers to start a foreign operation in a number of ways, either by opening branch offices, the formation of foreign subsidiaries by controlling the board or owning 50 percent of the paid-up equity capital, or by starting a foreign joint venture.

While many insurance companies in India have joined with foreign insurers to make joint ventures, any company that a domestic Indian insurer engaged with overseas to create a joint venture outside of India would not be allowed to enter into the domestic Indian insurance market.

Although there is a drive to make certain that Indian companies wishing to start operations abroad will have the financial wherewithal to do so without putting domestic business at risk, there are no concrete financial guidelines at the moment, whether with regards to the minimum net worth necessary to apply to the regulator for authorization or the capital requirements for establishing joint-venture’s overseas. However, the guidelines do mandate any losses incurred or capital requirements that must be met by foreign branches must be paid for by shareholder funds only, so as not to interfere with the policyholders’ funds in the domestic Indian business.

This could open a doorway to many opportunities for Indian insurance companies to globalize their business. In many places such as countries in the Middle East, there is a sizable Indian Diaspora which some insurers may already be considering tapping in to, however the opening of an office would also allow them to underwrite local business as well as expatriate Indians.

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Maldives Enlists Allied Insurance for Universal Health Insurance

The Maldivian government will move forward on plans to engage in a public private partnership with Allied Insurance to provide universal health insurance in the island nation.

The government had previously invited insurance companies to draw up plans for providing universal health insurance for the island and submit them to be considered for the partner position. The Maldivian Finance Ministry made the announcement that it was looking for private sector insurers to partner with in late October, prompting Sri Lanka Insurance, Amana Takaful and Allied Insurance to apply.

More recently, the Finance Ministry has announced that it will be partnering with Allied Insurance to provide universal health insurance to the populace, as it was the only company to finish the letter of expression.

The proposed system for the universal health insurance program is designed to be split 40/60, with the government holding 40 percent ownership in the scheme and the private insurance company, in this case Allied Insurance, holding the remaining 60 percent. The system is supposed to provide a wide array of benefits, including emergency treatments, both inpatient and outpatient treatment, prescribed medicines, therapeutic treatments and emergency evacuations within the Maldives. Also to be included will be overseas cover for any treatments that are not available locally.

In fulfilling its roll as the private sector partner, Allied Insurance will be handling billing from healthcare providers, processing claims and raising public awareness. The Maldivian government will pay the premium. The ministry’s Director General Saami Ageel said that they were still negotiating the costs of the insurance plan with Allied.

There is still much debate surrounding the implementation of the universal health insurance plan, and many things may change before the scheme gets underway. MPs are debating the 100 or so amendments that have been proposed, many of which could have a fundamental impact on how the scheme operates.

As the bill currently stands, workers are required to contribute 3.5 percent of their salaries towards the universal health insurance scheme, however, some MPs have already called for the scheme to be compulsory for both locals and expatriates in the Maldives. Other MPs have submitted amendments that would alter the amount of money contributed by the worker and others that would require the employer to contribute as well. Another proposed amendment would see the government pay all costs to cover the entire country under the scheme and do so through money raised by a tax on tobacco products.

There are reports that the universal health insurance scheme is supposed to begin being implemented in January of 2012, however this may depend largely on the content and number of amendments that have been proposed to the universal health insurance bill as more material changes to the proposed system may delay the start date.

Company Mentioned

Allied Insurance Company

The Allied Insurance Company was founded as a joint-venture between the Maldives’ State Trading Organization and the Commercial Union Assurance Company of the UK in 1985. In 1987 the STO bought back all shares from Commercial union Assurance and Allied Insurance now offers a wide range of general insurance products and life insurance in the Maldives.

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Aviva Setting Up Locally Compliant UAE International Health Insurance

UK-based Aviva is moving to build a network in the United Arab Emirates to provide international health insurance products to expatriates situated on the Arabian Peninsula.

Many countries in the Gulf Cooperation Council (GCC) are facing rising costs of healthcare, often due to a rising number of instances of lifestyle related diseases such as diabetes and heart disease. Abu-Dhabi alone spends approximately AED1 billion (US$272 million) every year on healthcare costs associated with treating young diabetics at risk of suffering heart disease in the future.

Abu Dhabi is not alone in this, with GCC compatriot Saudi Arabia having similar problems. The rise of sedentary lifestyles in the region has pushed the levels of obesity up alongside diabetes and related diseases. As many countries in the GCC pay for a large proportion of healthcare in their countries, this rising tide of costly chronic and lifestyle-related health problems is becoming an increasingly large problem.

The GCC healthcare market is expected to grow by approximately 11 percent a year, from an estimated AED94 billion (US$25.6 billion) in 2010 to AED161 billion (US$43.9 billion) in 2015. Given that much of this expenditure on healthcare is paid for by governments, many in the region are looking at health measures to ameliorate the trend lifestyle diseases, as well as possible health insurance mandates.

Abu Dhabi has led the way in this regard, initially requiring mandatory health insurance policies originally for expatriates to get a visa, and later expanding that program to the point where mandatory health insurance is now a requirement for most citizens and residents in the country. While other countries in the region may be debating similar requirements, some health insurance companies are working proactively to provide products that offer customers quality products while fulfilling any governmental health insurance requirements.

International health insurance company Aviva has recently been working with Abu Dhabi-based Emirates Insurance Company to build up a UAE health insurance network. Their efforts have paid off, resulting in the creation of Emirates’ International Solutions product line, a group of 4 benefit plans designed especially for the UAE region which will be available after March 1^st, 2012.

In being designed for the local region, international health insurance products that are to be available from Aviva will comply with local regulation. This means that any expats who live in Abu Dhabi will be able to take out one of the Emirates’ International Solutions products and have it satisfy the visa requirement for compulsory local insurance, allowing them to simply have one plan to cover them in Abu Dhabi and internationally.

In commenting on the recent news, the International Business Lead for Aviva, UK Health, Teresa Rogers noted that “Offering health provision in the UAE is complex due to different legislative requirements across each of the Emirates. We’ve worked with a specialist international law firm to help us develop bespoke solutions for our customers based in the UAE and we believe that our four products will enable us to respond to changes in legislation and customer needs both now and in the future.”

Company Mentioned

Aviva

Europe’s fourth largest insurance company, with more than 300 years of experience in the global insurance industry, Aviva is committed to the safety and satisfaction of its customers. They sell a broad range of insurance products including motor and property insurance, protection and health insurance, business insurance, life insurance and pensions.

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Thailand Flooding to Hit Reinsurance Industry

With the flooding in Thailand beginning to abate after it first started in July, the cost of covering all the P&C (property & casualty) insurance claims and other flood-related claims may come to upwards of US$10 billion for the insurance industry.

With the rains during Thailand’s monsoon season causing flooding across many parts of the country over the last few months, the loss of life and property has been devastating and will continue to have long lasting effects. The World Bank estimated in early December that the total damage from the floods was about US$45 billion.

While the estimated overall damages dwarf the damages covered by the insurance industry, estimates coming in from industry observers and reinsurance companies are indicating that insured losses from the flooding could be anywhere between US$8-11 billion dollars. This will further hit reinsurers after a long year full with tragic natural catastrophes around the world.

Asia Capital Reinsurance Group (ACR) has estimated that their losses, before tax but after any reinsurance and reinstatement premiums have been subtracted, add up to US$55 million. Singapore-based ACR’s estimates were based off of 1 percent market share, and were largely calculated from information they were getting from brokers and clients and therefore may be liable to change.

Swiss Re and Munich Re, two of the largest reinsurance companies worldwide both had tremendous insured losses due to the flooding. Swiss Re has estimated that so far its losses stand at US$600 million before tax and net of buying reinsurance on their reinsurance, bringing their total claims this year to US$3 billion for large losses. Munich Re is reporting similar levels of estimated losses at €500 million (US$660 million) net before tax. As with ACR’s estimated losses, these numbers may be due to change as the insurers get more solid information.

The flooding in Thailand has hit reinsurers at the end of a long year marked by large scale catastrophes including the earthquake and tsunami in Japan, the Earthquake in New Zealand and severe storms in the US. Moody’s has pegged 2011 as having “the second-highest level of insured natural catastrophe losses in history.”

Industrial estates in Thailand have been hard hit, with some reports saying as many as 1,500 industrial manufacturing and supply facilities have been damaged by flooding. Approximately 25 percent of computer components for hard drives are made in Thailand, and the interruption in manufacturing and supply is already sparking reports on the effects it may have on shipments of computers in 2012.

Moody’s Investor Services has already said that the global reinsurance industry will be “meaningfully hit” by the losses, but provided there are no further catastrophes, it shouldn’t affect reinsurers’ capital. Some industry observers believe this will help the firming of prices which complimented by the increased awareness of the effects of catastrophes among clients, could lead to an earnings event in the near future for the global reinsurance industry.

Companies Mentioned

Asia Capital Reinsurance

The Asia Capital Reinsurance Group is headquartered in Singapore with branch offices in Korea, Hong Kong, Japan, Taiwan, and India. The company offers reinsurance solutions across a number of lines of business throughout the pan-Asian region.

Munich Re

Munich Re focuses on providing financial stability, and consistent risk management based on its extensive solution-based expertise. 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.

Swiss Re

The Swiss Reinsurance Company Ltd was established in 1863 and is present in more than 20 countries. Swiss Re provides reinsurance products and financial service solutions. It offers various reinsurance products covering property, casualty, life and health insurance as well as special lines such as agricultural, aviation, space, engineering, HMO reinsurance, marine, nuclear energy, and special risks.

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Is the Latin America Health Insurance Market in Good Shape?

In recent weeks there has been a wave of news from within the international Health insurance industry revealing that Latin America is causing a host of issues for Health Insurance companies.

The leading causes of concern are primarily fraudulent claims being submitted under plans, and massive overcharging by healthcare providers for individuals seeking treatment who are in possession of medical insurance coverage. Both these issues are leading to increased health insurance loss ratios for most companies providing policies to the region, and is placing the continued viability of international health insurance for LatAm in doubt.

This is especially concerning considering the fact that Latin America has weathered the global economic downturn in a fairly robust manner. Brazil, for instance, as a key market for many international insurance companies and a major emerging BRIC economy should present high growth opportunities for insurers.

Despite the perceived opportunities in the Latin American health insurance market insurers are increasingly wary of the region and are slowly beginning to pull out of these markets. One such insurance company planning to leave LatAm is Nordic, the health insurance brand of Europæiske Rejseforsikring A/S; Nordic has revealed that it plans to cease the sale of NHC Americas Health Insurance products.

The company is also moving towards a complete withdrawal from Latin America, and will no longer sell NHC products through Agents or Brokers located in the region.

The move has surprised many industry insiders as it has been known that Latin America was one of Nordic’s biggest markets, and the company was well placed to capitalize on the expansive economic growth of the region over the near term future.

However, Nordic sources have revealed that this withdrawal from the LatAm health insurance market was instigated after an extensive internal review, and is being conducted in order for the company to consolidate its positions in other markets, with Asia being a key focus.

Unlike the recent announcement regarding the complete shutdown of Aviva Global LifeCare Health Insurance products, Nordic has stated that policyholders currently enrolled on an NHC Americas health insurance plan will still be able to renew their policies going forward, and that the plan will be serviced in accordance with existing policy terms.

This means that in contrast to Aviva, Nordic will not completely disable its NHC Americas business, but rather stop the sale of any NHC Americas products to new customers. As such, existing NHC Americas policyholders will be able to receive continuing coverage for any medical conditions they may have developed while on their health insurance plan.

The two companies, Aviva and Nordic, could not have handled the “shut down” of their respective plans in a more contrasting manner. Nordic, unlike Aviva, has shown its commitment to policyholders and has displayed its intent to provide high quality on-going services to members who may have developed serious medical conditions while enrolled on their health insurance plan. Aviva, on the other hand, has shown a complete disregard for the impact of its actions on its clients.

While the Aviva Global LifeCare plans may have been loss making for the company, the position they have placed themselves in by simply ceasing to operate these products could do major damage to the perception of “safeness” which IPMI policies offer on a global level. Facing a similar position, Nordic has elected to stand by its existing customers who may have otherwise faced a difficult proposition in obtaining continuing coverage for this region.

Nordic will not force policyholders off plans which are already in place. This key distinction over the manner in which Aviva is treating existing members is a major insight into the duality displayed by many major Global health insurance providers in the modern age. For the international insurance industry to grow, consumers must have trust in the company they are working with, in that the protection they are purchasing is often intended to provide their medical coverage for the rest of their life. While Aviva may have had a negative impact on the perceived trust levels clients have towards their insurer, Nordic has proven that at least some international insurance companies do care about the people they are protecting, and that these insurers are committed to protecting customers over the long haul.

At present it is still unclear why NHC has made this startling decision. Market Analysts suspect that one of the major contributing factors is due to the company’s Claims Ratio in the LatAm region; future claims development in Latin America for NHC was viewed by insiders as potentially unsustainable.

While the news will undoubtedly come as a blow for individuals in Latin American countries due to the high quality and coverage levels associated with the NHC Americas policy, the fact the Nordic remains committed to continuing service of existing customers will be welcomed by many.

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Middle East Insurance Slowdown Sees Development of New Products

A number of financial reports released by Qatari insurance companies on Monday indicate that the country’s insurance sector may be poised to experience a significant slowdown. Five Qatari insurance companies, operating mainly in the non-life insurance market, have indicated that the sector’s total net profits have risen by only 2 percent during 2011, compared to 9 percent for the same period in 2010.

The companies, which include Qatar Islamic Insurance, Qatar General Insurance and Reinsurance, Al Khaleej Takaful, Qatar Insurance, and Doha Insurance, saw the sector’s net profit for January – June 2011 reach QR 545.96 million (US$ 149.91 million), compared to the QR 537.11 million (US$ 147.48 million) in profits seen for the same reporting period in 2010. The data on the general profitability of these five Qatari insurance companies was released by Qatar Exchange data.

One of the primary reasons cited by the insurers with regards to the lower than expected profits in the first half of 2011 is due to the rise in premiums yielded to reinsurance companies. Reinsurance premium yielding has risen by 8 percent for Qatar’s insurance companies in 2011, with three companies actually yielding more than 55 percent of total written premiums to reinsurers. With the levels of premiums being yielded to reinsurers outstripping the total growth in premium revenue for the market, profits have inevitably come in at lower than expected levels.

Profit growth for the first half of 2011 for the five companies, compared to the same period in 2010, stood at:

Qatar Islamic Insurance: 1.83 percent growth in 2011, up from 0.43 percent in 2010.

Qatar General Insurance and Reinsurance: 1.83 percent growth in 2011, up from -7.31 percent in 2010.

Al Khaleej Takaful: 11.29 percent growth in 2011, down from 46.85 percent in 2010.

Qatar Insurance: 10.74 percent growth in 2011, down from 65.77 percent in 2010.

Doha Insurance: -8.80 percent growth in 2011, down from 60.55 percent in 2010.

While the slowdown of the non-life insurance sector in Qatar does not pose major concerns at present, it has highlighted the need to create innovative policies with which to cover underserved segments of the Middle Eastern insurance market.

One company taking notice from the Qatari slowdown is the Dubai Islamic Insurance and Reinsurance Company, also known as Aman, which is headquartered in Dubai, UAE. Aman’s CEO, Hussein Al Meeza, announced the creation of two new types of protection policy which would focus on affording medical cover to Indian expatriates working in the United Arab Emirates.

The Indian Expatriate Medical Insurance plans from Aman are being run in conjunction with ICICI Lombard, one of India’s leading insurance companies. On creating the plans, Hussein Al Meeza said;

“If you check the structure of the population in the UAE and what relation it has with Emiratis, they are our partners; they are our brothers. They are also the people who (are) behind all the work that has been done here. The relationship that we have with the Indian population was not (built) today or yesterday. Also, we have (an agreement) with ICICI Lombard, which is one of the top names in the Indian market.”

Mr Hussein went on to say;

“Europeans already have the culture of insurance. They have very advanced products. We are looking to see where the opportunities are to provide services. We are looking at the Arab world, Pakistanis, Bangladeshis and Filipinos. It needs a background from the countries, because India has a platform for service providers… The Indian (expatriate population) is a big market and there are a lot of opportunities. Also, we got the right partner for the products.”

The policies, named “Rishtey” and “Health on Return,” aims to give Indian expatriates in the UAE a wider choice with regards to their medical cover than they have previously been afforded. The Rishtey plan would see UAE expatriate workers obtain medical insurance cover for their families in India, while the Health on Return policy would provide health insurance protection to those same expatriate workers in the event that they return to India for a short stay. Additionally, the Health on Return plan also offers the expatriate Indian workers the option of having retirement health insurance cover, creating a far more flexible and comprehensive health insurance product than any which currently cater to this niche market segment.

While a slowdown in Qatar’s general insurance market may pose a concern for the region, industry analysts are aware that there exists significant potential with regards to developing ever more unique products for the GCC insurance sector.

Insurance Companies Mentioned

Qatar Islamic Insurance

Founded in 1995, Qatar Islamic Insurance, also known as QIIC, operates a number of lines of insurance coverage. Offering insurance based on Islamic principles QIIC offers coverage for all risks from Aviation to personal protection.

Qatar General Insurance and Reinsurance

Qatar General Insurance and Reinsurance was founded in 1979, and is a Qatari national company. Qatar General Insurance and Reinsurance offers both individual and business insurance products in Qatar.

Al Khaleej Takaful

Founded in 1978, Al Khaleej Takaful operates primarily in the general insurance and reinsurance markets. Covering risks including Property, Engineering, Liability, General Accident, Marine Transit, and Marine Hull, Al  Khaleej has proven time and again to be an innovative insurer.

Qatar Insurance Company

Founded in 1964, Qatar Insurance Company, also known as QIC, is Qatar’s oldest insurance provider. Operating a number of personal and business insurance products across the GCC, QIC is one of the most established insurers in Qatar.

Doha Insurance

One of the younger insurance providers in Qatar, Doha Insurance was founded in 2000. Establishing a Takaful products company in 2006, under the name Doha Takaful Insurance, Doha Insurance company offers a range of general insurance products.

Dubai Islamic Insurance and Reinsurance Company

Dubai Islamic Insurance and Reinsurance Company, also known as AMAN, was established in 2002 to provide comprehensive Islamic insurance products to residents of the UAE. Offering Motor, Home, and Medical Islamic insurance products, AMAN is one of the leading insurance providers in the UAE.

Globalsurance International Health Insurance - Expat Medical insurance products for you and your family no matter where in the world you live.

Boosting Big Investments in “BRIC”

As the economies of Brazil, Russia, India and China continue to grow, increasing numbers of international insurance and reinsurance companies are seeking to enter into these burgeoning regional markets. As some of the most recent international insurers to tap new country markets have found out, not only must they balance short and long-term strategies, but also provide appropriate and appealing products to local populations, sometimes even in the middle of shifting regulatory environments.

Just last week, at the Insurance Day Conference in Bermuda, Joe Plumeri, CEO and Chairman of Willis Group Holdings, spoke about the importance of maintaining growth in the Indian health insurance market along with the markets of Brazil, Russia, and China, or the “BRIC” countries as they are sometimes called. He stated that due to these countries’ developing populations, “the wealth and insurable value that an exploding global middle class will create will be unprecedented in history. The resulting demand for insurance will dwarf the capital and capacity of today’s insurance market.” Plumeri emphasized that “the new middle class will need brokers that understand them and their industries. They’ll need carriers who are innovative, financially secure, and who are there when they need them-carriers with a reputation for paying legitimate claims quickly.” A report published by Standard and Poor’s this week reaffirmed his opinion, with S&P credit analyst Magarelli stating that India’s “non-life sector, which includes property/casualty and health insurance, has one of the lowest penetration rates in Asia.” Again asserting Plumeri’s opinion on what customers will need from carriers, Magarelli proclaimed that in order to maintain the growth of the Indian insurance market, insurers need to start focusing more on key factors such as customer service, innovation, and efficiency; currently, “the insurers’ persistently poor underwriting performance..could potentially stunt the industry’s growth if it remains unchanged.”

As the demand for insurance in Brazil grows, The Travelers Companies Inc has just purchased 43 percent of Brazilian insurance company J. Malucelli Participacoes em Seguros e Resseguros SA for US$410 million, with the opportunity to increase its stake in the company to 49.9 percent over the next 18 months. As J. Malucelli already commands 30% of Brazil’s largest market, it is no surprise that Vice Chairman and head of Traveler’s Financial, Professional, and International Insurance business segment Alan Schnitzer said that J. Malucelli’s “extensive customer base provides us [The Travelers Companies, Inc.] with an exceptional platform for expanding the joint venture beyond the surety business into the growing property and casualty market.”

In accordance with projections for growth in Malaysia’s insurance sector, Zurich Insurance Company Ltd has just purchased Malaysia’s Assurance Alliance Bhd, a subsidiary of MAA Holdings Bhd, in full. A financial holding company, MAA offers general and life insurance, reinsurance, property management, investment advising, and more; Zurich purchased the general and life insurance sectors of the company. The sale comes a few months after Dan Bardin, Zurich’s chief executive of Global Life Asia Pacific and the Middle East, disclosed that the company was interested in expanding in Malaysia, saying that now is a “great time” to focus on expansion in Asia, although it can be “an enormous task to integrate.” Unfortunately, the sale effectively removed the basis of MAA, resulting in the quick descent of MAA’s shares on the Bursa Malaysia Stock Exchange from 5 sen to 67.5 sen on a volume of 32.63 million shares. MAA is also suffering other monetary issues, as without adequate internal funding, the company may not be able to pay their final principal payment of RM140 million. Whether or not they are able to do so will depend on the profit made from the RM344 million (US$114 million) sale to Zurich.

Bardin has reported that the company is also interested in expanding to Singapore and Taiwan. Contrary to S&P credit analyst Magarelli’s opinion that India has “one of the lowest penetration rates in Asia”, Zurich Regional Chairman of Asia/Pacific and the Middle East Geoff Riddell has reported that the company is currently not looking at expanding to India due to the competing prices caused by large private life insurers entering the market already. In March, Warren Buffett’s Berkshire Hathaway entered the Indian insurance market to sell automobile policies for Bajaj Allianz General Insurance, while New Zealand/Australia insurance giant IAG currently owns a 26 percent share of the Indian sector of its business alongside the State Bank of India.

Managing Director of Swiss Reinsurance’s Corporate Solutions Division Ivan Gonzalez elaborated on Swiss Re’s goals for expansion in the future in an interview last week. With 80% ownership of Brazilian insurance company UBF Seguros, Swiss Re has already gotten a footing in the Latin American insurance market, but they hope to use this ownership to expand in and out of Brazil; to grow the company “as a business”. With an eye on the other three largest Latin American markets-Mexico, Chile, and Columbia, Swiss Re is also opening an office in Miami, in order to “be closer to the Latin America market”, Gonzalez said.

Locally, Hong Kong is also trying to maintain its global financial foothold, as the Hong Kong government has begun to talk about creating an independent insurance authority; its aim will be to enhance “regulation and development of the insurance industry”, the government said. Secretary of Financial Services and the Treasury KC Chan also stated that the authority will “reinforce Hong Kong’s position as an international financial center.”

It is clear that companies will continue expanding into Brazil, Russia, India, and China, but only time will tell if they will be able to provide customer service that will maintain a good relationship between these countries and their new insurers.

Insurance Companies Mentioned:

Zurich: Although its headquarters are in Switzerland, Zurich services customers in more than 180 countries, providing insurance for markets in North America, Europe, Latin America, and the Asia Pacific. In North America, Zurich is the second-largest provider of commercial general liability insurance and the fourth-largest commercial property-casualty insurer.

Swiss Reinsurance: As the second-largest re-insurer in the world, Swiss Re maintains a presence on all continents, providing reinsurance for Property and Casualty and Life and Health related issues, as well as risk management services for corporations.

Bajaj Allianz Insurance Company: A joint venture between global insurance giant Allianz SE and Bajaj Finserv Limited, one of the 2 and 3 wheeler manufacturers in the world, Bajaj Allianz offers health, child, and pension policies in more than 1,200 offices across India.

J. Malucelli Seguradora SA is a Brazilian insurance company that provides surety insurance.

Malaysian Assurance Alliance Holding’s Berhad (MAA Bhd) is a financial holding company that provides financial services and insurance in South Asia, dominating in Malaysia while also establishing a presence in Indonesia and Malaysia.

Berkshire Hathaway: Under CEO Warren Buffet, Berkshire Hathaway manages many subsidiary companies, including Geico Auto Insurance, and can also provide financial planning help.

UBF Seguros: is a small Brazilian insurance company that provides agricultural and surety insurance.

Willis Group Holdings: As one of the world’s leading insurance brokers, Willis provides professional insurance services, reinsurance, risk management, financial and human resource consulting, and more in almost 120 countries.

The Travelers Company: One of the largest American insurance companies and the largest writer of US property-casualty insurance, The Travelers Company provides personal, business, financial, professional, and international insurance and ranks 106 on the Fortune 500 list.

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Lloyds moves into Saudi Arabia with RFIB

RFIB Group, the international Lloyd’s insurance and reinsurance broker, has been approved for an intermediary license by the Saudi Arabian Monetary Agency (SAMA) to commence its insurance and reinsurance operations in the Kingdom of Saudi Arabia.

RFIB had been active in the Saudi Arabia insurance market for nearly three decades, but renewed regulatory efforts initiated by SAMA last year have required all foreign brokers operating in the Kingdom to attain a license.

Upon the successful receipt of the license, RFIB has now established a branch office in the Saudi capitol city, Riyadh. SAMA also required RFIB Group to select a Saudi Arabian business partner to set up its Riyadh unit. The company has partnered with Bassam Al-Dhabaan, which now owns 40 percent of the local business.

This move follows RFIB’s entrance into the Russian market earlier this year, with the establishment of new Moscow-based retail broker Anglo Russian Insurance Broker (AnRu). AnRu operates as both an insurance broker and an agent targeting corporate retail business. AnRu already has several agency contracts signed with leading local insurance companies, and is expected to rapidly develop in 2011, according to RFIB.

At the outset, RFIB’s new Saudi office will handle reinsurance business, but after its first year of operation the company intends to explore further opportunities in more specialized retail insurance businesses. The Saudi subsidiary will be headed by Anthony Harris, a former British Ambassador to the UAE who been working for RFIB in the Middle East since February 2006.

On the establishment of the new RFIB unit, Anthony Harris said in a statement: “RFIB has been handling reinsurance risks from the Saudi market for nearly 30 years, but our new insurance and reinsurance broking license is the final stage in our establishing a domestic presence in this important and growing market and we would like to thank SAMA for their help in working with us to achieve this license.”

RFIB have also appointed Naji Tamimi, a Saudi national previously at local firm Malath Cooperative Insurance & Reinsurance Company, as the new office’s deputy general manager. Currently the RFIB offices have four full-time staff members and will soon look to ramp up recruitment efforts. The company eventually intends to have at least 50 percent of its staff be comprised of Saudi nationals.

Adrian Spooner, RFIB’s managing director in the Middle East, commented on the company’s expansion strategy: “Naji’s appointment as Deputy General Manager has been invaluable in establishing our new office in Riyadh. His long experience in the market and extensive contacts will be crucial in growing our business in the Kingdom. We now intend to seek further recruits from the local market, working closely with our international team in London to aid staff training and development.”

Saudi Arabia’s labor market has become a sensitive political matter in the Kingdom. In the midst of regional unrest and a considerable 10.5 percent unemployment rate, creating job opportunities for Saudi nationals has become a priority. Various schemes are being discussed by the government that will evaluate the employment of native Saudis by private companies and differentiate between those that have achieved high ‘Saudization’ rates, and others who have not; with stricter limits on foreign work-permits a real possibility going forward. Saudi Arabia employs around 8 million expatriate workers, 6 million of whom work in the private sector.

While foreign employees may not necessarily be in demand, outside capital certainly is becoming more welcome in the MENA region. Insurance House, a recently launched Abu Dhabi based insurance company, agreed at a shareholders meeting to raise the limit on foreign ownership of the business to 25 percent of the company’s paid up equity share capital. The move comes just days after Insurance House’s public listing on the Abu Dhabi Securities Exchange (ADX).

Insurance House provides insurance services to Gulf businesses and individuals from its headquarters in Abu Dhabi, and branch offices in Dubai and Sharjah. It has a listed paid-up capital of Dh120 million (US$32.7 million). Last month the insurer raised an additional Dh66 million (US$18 million) as it sold 55 percent of shares to the public. The share issue was available exclusively to UAE nationals at a minimum subscription of 25,000 shares per investor.

Mohammed Alqubaisi, chairman of Insurance House, spoke admirably of the company’s development. “[The IPO] is another milestone for Insurance House. We will always strive for excellence and will endeavor constantly to create value for our existing shareholders. Additionally, we will give an opportunity to foreign investors to participate in our promising venture by building a successful and established relation with them,” he said in a statement.

The Insurance House’s decision comes after a similar vote last week by First Gulf Bank, UAE’s second largest bank by market capitalization, to increase foreign ownership limits from 15 to 25 percent. UAE firms are seeking an upgrade to “emerging-market” status from “frontier market” by international index provider MSCI.

The MSCI cited the UAE’s tight limits on foreign ownership of listed companies as one of the key barriers currently preventing an upgrade to the market’s status. An upgrade to emerging-market status could drive an increase in international investment in companies throughout the Emirates. The limit for foreign ownership of listed companies in the UAE is 49 percent.

At present, non-Gulf foreigners ownership accounts for 8.5 percent of equities listed on the UAE markets, with holdings of Dh12.4 billion (US$3.37 billion). UAE citizens hold around 91 percent of all equities and the remainder is made up by other Gulf nationals.

Opening up further foreign investment opportunities in Gulf companies is expected to continue, according to market analysts. As more firms go public on local indexes they will need to amplify the visibility of their stock and increasing outside ownership limits is an effective way to get more attention.

Companies Mentioned

RFIB

RFIB Group is an international Lloyd’s insurance and reinsurance broker. The company provides insurance for a variety of risks associated with both facilities and personal casualty. In addition, RFIB offers an assortment of reinsurance products; and acts as broker and consultant to other direct and reinsurance brokers. The company’s clients include corporations, banks, insurance and reinsurance companies, captives, groups and individuals. RFIB was founded in 1980 and is based in London, the United Kingdom with branches worldwide.

Insurance House

Insurance House was launched in May 2011. The company provides a wide variety of insurance products and services to businesses, groups and individuals from its headquarters in Abu Dhabi, in addition to branches in Dubai and Sharjah.