Apr
27
Aviva: Half of UK Staff Want to Emigrate, Quarter Fear Worse Benefits When They Do
Filed Under Aviva, United Kingdom | 2 Comments
A new study conducted by Great Britain’s second largest insurer, Aviva PLC, reveals interesting developments on the changing attitudes of British workers when considering possible emigration from the UK.
The study, facilitated by market researchers OnePoll, surveyed 1,000 British employees nationwide aged 18 to 45 from 31 March to 5 April 2011, and found that over half (54%) of respondents would now contemplate leaving the United Kingdom and moving abroad.
While short respites outside of the UK have become more common, Aviva was surprised by the number of people contemplating better long-term prospects outside the country. Almost half (46%) of the respondents would consider a permanent move abroad compared to only 39 percent of those surveyed last year. One in five polled (21%) indicated however, that they would remain more cautious and only be prepared to move overseas for between one to three years.
The unconvincing forecast for the British economy has been the primary factor in the growth of these figures. Aviva’s survey discovered that 89 percent of respondents believed that the UK job market has been in perpetual decline for the last 3 years. More than half (54%) further admitted that government cuts have had a negative impact on their standard of living. Many of those surveyed claimed that the current culture of austerity and cost-cutting initiatives in Britain were now playing a key role in driving them to consider a move abroad.
More traditional reasons for emigration from Britain were also represented in the report. Almost half (45%) of respondents indicated that they were motivated to move abroad in pursuit of a better year-round climate. A further third of those polled (31%) believed that a move overseas could offer a healthier, less demanding and more varied lifestyle, with a better balance of work and family time available.
Aviva’s research showed that the same five countries first identified in the company’s 2010 study remained the principal re-location destinations of choice: Australia, Canada, Spain, New Zealand and the US. Other countries mentioned as popular destinations included: France, Germany, Italy, Switzerland and the UAE.
Addressing the UK study, Teresa Rogers, business lead for international private medical insurance at Aviva, said: “When times are tough, it might seem natural to set one’s sights on moving abroad. But our survey shows that there are certainly pros and cons to moving and people need to plan carefully if they are considering making their dream a reality.”
Indeed, the research highlighted that a quarter (25%) of British respondents worried that they might have worse benefits if they moved out of the country. More than a third (37%) acknowledged that they may have fewer state-funded privileges in their new foreign location.
Mrs. Rogers further highlighted that uncertainty regarding quality of medical service in a new country remained a chief going concern for expatriates. “Health is clearly a primary concern for people and whether you’re thinking of moving abroad for a short time or on a more permanent basis you need to take care to ensure you and your family are always properly protected,” she added.
Healthcare has been an increasing concern for Britons when considering a move abroad. Almost half (46%) of those polled believe the UK has superior health benefits to other countries worldwide. Over a third of respondents claimed the National Health Service (NHS) would be one of the British institutions they would miss the most if they left. This is an increase on last year’s results which indicated only a quarter (25%) felt the same way about the NHS.
Speaking for Aviva, Mrs. Rogers understood British concerns with regard to foreign healthcare services: “Healthcare provision varies greatly around the world and even routine medical care can prove costly in countries that don’t offer a similar service to the NHS.”
Anxiety about medical services overseas, prompted six in ten (59%) responders to declare that they would factor heath insurance into their travel planning. In contrast, 38 percent of those polled, claimed they would not arrange any sort of health insurance prior to moving.
Mrs. Rogers summarized Aviva’s assessment of these figures: “Although it’s very encouraging that over half of the people we spoke to would consider taking out international health insurance, over a third (39%) would sort their health insurance out only once they’ve arrived,” she said, adding, “this could leave them in a difficult position should the worst happen.”
To better meet the needs of their expanding base of globally mobile clients, Aviva has been upgrading its international private medical insurance products. These upgrades range from structural adjustments in the application and claims handling processes to minor changes in global group coverage policies.
Aviva has also been very proactive in expanding its operations to attract more potential clients worldwide. The company has established a presence in many of the increasingly lucrative Asian insurance markets through joint ventures with locally based insurance companies in order to capitalize on the rising demand for insurance products and services in the region.
In Asia, Aviva currently operates out of China, India, Malaysia, Sri Lanka, Singapore and Hong Kong, and recently agreed to acquire a 60 percentage stake in Asuransi Winterthur Life of Indonesia. Although Aviva has announced its intentions to pull out of its joint venture with First Financial in Taiwan, pending regulatory approval, the company remains otherwise committed to concentrating on both the Indian and Chinese key markets in the Asia-Pacific region and it’s well established client base in Western Europe and North America.
Insurance 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.
Mar
22
Britain seeks to prevent abuse of NHS
Filed Under Healthcare, United Kingdom | 1 Comment
A series of new reports issued by both the UK Border Authority and the Department of Health outline plans the British government will take to ban foreigners from entry to Britain if they have previously amassed debts of £1,000 or more with NHS run hospitals.
The measures are designed to reduce the £10 million in revenue thought to be lost each year through deliberate temporary migration to and access of another state’s subsidized medical services without payment, also known as ‘health tourism.’
NHS healthcare is currently free at point of access for residents of the United Kingdom as well as members of other EU nations who qualify through reciprocal agreements. British GPs may elect to register any person as an NHS patient, leading many visitors to receive free primary care including licensed prescriptions. Access to secondary and more advanced care is supposedly subject to more screening and rules of entry, but in practice few are denied care or charged. Overall the NHS is seen as a more accommodating health service than many other countries, including accident & emergency treatment and full healthcare exemptions for overseas students and employees. The new health report concurs: “entitlement to free healthcare is considerably more generous to visitors and short-term residents than is reciprocated for UK citizens seeking treatment in other countries.”
While the Department of Health acknowledges the humanitarian duties the NHS must uphold in meeting the immediate medical needs of any person, they acknowledge that “there is also an obligation to the public purse to protect the NHS’s finite resources.” As a result of the current system only £40 million a year is recovered from “visitors”, with “at least a further 25 per cent (over £10m) of charges raised are not recovered and written off each year.”
To close this funding gap, The Department of Health and UK Border Authority have both carried out separate consultations and now agree that tougher rules for foreigners seeking medical treatment in the United Kingdom must be implemented.
As a result of these consultations, the UK Border Agency has decided to implement a change to immigration rules. Starting in October 2011, those who fail to settle debts to the NHS of £1,000 or more will “normally be refused permission to enter or remain in the UK.” Non payments above £1000 currently represent 94% of all outstanding costs to the NHS.
The Department of Health has stipulated that failed asylum seekers (who comply with Home Office support schemes), unaccompanied non-resident children and persons involved in the 2012 London Olympics and Paralympics will not be subject to charge for healthcare.
In order to implement this new health care cost-recovery policy, NHS Trusts will record details about patients from outside Europe and communicate more closely with immigration services to identify debtors when they make their application to return or stay in the UK. Personal medical records, however, will not be shared.
Immigration Minister Damian Green pledged: “The NHS is a national health service not an international one. If someone does not pay for their treatment we will not let them back into the country.”
A further comprehensive review of the current health system will analyze whether treatment costs could be covered through extending user fees to primary care services or whether to introduce a health insurance requirement for non-EU visitors. Additional reforms considered include an increase in time UK residents can spend abroad without losing their free healthcare entitlement, up from three to six months.
The Department of Health concludes that: “while the immediate actions to introduce immigration sanctions for debtors seeking to return to the UK will help to reduce levels of unrecovered debt, wider ranging actions are needed.”
While the NHS looks to cut down on abusive foreign patients, the growth of a global network of high quality medical services is legitimate. The substantial development of the global economy coupled with the falling costs of travel and communication has enabled world class medical practices to establish themselves all around the world. International clients seeking alternative healthcare solutions to their home countries at competitive prices now are presented with many opportunities.
Popular locations for medical travel include countries in South East Asia and Latin America, where many surgery procedures, including transplants, cost a fraction of the price they would do in North America or Western Europe and usually offer shorter waiting lists for treatment. The convenience and efficiency of pursuing international healthcare options is something to be considered for patients seeking to fully evaluate their future health procedures.
Mar
18
Legal & General Delivers Improved Results in 2010
Filed Under Insurance Company, Life Insurance, United Kingdom | 3 Comments
The major British based insurer Legal & General (L&G) has unveiled a rise in pre-tax profits to reach £1.09 billion (US$1.74 billion) in 2010 – up from £1.07 billion (US$1.71 billion) delivered in 2009. Plans also identify opportunities for future growth in both the domestic UK and overseas insurance markets.
L&G total sales worldwide grew by 28 percent – £1.8 billion (US$2.88 billion) – which was the key driver in delivering the UK insurer’s profits in 2010, including new business in the emerging insurance markets in Asia especially India; India and China are pinpointed for future growth.
The life insurer was able to surpass its £600 million (US$960 million) target for cash generation in the year ending 31 December 2010 – making a total of £728 million (US$1.16 billion) available. L&G’s savings arm was the catalyst for the improvement in the company’s results, with operating profits up by 130 percent over the year to total £1.15 billion (US$1.84 billion).
L&G is predicting that the UK’s savings and life market will continue to offer strong returns in the future, reflecting the need to redress underfunding which occurred in previous years. The life insurers said that it is well positioned in the market with its business model and product mix making it ready to capitalize on the potential for growth in demand.
However, L&G will continue to exploit demands in its international insurance operations, especially emerging markets in India and China, which are currently enjoying an economic boom. This will provide a safeguard to offset any slowdown in demands in western hemisphere countries as the impact of austerity measures are implemented to overcome national debt problems.
L&G aims to expand international operations within the two Asian powerhouses China and India by employing opportunities through bancassurance deals in order to create platforms for distribution of L&G insurance products.
In the burgeoning Indian insurance industry, L&G has enjoyed success with more than 130,000 policies sold during 2010 through its bancassurance joint venture – India First. This joint venture is expected to continue to enjoy product growth. Additionally, L&G has recently received approval by the Chinese regulatory authority – the China Insurance Regulatory Commission (CIRC) – to open an office in China providing scope for a possible future Chinese bancassurance venture.
India First is L&G’s bancassurance Indian insurance venture with local banks Bank of Baroda and Andhra Bank in which the British insurer holds a 26 percent stake. India First was established in March 2010 and has a network of over 4,800 branches across India and provides life and health insurance along with financial, retirement, savings and investment planning products and services.
The insurance industries in China and India have become essential markets for insurers in order to capitalise on the increasing wealth of an expanding middle class population seeking savings and protection products.
L&G has operations in Egypt and the Gulf states, a region also experiencing economic prosperity, although on a smaller scale than Asia. The region offers scope for expansion because of the relative fledgling status of the insurance sector in these countries.
Meanwhile, the UK insurance sector has seen insurers consolidate market positions since the 2007-2008 global financial crises with L&G competing with other major insurance companies such as Prudential, Standard Life and Aviva. Opportunities for growth in the savings and pension sectors in the UK – and other Western European countries – have been assessed as substantial in order to close a gap of some £2 trillion (US$3.3 trillion) annually in the funding for corporate and individual contributions. This is compounded by the diminishing value of state provided pensions, with the possible imposition of legislation in the UK for all workers in the UK to contribute to personal pension plans.
L&G has been able to turn-round its shortfall in profitability immediately following the 2007- 2008 worldwide financial crises, although unlike some multinational insurers it did not require a government bailout loan to avoid collapse, and is now confident that its market position will deliver future growth opportunities. The company is also satisfied that it has built up sufficient cash reserves – with the target of adding a further £700 million (US$1.1 billion) in 2011 – to provide a total capital reserves of £3.7 billion (US$5.92 billion), which will be more than adequate to meet the new European legislation on solvency – to be introduced in 2012.
Insurance Companies Mentioned:
Legal & General
Legal & General was founded in 1836 and is based in the United Kingdom and offers a variety of risk, savings and investment management products. L&G saving products includes unit trusts, individual savings accounts, investment bonds and pensions. In the risk market the insurer offers individual and group protection, individual and bulk purchase annuities and general insurance. The investment management business includes index funds, fixed income, risk management solutions, property and private equity. L&G’s International segment includes term insurance, group protection, wealth management and unit-linked saving.
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.
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.
Standard Life plc.
Standard Life was established in 1825 and headquartered in Edinburgh, Scotland. Since its beginnings, Standard Life has expanded into a financial services company offering pensions, life assurance, and investment management to over 6.5 million customers around the globe.
Mar
10
Prudential’s 2010 Results Beat Expectations
Filed Under Insurance Company, United Kingdom | 2 Comments
The major British insurer Prudential plc reported better than expected results for 2010, with pre-tax profits totaling £2.1 billion (US$3.36 billion) reflecting a 24 percent year-on-year improvement in earnings.
Prudential’s operating profit also increased by 24 percent in 2010, amounting to £1.9 billion (US$3.04 billion), with new business sales rising by 23 percent to reach £3.5 billion (US$5.6 billion).
Following the controversial and unsuccessful bid to acquire AIG’s Asian arm, AIA, for £21 billion (US$35.5 billion) in 2010, Prudential focused on the generation of cash reserves and improvements in profit margins in order to enhance its position on the global insurance stage – especially in the rapidly growing Asian market.
The ambitious approach to acquire AIA was part of newly appointed Chief Executive Tidjane Thiam’s bid to seize AIG’s Asian assets and thereby instantly increase its network in a rapidly expanding region of the world for insurance products. However, Prudential’s shareholders strongly challenged the Chief Executive’s judgment and rationale in respect of the size of the bid, which was subsequently dropped by Tidjane Thiam.
In the event, Tidjane Thiam has been largely able to redeem himself with Prudential investors following the latest results after announcing a 20 percent jump in dividend payments at 23.85 pence per share; thus offsetting the disquiet over the £377 million (US$ 603.2 million) cost associated with the failed AIA bid.
Despite the failed bid, Prudential’s Asian insurance network has been able to grow and generate significant increases in sales activity during 2010. The demand for Prudential’s saving and protection products has primarily been down to the rapidly strengthening Asian economy, with the improving wealth of the massive populations in Asian countries such as China, India and Indonesia driving premium growth.
Following the collapse in the world’s financial markets in 2007-2008, Prudential adopted a disciplined strategy in order to protect and strengthen its balance sheet with the objective of improving profit margins. These measures have rewarded the multinational insurer by providing a springboard for substantial growth, primarily in the Asian region, and the consolidation of business in its other key markets.
Prudential is now focusing on the acceleration of profitable growth, with Asia expected to be the primary source of delivery. Within the Asian region, Prudential has highlighted the demands for insurance products in Indonesia, Malaysia, Vietnam, Thailand and the Philippines as hotspots for premium growth during 2011.
In addition to the emerging markets in Asia, the demands for protection and saving products in the two mature Asian island nations of Hong Kong and Singapore remain an attractive proposition for Prudential.
Although Prudential failed in the move to acquire AIA, the British insurer has a well established reputation across Asia, with an extensive distribution platform and good brand recognition providing the company with a competitive edge over rival insurers.
Prudential’s rivals include other multinational insurers such as Aviva, AIG, AXA, Allianz and Zurich with these companies also highlighting the Asian insurance market for potential growth as the once buoyant markets in Western Europe and the USA suffer from more challenging conditions as a result of stuttering economies and the imposition of austerity measures.
Insurance Companies Mentioned:
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.
AIG
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
AIA
The AIA Group is a leading life insurance organisation in Asia Pacific that traces its roots in the region back more than 90 years. It provides individuals and businesses with products and services for life insurance, retirement planning, accident and health insurance as well as wealth management solutions. Through an extensive network of more than 320,000 agents and approximately 23,500 employees across 15 geographical markets, the AIA Group serves the customers of over 23 million in-force policies in the region. The AIA Group has branch offices, subsidiaries and affiliates located in jurisdictions including Australia, Brunei, China, Hong Kong, India, Indonesia, Macau, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.
Mar
9
Bupa’s Results Show Strong Growth In Emerging Markets
Filed Under BUPA, Expat Insurance, Health Insurance, Medical Insurance, United Kingdom | 3 Comments
British United Provident Association (BUPA) announced results for the year ending 31st December 2010, with strong international sales contributing to a 9 percent jump in revenue to total £7.58 billion (US$12.12 billion) for the year.
However, the health insurers’ surplus before taxation expense was down by 72 percent to £118.0 million (US$188.8 million) from £416.5 million (US$666.4 million) reported in 2009, mainly due to goodwill impairments of £249.2 million (US$398.7 million).
Bupa’s overall revenue was up 9 percent compared to 2009 reaching £7.58 billion (US$12.1 billion); this reflects a 4 percent growth from organic activities and a 5 percent benefit from favourable foreign exchange movements. The key drivers for improvements in sales were Bupa’s international businesses in Asia, Latin America, Australia and Saudi Arabia; the improvements from these sources offsetting static sales in the UK, North America and Spain during 2010.
Bupa’s underlying surplus before taxation amounted to £464.9 million (US$743.8 million) representing a 9 percent improvement year-on-year primarily down to the positive performance in Australian and Asian healthcare markets.
The Bupa Health and Wellbeing UK (BHW) brand also produced sound results contributing to the health insurer’s profit margin following the restructuring of this business sector.
Bupa struggled in some established markets – particularly in the UK, US and Spain – during 2010, with new sales remaining static in line with the very tough economic conditions applicable in western hemisphere countries.
Buoyant sales in Asian, Latin American and in Middle Eastern countries, along with a new business activity in Australia, helped the company offset the loss of growth in previous dominant markets.
A key driver for Bupa’s robust international sales figures resulted from the market for expatriate health insurance. This activity strengthened in 2010 with increased mobility by expats searching for new opportunities as economic conditions deteriorated in Europe and the US causing high levels of unemployment; Bupa was able to capitalize on this trend, being one the leading insurance providers for expatriate health insurance.
In Asia, Bupa saw profitability levels increase as higher customer numbers helped revenue from international activity reach £3.39 billion (US$5.42 billion) in 2010 – up from £2.83 billion (US$ 4.52 billion) in 2009. This represented a 20 percent increase in revenue generating a business surplus of £208.9 million (US$334.2 million) in 2010.
Bupa’s fledgling operations – Bupa Arabia and Bupa Australia – have generated new customers: now there are over 1 million BUPA policyholders from the Middle Eastern operation and over 3.2 million customers in Australia. Bupa Arabia’s sales have benefited from the health insurance legislation in place in Saudi Arabia, which requires all expatriate residents in the country to hold private health insurance.
There was a notable growth in sales in Hong Kong and Thailand which saw customer numbers increased by 12 percent and 9 percent respectively. Health insurance delivered a good performance in both countries with new sales growth and high retention of existing customers.
MaxBupa, the standalone Indian health insurer, was initiated by Bupa in 2010. It now has a presence in nine cities and has established a network link with over 700 hospitals across India. Bupa is in a strong position in India through their MaxBupa venture, which has already secured a sound reputation with over 27,000 customers in a market set to expand as economic conditions strengthen.
Speaking on Bupa’s 2010 results, Chief Executive, Ray King, said: ‘We achieved strong growth in our insurance businesses in Australia and Asia and increased operational efficiency in our businesses in Europe and North America, where market conditions were more challenging.”
Bupa is expecting business to grow in 2011 particularly in the expanding Asia-Pacific and Latin America regions, where there is an increasing demand for quality health insurance. The momentum within these two emerging regions and Saudi Arabia are expected to drive profits for the international health insurer and create an increasingly diversified customer base.
While growth is expected in emerging markets, Bupa is anticipating challenging conditions to continue in its traditional markets in the UK and the USA with sales likely to be inhibited as economic conditions are impacted by austerity measures being applied nationally. While unemployment numbers remain high in the UK and the USA, both individual and corporate health insurance sales are expected to be frustrated.
As global demands change, Bupa will seek to penetrate new markets and strengthen its foothold in emerging markets where a presence has been recently been established. The health insurer also plans to develop its product range and quality of service in order to promote sales growth.
The UK based health insurer took a major strategic decision in 2007 and sold its private hospital network within the UK in an ambitious step to focus on the core private health insurance and care market. The £1.44 billion (US$2.2 billion) capital generated from the sale of private hospitals was used to strengthen Bupa’s global presence which is now reaping financial benefits.
In the medium term, Bupa is planning to grow by responding to demands from highly populous emerging markets where action has been taken to establish a presence.
Bupa’s global reputation has made it one of the leading multinational health insurers and it is a strong favourite with expatriates seeking health insurance cover. This sector of business has helped Bupa to increase sales during 2010 and it is expected to be a major contributor to trading activities in 2011.
Across the group, Bupa retains a strong market position with a sound financial standing. It is, therefore, well placed to meet the prevailing challenges in 2011 including pressures arising from the spread of chronic diseases, the rise in ageing populations and changing consumer and national government expectations about the services required from companies in the health insurance and care business.
Insurance Company Mentioned:
Bupa
Bupa was established more than 60 years ago in the UK and is now has ten million customers in over 190 countries, and over 52,000 employees around the world. Bupa is a leading international healthcare provider, offering personal and corporate health insurance, workplace health services and health assessments. As a provident association Bupa has no shareholders, because of this it uses its profits to invest in healthcare and medical facilities around the world. Bupa has operations around the world, principally in the UK, Australia, Spain, New Zealand and the US, as well as Hong Kong, Thailand, Saudi Arabia, India, China and across Latin America.
Mar
4
Aviva Produces Sound Results In 2010
Filed Under Aviva, Insurance Company, Life Insurance, United Kingdom | 6 Comments
Britain’s second largest insurer Aviva has reported sound results for 2010, with a 33 percent jump in net profit to reach £1.46 billion (US$2.33 billion). This compares with results in 2009 when a profit level of £1.1 billion (US$1.76 billion) was achieved. Aviva also highlights plans for an overhaul of global operations during 2011.
Aviva’s pre-tax profits came in at £2.44 billion (US$3.90 billion) for 2010 – a significant year-on-year improvement of 35 percent – when a corresponding pre-tax profit of £1.8 billion (US$2.88 billion) was reported. Operating profit strengthened in 2010 to £2.55 billion (US$4.08 billion) an uplift from £2.02 billion (US$3.23 billion) in 2009 reflecting a 26 percent rise.
New written business in the UK, Europe, North America and Asia contributed to the Aviva’s groups profits, with double-digit growth recorded across the network.
There were strong sales in Aviva’s life and pension sectors, along with growth in the general and health insurance businesses. Aviva’s life and pension sales increased by 4.2 percent to reach £33.36 billion (US$53.37 billion), while sales activity in the general insurance and healthcare business were up by 6 percent to total 9.7 billion (US$15.52 billion) in 2010.
Last year, Aviva announced that steps had been taken to save £400 million (US$640 million) in group costs in order to make the global insurer even more efficient to help long term growth.
Andrew Moss, Aviva’s Chief Executive said: “Over the last few years, we’ve grown the business, significantly reduced costs and strengthened the balance sheet. As a result, we’ve created a good platform for the next phase of growth.”
In reporting, Aviva highlighted future plans for growth which will see the insurer focusing on 12 core markets earmarked for investment in a bid to strengthen the group’s market position. Aviva said it will concentrate more closely on its most profitable markets while potentially departing from some non-essential market sectors which have been delivering lower levels of financial return.
The revamping of Aviva’s operations will take place over the next 12 months, but no specific details were given on the extent of the restructuring programme.
Part of Aviva’s future plan is to focus on the UK and European savings and pensions market, where the insurer expects significant growth in demand over the next few years. The UK and European savings market is one of the largest in the world with potential growth expected to generate a total market demand reaching £1.05 trillion (US$1.7 trillion) by 2014; this position has been established by research conducted by Aviva last year. Aviva’s study found that European citizens need to save an additional £2 trillion (US$3.3 trillion) annually to fully close the pension gap for people retiring between 2011 and 2051.
While some rival insurers have shied away from western European life and non-life insurance markets – preferring to concentrate on the higher growth markets in Asia and Latin America – Aviva sees great potential from the need to recover the shortfall in the savings and pension market in the European region. The pressure on corporate funding for pensions over a number of years, and the increasing awareness that private pensions will be required to supplement the value of state pensions, has created a huge pensions and savings gap creating a demand for long term investment and saving products.
Aviva has built a strong reputation in the insurance market within Europe and has significant brand awareness. Optimizing its position in the life and pension market in Europe is, therefore, key for the insurer to bolster future growth. Although the European region has seen a slow recovery from the global financial crisis which arose in 2007-2008, there is evidence that key industries have strengthened, with high demand for insurance products in emerging markets such as Turkey.
In the relatively static market prevailing in North America, Aviva was able to grow its business in 2010, with the operating profit totaling £376 million (US$601.6 million) reflecting a 77 percent increase year-on-year. The growth in Aviva’s North American operation was down to stronger pricing and underwriting management, within a slowly improving economic environment.
Meanwhile in the thriving Asia-Pacific region, Aviva is continuing with its strategic goal of increasing its presence and improving its market position. The British insurer is growing through organic processes and extending franchising, while investing in key sectors to capitalize on the rapidly expanding economies and demand for saving and protection products in the region.
In China and India, Aviva saw their market position strengthen, with the insurer experiencing a significant increase in new business. Meanwhile, in the mature Asian market of Singapore, Aviva’s local operation on the island also demonstrated growth in business during 2010.
Aviva intensified operations in China and India during 2010 and has made the two economic powerhouse countries priority targets for market growth due to the rapidly expanding number of people in the middle class sector, with increasing wealth driving demand for insurance products. Overall Aviva’s sales in China increased by 28 percent and in India sales jumped by 22 percent.
Aviva has been able to deliver improved profit figures for 2010 due to the implementation of cost management actions, coupled with positive sales growth across key markets in the UK, Europe, North America and Asia. The overall profit increase was generated in a tough market climate, but Aviva intends to focus on core markets in 2011 with plans to inject capital in order to enable the company to augment its already strong market position.
Insurance 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.
Mar
2
Catastrophe Payouts Hit Brit Insurance Profits
Filed Under Insurance Company, Personal Accident, United Kingdom | 2 Comments
The Lloyds of London insurer Brit Insurance reported that profits in 2010 were hit by high payouts on catastrophe claims resulting in pre-tax profits of £119.2 million (US$191.9 million) reflecting a fall of 30 percent compared to the £171.3 million (US$275.7 million) achieved in 2009.
Brit Insurance, which was bought by private equity firms Apollo and CVC Capital last year, said that profits in 2010 were adversely affected by substantial claims paid out during the year; the most notably claims arising from the earthquakes in Chile – which cost the firm £29.9 million (US$48.1 million) – and the September quake which struck New Zealand resulting in a £27.9 million (US$44.9 million) outflow of funds. The two events alone costing Brit Insurance a combined total of £57.8 million (US$.93.0 million).
However, Brit’s profit after tax improved by 26.2 percent to total £110.5 million (US$179.9 million) in 2010 – up from £87.5 million (US$140.8) reported in the previous year. There was a slight increase in written premiums of 1 percent in 2010 compared to a 4.8 percent uplift in 2009.
The US-based investment companies Apollo Global Management and CVC Capital Partners were attracted by the future potential in Brit Insurance’s balance sheet and strong market position, which were considered to present huge opportunities for the insurer; these factors prompted the takeover bid. The new owners acquired Brit for £880 million (US$1.4 billion) after their bid was accepted by shareholders in October 2010; the transaction was one of the biggest takeover deals completed in 2010.
Apollo and CVC Capital, who will take full control of Brit Insurance in March 2011, said that the steep decline in the pre-tax profit margin was primarily due to Brit’s high exposure to catastrophe risk coupled with a high number of claims and the low level of new written premiums during 2010.
Brit Insurance’s position was not unique as rival insurers have seen profits dented by high payout claims for catastrophic events occurring in 2010 – insurers such as Hardy and Beazley – which specialize in insurance coverage for large scale events, have experienced difficult operating conditions over the last year.
Earlier this year, Brit Insurance’s Lloyds of London competitors – Beazley Insurance – reported that the cost of the Chilean earthquake in February 2010 resulted in a minimum payout for them of £34.1 million (US$55 million) in claim payments; Beazley also incurred a cost of £21.7 million (US$35 million) as a result of the devastating earthquake in New Zealand in September 2010.
Brit Insurance has a presence in Europe, North America, Asia and Australia and is an international expert in the reinsurance market. The London based insurer, specializes in risks in sectors such as marine, contingency, aerospace, liability, accident and health insurance. Within the reinsurance sector, Brit is recognized as a multi-class and multi-territory portfolio insurer.
The major German based re-insurance specialist – Munich Re – reported that 2010 was one the worst years on record for natural catastrophes, with the effects of earthquakes, heat waves and floods contributing towards the £23 billion (US$37 billion) paid out in claims for insured losses during the year.
Natural disasters which took place in 2010 included the earthquakes in Haiti, Chile and Central China, floods in Pakistan and a heat wave in Russia. These devastating natural events during the last year influenced insurance company profits, with many insurers and reinsurers having high levels of exposure to these events.
Despite being less than a third way through 2011, large scale natural disasters have already hit Australia and New Zealand. At the start of the year devastating floods struck Australia and, more recently, another earthquake hit Christchurch in New Zealand – this one being even more devastating than the similar event in 2010. With political and social unrest now spreading across North Africa and the Gulf region – resulting in damage to infrastructure – global insurers and reinsurers would appear to be heading for another year of major payouts. Nevertheless Brit Insurance is well placed to move forward in 2011 with the new ownership set to exploit its reputation and strength in the insurance industry.
Risk management is the essential role for insurance companies. Consequently getting the risk-reward ratio correct is the key to profitable trading. While international insurers have been adversely affected by natural disasters in 2010 – which have impacted on profits during the year – the most important factor for insurance companies is to ensure year-on-year trading and new written premiums deliver results to achieve long term profitability.
Companies Mentioned
Brit Insurance Holding
Brit Insurance Holdings is a general insurance and reinsurance group, provides commercial insurance products. The company offers accident and health, contingency, marine, aerospace, professional risks, trucking, commercial motor, liability, personal lines, property and packages, small business, war and terrorism, and horses insurance policies. It also provides agriculture, casualty, marine, aviation, and property reinsurance policies.
Apollo Global Management
Apollo Global Management (“Apollo”) is a contrarian, value-oriented investors in private equity, credit-oriented capital markets and real estate. Apollo raises, invest and manage funds on behalf of some of the world’s most prominent pension and endowment funds as well as other institutional and individual investors.
CVC Capital Partners Ltd
CVC Capital Partners (‘CVC’) was founded in 1981 and is a leading global private equity and investment advisory firm, with it’s headquarters in Luxembourg with a network of 20 offices across Europe, Asia and the USA.
Beazley
Beazley plc, was founded in 1986 and is a specialist insurance company, provides underwriting and claims services. Beazley operates in five insurance segments: Marine, Political Risks and Contingency, Property, Reinsurance, and Specialty lines. The company has operations in Europe, the United States, Asia, and Australia.
Munich Re
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.
Hardy
Hardy Underwriting is a specialist insurer and reinsurer underwriting in the Lloyds market and other worldwide locations. Through its subsidiaries, Hardy is in engages in underwriting insurance and reinsurance products internationally. Hardy is included in underwriting aviation, marine, and non-marine risks on reinsurance and direct basis.
Feb
9
Specialist Insurer Beazley Reports Profits
Filed Under Insurance Company, USA Health Insurance, United Kingdom | Leave a Comment
Beazley the Dublin based insurance specialist has posted a pre-tax profit of US$250.8 million (£155.6 million:€84.7 million) for 2010. This is up from US$158.1 million (£98 million:€116.4 million) recorded in 2009, representing an increase of 59 percent for year-on-year results.
A breakdown of Beazley’s operations in 2010 shows that the insurer generated a 21.4 percent return on equity reflecting an increase from 16 percent last year. There was a 1 percent decline in gross written premiums, which totalled US$1.74 billion (£1.08 million:€1.28 million).
Beazley, a member of the Lloyd’s syndicate, highlighted the competitive pressures across all segments of the insurance business during 2010, although the insurer was able to deliver an improvement in the combined ratio from 90 to 88 percent representing a profit of US$19.2 (£12:€14.4) for every US$160 (£100:€120) from premiums obtained.
The increase in profits was partly driven by favorable foreign exchange rates – contributing US$33.7 million (£20.9 million:€24.8 million) to overall results. However, this was offset by a 57 percent fall in returns from investments as Beazley adopted a lower risk strategy to speculative trading, coupled with the impact of exceptionally low interest rates. Premiums from business renewals declined by 2 percent, but these were more than offset by skilled underwriting practices balancing the insurer’s portfolio.
Beazley’s exposure to the Chilean earthquake in February 2010 is estimated to have cost the insurer approximately US$55 million (£34.1 million:€40.5 million) to US$75 million (£46.5 million:€ 55.2 million) in claims; a figure which has been taken into account in trading results for the year.
The specialist insurer also expected to incur a loss of up to US$35 million (£21.7 million:€25.7 million) from the New Zealand earthquake disaster. However, future claims resulting from the devastating Australian floods this year are unlikely to affect Beazley.
“Our 25th year in business was distinguished by excellent profits and an enhanced underwriting result in the teeth of worsening market conditions. The expertise of our underwriters helped us achieve a combined ratio of 88%, an improvement of two percentage points over 2009. Since we began underwriting in 1986, we have achieved an unbroken track record of profitability through often turbulent market conditions. Our underwriting teams have shown they possess the skills needed to perform strongly in the current challenging environment.” said Andrew Horton, Chief Executive Officer of Beazley, when details of 2010 profits were released.
Beazley, which operates in the UK, the US, Europe and Asia, said it was looking for possible deals to augment its business in 2011 and has not ruled out a future acquisition; Beazley failed in an attempt to take-over rival Hardy Underwriting in 2010 but stressed that any future bids will only be made at the right price. Beazley’s final bid of US$290 million (£181 million:€212 million) for Hardy Underwriting was made in mid-December 2010 but was turned down by the company.
Beazley acquired Momentum Underwriting Management Limited (MUM) in 2008, which helped the company to grow its life, accident and health business delivering revenue of US$78.1 million (£48.4 million:€57.5 million) in 2010 – a figure which was better than expected.
Beazley has established a reputation as a renowned specialist insurer operating on the global stage providing cover for activities such as employment practice liability, directors and officers liabilities and risks associated with mergers and acquisitions. In addition to providing specialty insurance lines, the company provides insurance cover for conventional risks involving property, marine, life, accident and health insurance together with reinsurance products.
The USA is a pivotal market for Beazley and is a sector in which the specialist insurer has grown its presence over the years – accounting for approximately 60 percent of its current business. Business activity in Europe is also an important market for the company, with expansion through an acquisition a possibility. Likewise, Beazley has not ruled an acquisition in the Asia-Pacific region where it currently operates through a small network of outlets.
Beazley highlights the difficult trading conditions in 2010 with limited opportunities for growth. However, the insurer experienced positive returns through organic trading and the acquisition of MUM. A significant part of Beazley’s organic growth came from reinsurance and from an increase in demand for date breach insurance in the USA.
During 2011, Beazley’s expects to strengthen its life, accident and health insurance business in the USA and to strengthen its presence in the specialist insurance accident and health risk segment with the development of a team in the USA to offer simple and streamlined corporate healthcare insurance products to US companies.
Over the last two decades Beazley has increased its market share and has become a renowned specialist insurer on the global stage. As Beazley’s product range expands and its portfolio increases, with the prospect for further acquisitions, the company is well placed to continue its successful results in 2011 when trading conditions are expected to be very competitive.
Insurance Company Mentioned:
Beazley
Beazley plc, was founded in 1986 and is a specialist insurance company, provides underwriting and claims services. Beazley operates in five insurance segments: Marine, Political Risks and Contingency, Property, Reinsurance, and Specialty lines. The company has operations in Europe, the United States, Asia, and Australia.
Feb
7
UK’s Private Health Providers Poised To Benefit From Reforms
Filed Under Health Insurance, Healthcare, United Kingdom | 4 Comments
As the UK braces itself for the largest shake-up of the National Health Service (NHS) since its inception in 1948, the UK’s private healthcare sector is poised to benefit from the changes proposed in the provision of medical services which arise from the reforms.
Under the Health and Social Care bill set out by David Cameron’s Coalition Government, the long established British healthcare system is set for major changes aimed at improving the efficiency of the NHS and ultimately to achieve substantial savings in the multi-billion cost of services under current arrangements. As reforms take effect across the UK public healthcare sector, the privately run healthcare sector is gearing itself to respond to opportunities likely to emerge from these changes.
The UK private healthcare sector has evolved extensively over the last decade and is currently valued at £5.5 billion (US$ 8.6 billion) per year, with private healthcare providers in the UK having already established links with the NHS for patient referrals and the outsourcing of medical procedures.
Last year an alliance was formed between a group of private healthcare providers – the General Healthcare Group, Spire Healthcare, HCA International, Nuffield Health and Ramsay Healthcare UK – designed to work in unison with the NHS and promote the key benefits offered by the private healthcare sector in the provision of healthcare in the UK; the alliance has called itself H5.
H5’s membership consists of approximately 165 hospitals across the UK and the collective partnership accounts for roughly 80 percent of the private hospitals and 85 percent of total private hospital beds in the nation. H5 members play an active role in the provision of healthcare services in the UK and are aiming to become a more important contributor in the overall supply of medical services as the healthcare reforms are introduced over the next two to three years.
The UK’s private medical insurance (PMI) industry is also set to expand as the controversial reforms are introduced and expected budgetary cuts emerge within the NHS. PMI has predominately been a fringe benefit supplied by companies to employees or as safety policy for Britons prepared to fund private healthcare in order to avoid delays in the provision of medical treatment under the NHS. Insurers such as CS Insurance, Westfield, the WPA Group and Aviva Health have established firm links with the network of privately run hospitals.
At the same time as the UK is set for changes to the NHS, the national independent body – the Office of Fair Trading (OFT) – has announced that it will be carrying out an investigation into competition within the private medical insurance industry reviewing network agreements and the funding of consultant fees specifically.
In 2010, there were 7,238,000 people in the UK holding private medical insurance policies, representing 11.7 percent of the UK population, according to a recent Laing and Buisson report. Although the UK’s PMI sector suffered adversely following the collapse of global financial markets in 2007-2008, the reforms in the UK’s NHS is set to ignite demand for individual and family private medical coverage.
For more than 60 years, the British population has become accustomed to free at point-of-use healthcare supplied by the NHS and financed by general taxation. However, as the UK – like many other developed nations – grapples with increasing healthcare costs, with major advances in the range of treatments available, it is inevitable that reforms will be necessary with the focus on the elimination of bureaucracy and the emphasis on front line services. The privately run healthcare sector – with its reputation for the provision of quality medical services in high standard facilities – is ideally placed to benefit from these changes.
The healthcare reforms in the UK should result in more opportunities for the privately run provisioning of medical services, with a resultant improvement in competition and standards within this sector of supply. This is expected to follow an increasing amount of interaction between the NHS and private medical suppliers as reforms are implemented.
Companies Mentioned:
General Healthcare Group
General Healthcare Group (GHG) is leading health care services provider in the UK. GHG’s primary focus is treating private patients, while maintaining its position as a dynamic partner of the NHS. GHG has a network of 67 hospitals and treatment centres across the UK.
Ramsay Health Care
Ramsay Health Care was established in 1964 and has grown to become a global hospital group operating over 100 hospitals and day surgery facilities across Australia, the United Kingdom, Indonesia and France.
Spire Healthcare
Spire Healthcare’s mission is to be the best private provider of quality healthcare. Spire Healthcare has 26 year heritage in the private healthcare sector.
The Hospital Corporation of America (HCA)
The Hospital Corporation of America (HCA) is the largest private operator of healthcare facilities in the world. HCA operates some 170 acute care, psychiatric, and rehabilitation hospitals in the worldwide.
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.
Westfield Health
Westfield Health is one of the most successful secure health insurers in the UK with over 90 years experience and more than a third of a million policyholders.
Jan
21
PruHealth Launches New Product
Filed Under Health Insurance, Medical Insurance, United Kingdom | 3 Comments
PruHealth, the joint venture between British insurance giant Prudential and Discovery Holdings is launching a new health product range. It will be the first new product to be released by PruHealth since its take-over of Standard Life Healthcare UK in August 2010.
The new product range will be launched on the 1st of March 2011 and will result in the gradual phasing out of existing Standard Life and PruHealth policies.
The new health insurance product will be available to individuals, SMEs (small & medium enterprises) and corporate clients. A key feature of the new range of healthcare cover is that it can be tailor-made to suit personal requirements, with a series of add-ons to a basic healthcare package. The add-on options will include cover for cancer and an addition to promote wellness and vitality, with discounts for gym membership.
PruHealth has taken time in launching the new product range, which follows consultation with current policyholders in order to create a healthcare insurance product to penetrate the market.
Part of PruHealth’s service will include the development of a ‘Cover Check’ programme designed to simplify policy documentation making it easier for policyholder understanding. Marketing of the new product range will highlight the transparency of the cover included in the policy documents, with the emphasis on a ‘Full Cover’ policy having no hidden conditions.
PruHealth acquired Standard Life Healthcare UK in August last year as a bolt-on to Prudential’s insurance products with the intention to grow its healthcare business.
As part of the launch of the new product range, PruHealth will move its customer services operation from South Africa to the UK, although back-office staff will remain in South Africa. The decision to relocate the PruHealth customer service staff is a key part of the insurers bid to gain market share in the UK and enhance its reputation for quality of service.
PruHealth’s new product has been designed to meet a wide spectrum of healthcare needs building on its core strengths of brand awareness and service delivery. Consequently, the company is optimistic that the efforts taken to consult with policyholders in advance of its launch will reap positive benefits in terms of securing new business premiums.
Insurance Company Mentioned:
PruHealth
PruHealth is part of a joint venture named Prudential Health Holdings Limited, between Prudential Assurance Company of the UK and Discovery Holdings. The joint venture was started in 2004 and offers private medical insurance in the United Kingdom. Currently Discovery Holdings owns a 75 percent stake in the joint venture while Prudential Assurance holds the remaining 25 percent.
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