Sep
30
Liberty Mutual Group, based in the US state of Massachusetts, has announced the postponement of the initial public offering (IPO) of Liberty Mutual Agency Corp. (LMAC), citing the lacklustre demand from investors and the uncertain state of the US economy as main causes. Not so long ago it was heralded as the biggest IPO of 2010 in the US, Liberty Mutual Group had initially sought to raise almost US$1.3 billion (EUR 956 million) by selling 64.3 million Class A LMAC shares at an initial price of between US$18 (EUR 13.5) and US$20 (EUR 15) per share.
The retraction of the LMAC IPO by Liberty Mutual joins the many other IPO postponements this year in the US; there have been at least 45 other companies that have either delayed or entirely withdrawn their listing plans, on concerns that the recovery from the longest recessionary period since the 1920s Great Depression is deteriorating. This pessimistic sentiment has already seen the S&P’s 500 Index shed a significant 16 percent from its 2010 highest.
Financial analysts perceive the current volatile environment in the US stock market, compounded by undervalued property-and-casualty insurance stock prices, as unfavourable and may explain why investors would prefer not to take part in the LMAC IPO. Another concern voiced by some investors was the perception that Liberty Mutual Group (LMG) would be benefited more than LMAC, since approximately US$1.2 billion (EUR 882.4 million) would be paid to LMG, as indicated in the prospectus.
During the past few weeks there have been some IPO success stories, and that may have initially encouraged Liberty Mutual to believe that theirs would whet the appetites of investors. However, analysts believe that the current climate in the stock market is not the perfect environment for initial offerings of industry-specific shares, such as Liberty Mutual Agency’s, since the demand for property and casualty insurance has been weakened by the prolonged recession and the persistent high unemployment rate.
No further details were released by Liberty Mutual as to the anticipated length of their LMAC IPO postponement.
Insurance Company mentioned:
Liberty Mutual Group offers a wide range of insurance products and services, including personal automobile, homeowners, workers compensation, commercial multiple peril, commercial automobile, general liability, global specialty, group disability, assumed reinsurance, fire, and surety. Liberty Mutual Group employs over 45,000 people in more than 900 offices throughout the world.
Sep
30
Allied World Assurance Launches European Health Insurance Unit
Filed Under Health Insurance, Healthcare, Insurance Company, International Healthcare, Medical Insurance, United Kingdom | Leave a Comment
Allied World Assurance Company Holdings, Ltd. has established a healthcare division through its European operation, Allied World Europe, to sell health insurance solutions in European Markets.
Allied World Assurance, which offers property, casualty and specialty insurance and reinsurance solutions as well as a growing international health insurance unit, intends to use the new European health insurance section to target business specifically in London, as well as throughout the UK and the rest of Europe. The new healthcare solutions division in Allied World Europe will be headed by Rob Wendin, who joined Allied World Europe as Vice President.
Mr. Wendin previously worked as the Managing Director for Health and Life Sciences industries at Marsh, covering Europe, the Middle East and Africa. With over 25 years of experience in multiple facets of health and life related industries, including having been a broker as well as underwriter, Mr. Wendin is now tasked with building Allied World Europe’s healthcare division, including the development of a full health insurance product suite to service European regional needs. He will report to Kirsten Faria, Senior Vice President of International Healthcare and Allied World Assurance’s Bermuda subsidiary.
Kirsten Faria said that “We are thrilled to launch Allied World Europe’s healthcare department to build on our steadily growing international healthcare segment. I am confident that Rob’s extensive experience on both the underwriting and brokerage side will be an invaluable asset as we begin building a strong book of business.”
Insurance Company Mentioned:
Allied World Assurance
Allied World Assurance is a global insurance and reinsurance company headquartered in Bermuda. They have a worldwide network of offices, including numerous major cities in the United States, as well as Hong Kong, London, Singapore and Zug. Allied World Assurance deals with property, casualty, and specialty reinsurance and insurance products.
Sep
29
Improving Medical Tourism Strategy a Central Focus for Dubai
Filed Under Healthcare, International Healthcare, Middle East, UAE Insurance | 1 Comment
The Dubai Health Authority (DHA) was not only the Diamond Sponsor of the 3rd Annual World Medical Tourism and Global Health Congress, which ran from September 22-24, 2010 in Los Angeles, but also walked away from the convention with a Mission of Understanding with the Medical Tourism Association.
The Mission of Understanding (MoU) will see the Dubai Health Authority and the Medical Tourism Association both working towards the continued development and build up of the medical tourism sector in Dubai. This may include collaborating on the Dubai Health Authority’s efforts to improve upon its healthcare capabilities, regulations and policies.
Read the rest of the Improving Medical Tourism Strategy a Central Focus for Dubai and Health Insurance article
Sep
28
New US Healthcare Reform Laws Now in Force
Filed Under Health Insurance, Healthcare, Insurance Company, Medical Insurance, USA Health Insurance | 3 Comments
After the passage of the Affordable Care Act six months ago in the United States, the first raft of new healthcare rules have come into effect, as of Thursday, September 23rd 2010.
While much of the healthcare law has yet to impact the US Healthcare landscape, what has gone into effect on Thursday 23rd are important consumer protection laws known as the Patient’s Bill of Rights. These provisions tend to either prevent US domestic insurance companies from engaging in certain practices, or grant additional rights to patients and insured persons.
One of the more important provisions that have come into effect is the fact that children may stay on their parent’s health insurance plan until the age of 26. Young people in America are a demographic that has high numbers of uninsured individuals, with up to one third of young Americans having no health insurance. The new provision applies to all health insurance plans, allowing parents the choice of whether to keep the children on their health plan until their 26th birthday. However, for employer-based insurance plans, children will only be extended this benefit if they are ineligible for their own employer-based coverage.
In another child related provision, American insurance companies are no longer allowed to either deny coverage to children with pre-existing medical conditions or limit the benefits offered to them, except in the cases of insurance plans that are ‘grandfathered’ in. Currently this provision covers children up to the age of 19, although in 2014, this provision extends to cover Americans of all ages.
Insurers in the United States are also no longer allowed to place lifetime limits on health insurance plans. Some policies in the domestic US insurance market come with coverage limits, whereby once treatment costs reach a certain ceiling, coverage by the insurer is ceased leaving the insured unprotected when they need it most. There were approximately 100 million Americans with insurance plans that had lifetime coverage limits in place, however these limits are now prohibited on all health insurance policies.
Another type of coverage limit placed on plans are annual limits, whereby once an insurer pays out for enough claims to hit the ceiling, the insurer will no longer pay out during that year. While less prevalent than lifetime limits, annual limits are still used by about 14% of small employer plans and 19% of individual plans on the US market. Under the new provisions in force, annual limits will be phased out over the next three years, except for individual plans that are ‘grandfathered’ in. For insurance plan years starting on or after September 23rd, 2010, the annual limit must maintain a bare minimum of US$ 750,000 (EUR 559,800). During the second year, the minimum annual limit is raised to US$ 1.25 million (EUR 932,800), and in the third year annual limit minimum must be at least US$ 2 million (EUR 1.49 million) before all annual limits are banned in 2014.
Also made illegal is the practice where insurers may retroactively cancel your insurance coverage, also known as rescission, for a variety of potential reasons. For all health insurance plans, insurance companies are no longer able to lawfully rescind your insurance coverage, unless it is in the case of fraud or intentional misrepresentation of facts.
Furthermore, anyone buying a new insurance policy is now protected by a number of consumer-friendly provisions in the law. One of these provisions that Americans should be taking advantage of to stay healthy is that insurers must now cover Level A and Level B preventative care, without deductibles, co-insurance or co-payments. This includes immunizations, mammograms, colonoscopies, pre-natal checks and new baby care, to try and encourage Americans to be proactive about keeping themselves healthy, or at least catching serious illnesses early.
The new laws also guarantee the insured the right to both an internal and external appeal over denied claims. Previously, if an insurer declined to either cover a treatment or pay out a claim, in many cases there would be an internal mechanism within the insurance company to appeal the denial of treatment or claim payment, dubious as that might seem. The provisions now guarantee that all new insurance plans must have an internal appeal mechanism, and are now prevented from denying coverage without an opportunity for an external appeal to an independent third party.
People purchasing health insurance plans will now be able to pick their own doctor, which has previously been difficult on occasion due to American health insurance provider networks. One survey reported that three of every four obstetrics and gynecology specialists (OB/GYN) said that patients had to return to their primary physician to be referred back for follow up care. The laws now in force ensure that policyholders have the right to choose their primary physician, the right to choose a pediatrician for their child’s primary care, as well as granting women the right to see an OB/GYN specialist without a referral.
Another provision which affects in-network versus out-of-network issues is that health insurance plans will not be able to make the insured pay more in cost-sharing methods for getting emergency treatment at an out of network hospital. Prior to this law coming into effect, an individual would have to pay excessively higher costs for emergency care that happened outside of their insurance company’s healthcare provider network, making an accident while away from home potentially financially devastating. Insured individuals now have the ability to receive emergency care at out-of-network healthcare providers, while being charged in-network prices.
All of these provisions are now in effect, as of Thursday, 23rd September, 2010, meaning that Americans now have much greater protections and clarifications of their rights in regards to their health insurance policies. However, this is only a small part of the Affordable Care Act which is coming into force and there will be some new developments in early 2011, and more changes to the healthcare landscape within the next four years, so it is always advisable to ensure you remain informed.
Sep
27
AIG Gets IPO Approval, Releases 2010 Profit Estimate for AIA
Filed Under AIG, Hong Kong, Insurance Company | 7 Comments
American International Group Inc. (AIG) has recently been given approval to list its Asian life insurance unit, American International Assurance Group Ltd. (AIA), on the Hong Kong Stock Exchange, as per initial plans announced earlier this year by mid-July 2010. Additionally, AIG has released the estimated annual operating profit of AIA, which should reach at least US$2 billion (EUR 1.5 billion) by the end of the fiscal year ending 30 November 2010.
The initial public offering (IPO) of AIA may raise up to US$15 billion (EUR 11.1 billion) for AIG, with investor road-shows and marketing activities to start on 06 October 2010, followed by the pricing of the shares on 21 October 2010. It is lining up to become the second-biggest IPO of this year. Agricultural Bank of China already claimed the world’s largest IPO title back in August 2010, with a confirmed US$22.1 billion (EUR billion) raised when its shares were listed in the Hong Kong stock exchange in July 2010.
In regards to the operating profit estimates for the fiscal year 2010, AIG cited strong growth in Thailand and Korea, and an increase in insurance premium income realised by AIA that climbed 11.3 percent year-on-year to US$9.32 billion (EUR billion), in the nine months ended 31 August 2010, with Hong Kong accounting for the single biggest share at US$2.1 billion (EUR 1.56 billion), equivalent to a 3 percent increase compared to 2009, as per figures recently released in the unaudited results report.
AIG will likely use the proceeds of the AIA IPO towards the repayment of debt incurred by the US government bailout it received during the global financial crisis. It is estimated that up to half of AIA will be sold by AIG during the formerly mentioned IPO.
Insurance Companies mentioned:
American International Group, Inc. (AIG) is a leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services around the world. AIG common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo.
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.
Sep
27
Aetna Global Benefits expands Executive Healthcare Plan in Africa
Filed Under Aetna, Africa, Expat Insurance, Health Insurance, Medical Insurance | 8 Comments
Aetna Global Benefits (AGB) has announced a new international health insurance plan in Africa as part of their Executive Healthcare Plan lineup, targeted at regionally mobile individuals and groups.
Aetna Global Benefits offers the Executive Healthcare Plan (EHP) line of international health insurance products in partnership with Kenya-based medical insurance provider Executive Healthcare Solutions.
The Executive Healthcare Plans offer three coverage areas, which include the usual Worldwide and Worldwide excluding the U.S. areas of coverage, as well as Africa plus India, Bangladesh and Pakistan.
The new EHP Lifestyle plan includes a number of benefits over and above hospitalization and out-patient treatment, such as routine and restorative dental treatment up to US$ 1000, full refund for vaccinations and inoculations, routine management of chronic conditions, pregnancy and childbirth benefits, newborn cover including congenital anomalies, HIV/AIDS treatment, hormone replacement therapy, home nursing benefits, transportation of mortal remains or local burial costs, and hospital cash benefits.
Like other Executive Healthcare Plans, policyholders have access to Aetna Global Benefits’ Global Health Databank as well as the Health and Wellness Centre. AGB’s Global Health Databank offers the ability to look up medical facilities, medical translation services, city profiles and safety and security information from around the world. The Health and Wellness Centre offers users educational information and resources on health conditions in the region.
Stuart Leatherby, the Aetna Global Benefits Managing Director for the Middle East and Africa said “We are extremely pleased to offer an additional medical plan for customers in the region that provides increased benefits and benefit levels. This demonstrates our continued commitment to providing employers and individuals with a wide range of products and services to address their specific benefit or economic requirements.”
Insurance Companies Mentioned:
Aetna Global Benefits
Aetna Global Benefits, the international business segment of Aetna, is committed to helping create a stronger, healthier global community by delivering comprehensive health benefits and health management solutions worldwide. AGB’s expatriate business is one of the industry’s largest and most prominent US-based international health benefits providers, supporting more than 400,000 members worldwide. The organisation’s health management business collaborates with healthcare systems, government entities and plan sponsors around the world to design and build locally-applied health management solutions to improve health, quality and cost outcomes.
Executive Healthcare Solutions
Executive Healthcare Solutions is a well established Kenyan medical insurance provider, with over 50 years of experience in dealing with international insurance arrangements. Executive Healthcare Solutions has been actively participating in the international private medical insurance market for over 10 years. The company is Aetna Global Benefits and subsidiaries’ principal representative for the Executive Healthcare Plan in Africa, and currently has approximately 10,000 members across Africa.
Sep
24
South Africa National Health Insurance Scheme Commences in 2012
Filed Under Africa, Health Insurance, Healthcare, Medical Insurance | 331 Comments
South Africa’s ruling party, the African National Congress (ANC) has released more information regarding their plan to mandate universal access to healthcare through a National Health Insurance Scheme.
The Ministerial Advisory Committee on the NHI has produced a document providing a rough outline of the ANC’s National Health Insurance (NHI) scheme, which is ready to be submitted to the ANC National General Council (NGC) for debate. The ANC’s National Health Insurance plan aims to ensure access to healthcare is based on need rather than the ability to pay, with the intention of doing this through a single payer health insurance system. The initiative will take a community-centric approach, with a focus on local primary care networks rather than large-sized hospitals.
South Africa currently spends slightly more than 8% of GDP on healthcare every year, although most of that money is being spent through the private healthcare system, despite the fact that nearly 64% of the South African population relies upon the public system.
The new national health insurance program is expected to cost at least ZAR 128 billion (USD 18.1 billion) in the first year, rising to ZAR 376 billion (USD 53.15 billion) by 2025. Although according to Di McIntyre, the Director of the Health Economics Unit of the University of Cape Town, this would roughly equal the total amount spent on healthcare in South Africa. McIntyre also said that even with the NHI scheme and associated increases in healthcare use, hospital staff and resources over the next 10 to 15 years, healthcare expenditures would still remain at roughly 8% of GDP.
The South African treasury and the Ministerial Advisory Committee on the NHI, which is chaired by Dr. Olive Shisana, the CEO of the Human Science Research Council, has put forward a provisional model for funding the scheme, while they explore potential options. While the main source of revenue would be from South Africa’s general taxation, additional financing may be sought through a surcharge on taxable income, an increased value-added tax (VAT) dedicated to the NHI, payroll taxes for employers and employees, and removal of the presently existing tax credit for medical aids.
The first phase of the project will be rolled out in 2012, and will focus primarily on bringing services to areas with little or no access to quality healthcare. A number of other key areas of attention for the initial roll-out are being discussed in closed chambers by delegates at the NGC. These include investing and rebuilding the country’s public health infrastructure, developing human resources programs to fill the national shortage of qualified health workers, and establishing a national health fund that would be ensconced in the Ministry of Health but operate autonomously, much like the South African Revenue Service in the National Treasury.
Officials are also looking at electronic medical records, such as the e-health system that Singapore has been developing, as a way to manage to reduce the associated management costs of the healthcare system. Members of the Ministerial Advisory Committee were also quick to point out that affluent South Africans would still be able to use private healthcare, through the purchase of private medical insurance and use of private hospitals.
As the Ministerial Advisory Committee has now submitted their proposed program to the ANC National General Council for debate, it will be interesting to see how the continuing process, as government officials are encouraging input from stakeholders in the debate, with ANC Spokesperson Jackson Mthembu saying “If there is one organisation that likes to have people involved in what it does, that’s the ANC. We welcome your contributions on this matter.”
Sep
24
Zurich International Life Releases New Product in the Middle East
Filed Under Income Protection, Insurance Company, UAE Insurance | 3 Comments
Zurich International Life, based in the Middle East, has recently announced the launch of a new life insurance product called Protected Equity Plus (PEP). PEP is a single-premium, investment-linked insurance plan, which offers a guaranteed return upon maturity, even in the event of a stock market collapse in the Middle East.
Some of the characteristics of PEP are that it offers access to equity markets in geographical regions specifically chosen by the Insurer, with the possibility of switching on a quarterly basis free of charge, and the ability to make withdrawals. The guaranteed return of PEP is paid upon the 10th anniversary of the investment, deducting from the total return any prior withdrawals made under the policy.
For investors in the Middle East, PEP offers a rare combination of investment protection and potential for growth; which makes it appealing as a potential safety-net, in addition to providing general peace of mind and value for money on the part of the policyholder. Furthermore, the guaranteed returns are increased when the initial investment amount has grown by at least 10 percent on the 5th anniversary of the plan.
The simplicity of PEP makes it easy for investors in the Middle East to invest their money and frees them from the requirements of having to constantly monitor the performance of their investment. PEP will be launched by Zurich International Life intermediaries within the next few weeks through a series of road-shows across the UAE, Bahrain and Qatar.
The regional director of Zurich International Life in the Middle East, Graham Morrall, said of the Protected Equity Plus plan, “we have seen an encouraging response from our intermediaries so far and they have been particularly impressed with the simplicity of the product’s structure. Our recent Zurich Community Research results showed that many of our investors are still feeling risk-averse, so we are not at all surprised by the majority of respondents’ positive feedback about PEP and its guaranteed element.”
Insurance company mentioned:
Zurich International Life (ZIL) offers life assurance, investment and protection solutions throughout the world* with licensed offices in the United Arab Emirates, Hong Kong, Bahrain, Qatar, Singapore and Taiwan. As part of the Zurich Financial Services Group, ZIL can offer innovative and individual financial solutions. With tailored products and services that meet the requirements of local markets for many years, ZIL ensures to offer truly flexible and portable financial solutions. As part of one of the world’s leading providers of international insurance and investment products, ZIL has a reputation for excellent performance and commitment to the customer. * Not all products are available in all regions.
Sep
22
AIGs Japanese Insurance Business Targeted By Prudential Financial
Filed Under AIG, China, Insurance Company, Life Insurance, USA Health Insurance | 5 Comments
Early reports indicate that Pudential Financial Incorporated is nearing a US$4-5 billion (EUR 3-3.8 billion) deal to take over two Japanese Life insurers from the American International Group Inc (AIG).
Japanese life insurance companies AIG Edision Life Insurance Co and AIG Star Life Insurance Co have been highlighted as possible acquisition targets for the Prudential Financial Incorporated in a deal which could generate up to US$5 billion (EUR 3.8 billion) for AIG. If concluded, the sale would provide a significant contribution towards repaying the US$182.3 billion (EUR 137.3 billion) AIG owes to US taxpayers for the bailout of the company in 2008 following the global collapse of financial markets. Along with other financial institutions, which received government bailouts, AIG received US$182.3 billion (EUR 137.3 billion) from the US government resulting in the company being nearly 80% owned by the US taxpayer.
Prudential is the second-biggest U.S. life insurer and has been present in the Japanese insurance market for more than twenty years. It has been looking to further strengthen their presence in this market following the takeover of bankrupted Yamato Life Insurance Co in May 2009 – which subsequently changed its name to Prudential Financial Japan Life Insurance. If Prudential do acquire the two Japanese life insurers, it will mean that they will increase their presence in the Japanese life insurance market and will utilize their considerable expertise in this industry.
Rumours have been circulating about the potential sale of AIG’s two Japanese life insurance businesses as the US based company looks to create capital to repay the US government loan. Prudential Financial Inc has emerged as the front runner for the acquisition after suspected initial talks stalled earlier this year.
A buyer of the either of the Japanese life insurance companies would obtain a well established Japanese life insurance business. AIG Star Life Insurance Co Ltd provides life insurance coverage and retirement pension plans to individuals and group policyholders. AIG Edison Life Insurance operates as a subsidiary for American International Reinsurance Company Ltd providing life insurance services in Japan, with customers that include large corporations, unions and government agencies. If a takeover does go-ahead, it will see Prudential Financial Japan Life Insurance increasing their reach and life insurance product range in Japan.
AIG has been busy retrenching since the world financial crises took hold, while other rival insurers have been pursuing global expansion by re-positioning and entering new operating channels, as global financial markets stabilise and opportunities for restructuring emerge.
Earlier this year, AIG saw a potential deal worth US$2.15 billion (EUR 1.6 billion) blocked by the Financial Supervisory Commission (FSC) of Taiwan for the sale of the life insurance unit of AIF Taiwan by Primus Financial Holdings Ltd and China Strategic Holdings on the grounds of violation of investment regulations.
Recently American International Insurance (AIA), the Asian arm of AIG, entered into an agreement with Industrial and Commercial Bank of China (ICBC) to form a bancassurance partnership in China to develop a network for sales, marketing, telemarketing and wealth protection services in a deal which will strengthen AIG’s network in this fast growing economy.
There are also early reports that AIG Group Ltd has received approval to list Asian life insurance business American International Assurance (AIA) on the Hong Kong Stock Exchange (HKEX), which could generate up to US$15 million (EUR 11.3 million) from IPOs (Initial public offerings). AIG has progressed to the floatation on the HKEX after the collapse of the US$35.5 billion (EUR 26.7 billion) deal with Prudential earlier this year, which would have seen the British insurer acquiring AIA from AIG. AIG has sought numerous avenues to generate capital to pay back the Group’s US$182.3 billion (EUR 137.3 billion) debt to the US taxpayer after the government bailout in 2008.
In June 2010, the Life Insurance Association of Japan (LIAJ) reported that there were 47 life insurance companies operating in Japan with the main firms being: AIRIO, Midori, Lifenet, SBI AXA Life, Japan Post (Kampo), Hartford Life, ALICO Japan, ING, Manulife, AIG Edison and AIG Star. The Japanese insurance market experienced a premium decline of roughly 58% in 2008, although, in 2006, the total premium income generated in this market amounted to US$363 billion (EUR 273.2 billion) – which was nearly one-sixth of the total world life insurance premium income for the year. The Japanese life insurance market is now facing stiff competition from China and Indian markets; Japan has the oldest age profile population in the world and a declining young population, which has lead to a fall in life insurance customers.
Insurance Companies Mentioned:
AIG
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
AIG Star Life Insurance
AIG Star Life Insurance Co. Ltd. is involved in providing life insurance coverage and retirement pension plans to the individual and group policyholders.
AIG Edison Life Insurance
AIG Edison Life Insurance Company provides life insurance services in Japan. AIG Edison Life Insurance has 8,000 sales agents and 17 bancassurance partners in Japan. The company is also providing new distribution channels for AIG which includes, corporation, unions and government agencies
AIA
AIA is a Hong Kong-based life insurance company doing business across Asia that has been in business since 1919. They service over 20 million policies through 23,000 employees and 300,000 agents throughout markets in Asia, including; Vietnam, Thailand, Taiwan, South Korea, Singapore, Philippines, New Zealand, Malaysia, Macau, Indonesia, India, Hong Kong, Mainland China, Brunei and Australia.
Sep
22
Liberty Mutual, the Boston-based American insurance group, has submitted to the Securities and Exchange Commission (SEC) an application to take public Liberty Mutual Agency Corp. (LMAC). According to the details in the IPO application form, Liberty Mutual plans to sell over 64 million shares at between US$18 (EUR 13.5) and US$20 (EUR 15) per share.
A group of independent agents and brokers makes up Liberty Mutual Agency, which distribute property, auto, workers’ compensation and casualty insurance products from Liberty Mutual. Liberty Mutual will retain an 80 percent stake in LMAC, whilst shareholders will own the remaining 20 percent.
Analysts overall agree that the IPO move, considered the biggest in 2010, is a positive one for Liberty Mutual, and will bring a windfall of approximately US$1.7 billion (EUR 1.28 billion), which the insurer could use to fund new acquisitions and settle debt, such as the US$130 million (EUR 97.7 million) it paid back in 2007 for the purchase of the insurance company Ohio Casualty.
Business generated by LMAC contributes significantly to Liberty Mutual coffers, and by itself stands as the 10th largest property and casualty insurance company in the United States.
No concrete date for the public offer has been announced, although it is likely to happen as early as this fall, depending also on the approval by the SEC and response of investors.
Insurance Company mentioned:
Liberty Mutual Group offers a wide range of insurance products and services, including personal automobile, homeowners, workers compensation, commercial multiple peril, commercial automobile, general liability, global specialty, group disability, assumed reinsurance, fire, and surety. Liberty Mutual Group employs over 45,000 people in more than 900 offices throughout the world.
Sep
21
FIH Erhvervsbank Acquired by Insurance and Pension Consortium
Filed Under Health Insurance, Insurance Company, Life Insurance | 2 Comments
A deal has been announced involving Danish and Swedish insurance and pension firms agreeing a DKK 5 billion (US$879 million:670 million Euros) takeover of Danish Investment Bank FIH Erhvervsbank (FIH); the deal relieves FIH of liabilities incurred by its previous takeover of failed Icelandic bank Kaupthing.
The Scandinavia consortium consists of Danish based pension company ATP, PFA Pension, CPDyvig and Swedish insurer Folksam forming a partnership to takeover FIH for an initial cash payment of DKK 1.9 billion (US$333 million:255 million Euros). The cash payment is topped up with an earn-out payment of DKK 3.1 billion (US$542 million:415 million Euros), which will take into account any losses which occur between the 30 of June 2010 and 31 December 2014 – offset by potential gains from other trading activities . Additional financial adjustments will be factored in for previous commitments currently held by FIH.
The deal was made with the Central Bank of Iceland (Sedlabanki) which holds 99.89% of the shares after previous Icelandic owners Kaupthing bank – currently in a moratorium status – granted Sedlabanki the equity for a loan in October 2008. Sedlabanki agreed to the consortium’s approach to acquire their 99.89% stake in the Danish based investment bank FIH Erhvervsbank.
Mar Gudmundsson, Governor of Sedlabanki, said of the deal, ‘We see this transaction as a good outcome for the parties involved given the circumstances. When the transaction will be completed Sedlabanki will receive a substantial amount of foreign currency, and will also get a possibility over the medium term to recover the rest of the loan granted in 2008.”
The joint venture is comprised of ATP – which will hold the largest shareholding at 49.95% – with PFA Pension and Folksam each owning 19.98%. CP Dyving will own a minority share of 9%, with the remaining 0.11% of the new company being held by FIH and employees. The acquisition will provide FIH with the offer of a loan facility from ATP of DKK 10 billion ($US$1.7 billion:1.3 billion Euros).
The FIH headquarters are currently based in Copenhagen. As of June 2010 the investment bank held assets amounting to DKK 125 billion (US$4.3 billion:3.3 billion Euros) and shareholder equity of DKK 8 billion US$1.4:1.07 billion Euros); it is currently the sixth largest bank in Denmark, providing corporate banking, corporate finance and risk management services.
ATP CIO Bjarne Graven Larsen said ‘It is the Consortium’s intention for FIH to prosper as the best corporate and investment bank in Denmark. We have a strong belief in FIH’s unique position and expertise coupled with the demand for the financial services that the bank offers its clients. FIH is well positioned to capitalise on this and we expect an attractive return on our investment.”
The Icelandic bank, Kaupthing, bought FIH in 2004 for DKK 7.1 billion (US$1.2 billion:953 million Euros); Kaupthing failed in 2008 under the huge debt obligation it accumulated with fellow Icelandic banks at the onset of the global collapse in the banking system. In 2009, FIH recorded a pre-tax loss of DKK 148 million (US$26 million:33.8 Euros), but, along with the general turn-round in banking finances, is forecast to generate an estimated a profit of DKK 600 million (US$105 million:80 million Euros) in 2010.
Final completion of the takeover is subject to regulatory approval by the Danish Financial Supervisory Authority.
So far as the partners in the joint venture are concerned, ATP (Arbejdsmarkedets Tillægspension) is the largest Danish statutory pension plan, with 4.6 members providing income security through a broad range of investment categories. Danish PFA Pension is an established pension and life insurance company, with approximately 600,000 policyholders and 10,000 corporate customers. The Swedish based Folksam Group consists two companies providing a life and general insurance network, including activity based and health insurance. C.P. Dyvig is an independent financial advisory firm operating in Denmark.
Companies Mentioned:
ATP (Arbejdsmarkedets Tillægspension)
ATP was is a statutory pension plan covering 4.6 million members. Together with the tax-financed state pension, ATP provides basic income security in old age for the Danish population. ATP was established as an independent entity in 1964 and has since developed to become the largest pension fund in Denmark. ATP invests in a wide variety of assets. Investment categories: Equities, Interest, Credit, Inflation and Commodities.
PFA Pension
PFA is the leading Danish pension and life insurance company within corporate pension plans with approximately 600,000 policyholders and 10.000 corporate customers. PFA is owned by its customers, which means that the value creation is first and foremost used for high returns on pension plans and significantly increasing reserves. PFA was established in 1917 as an independent life insurance company focusing on the Danish corporate market for pension plans and life insurance,
Folksam Group
Folksam
Group was founded in 1908 and has approximately 4 million customers. The Folksam Group consists of two insurance companies in which Folksam ömsesidig livförsäkring (Folksam Life) and Folksam ömsesidig sakförsäkring (Folksam General) are parent companies. Folksam provides occupational pensions, private pension savings schemes, endowment insurance, group life insurance, and other risk insurance products. The company is based in Stockholm and mainly focus on the Swedish market.
FIH Erhvervsbank (FIH)
FIH Erhvervsbank was founded in 1958 and is headquartered in Copenhagen, Denmark. FIH provides various banking and financial products and services to corporate and individual customers, property investors, and institutional investors primarily in Denmark.
Sep
20
Brit Insurance Board agree £850 Million (US$1.3 Billion) Offer
Filed Under Insurance Company, United Kingdom | 6 Comments
London based insurance company, Brit Insurance, is recommending acceptance of an offer by private equity groups Apollo Global Management and CVC Capital Partners Ltd which would conclude an acquisition proposal under discussion since June this year.
Brit Insurance – which specializes in the major insurance and reinsurance business – has finally decided to recommend to its shareholders acceptance of an approach by Apollo Management and CVC Capital Partners. The bid is valued at £850 million (US$1.3 billion), with the potential for a further 2.3% increase in value if certain targets are achieved. The original bidders Apollo Management teamed up with CVC Capital – a UK based private equity firm – to offer Brit Insurance shareholders £10.75 (US$16.8) per share, which could rise to £11 (US$17.3) per share depending on end of year asset values. Without the 25 pence per share increase, the deal will be worth £850 million (US$1.3 billion).
Brit Insurance is a holding company writing it’s direct and reinsurance business through Lloyds of London. Brit Insurance Limited trades off the London Stock Exchange with a share price that has ranged between £7.20 (US$11.2) and £10.05 (US$15.7) on the FTSE 250 index over the last twelve months.
The Lloyd’s of London insurers provide insurance cover against large-scale risks including natural disasters and have been stalked as potential takeover targets for several months, reflecting the pressure on its historical share price due to relatively low insurance premium levels.
US group Apollo Global Management originally offered £10 (US$15.3) per share in June 2010 for Brit Insurance, increasing it to £10.50 (US$ 16.06) per share. The company initially rejected the approach arguing that the valuation was too low, but agreed to open its books for due diligence in July 2010.
A separate, individual advance was originally made by Apollo Global for Brit Insurance, but it become apparent that the private equity firm would struggle to meet the Brit Insurance board’s valuation. This lead to UK private equity firm CVC Capital joining forces with American based Apollo Global Management in order to generate sufficient funds for the potential takeover.
The finalization of the deal is subject to further due diligence by both private equity firms and is dependent on Brit Insurance shareholders acceptance of the bid tabled and regulatory approval. All parties involved in the deal have agreed the 15th October 2010 as deadline date for resolution of the remaining pre-conditions.
Private equity firms have invested in the region of $103 billion in company buyouts worldwide in 2010; this compares with $44 billion generated during the same period in 2009. Private equity company investment has been leading the way in financial recovery since the world financial crisis took effect in late 2008, particularly in emerging and developing markets.
Financial service companies globally have become increasingly attractive takeover ventures for private equity firms. Scope for company mergers and acquisitions has been heating up since world financial markets stabilization over the past 18 months. It is estimated there is currently US $1 trillion liquid capital available for company acquisitions and mergers.
If the takeover is a successful, Apollo Global Management and CVC Capital Partners Ltd will capture an expert international general insurance and reinsurance specialist, with a diverse portfolio of over 70 class protection products. Brit Insurance has offices in Europe, North America, Asia and Australia.
Brit Insurance posted net income of £67.4 million (US$103.1 million) in June 2010 for the first six months trading activity; a significant improvement on the comparable position in 2009, when a loss of £6.3 million (US$9.8 million) was made. The valuation recognizes Brit Insurance liabilities in respect of large claim estimated at US$71 million (£45.3 million) towards the Chilean earthquake in February 2010.
In 2008, the United Kingdom insurance industry was the largest in Europe and the third largest in the world. It is comprised of more than 970 companies generating net premiums amounted to £33.8 billion (US$ 51.7 billion); the three main sectors being motor insurance £10.7 billion (US$ 16.3 billion), property insurance £8.8 billion (US$ 13.4 billion) and accident & health insurance £4.6 billion (US$ 6.9 billion). The insurance industry has mostly weathered the recent financial crises and is expected to strengthen and remain one of the global financial sector leaders.
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.
Sep
17
Horizon Capital Agrees the Purchase of Fortis Life Insurance Ukraine
Filed Under Health Insurance, Insurance Company, Life Insurance | 52 Comments
Private equity fund manager Horizon Capital has agreed the purchase of Fortis Life Insurance Ukraine. The acquisition has been agreed with Belgian based Ageas Insurance International.
Ageas, who were formally known as Fortis Insurance, has reached a deal with US based Horizon Capital. The transaction fits with Ageas continuing their portfolio restructuring and follows the sale of their Turkish life & pensions business to the insurance unit of France’s BNP Paribas in June 2010.
Ageas welcomed the approach from Horizon Capital as they believed it is in the best interests of all parties involved, including employees, agents and customers.
Speaking about the deal, Steven Braekeveldt, CEO Ageas Continental Europe, said: “The sale of our Ukrainian company is in line with the objective to streamline our portfolio against the strategic criteria we determined in September 2009. We are convinced that Fortis Life Insurance Ukraine will continue to capture the potential of the market in which it operates together with its new owner.”
Ageas began operating in the Ukrainian insurance market in 2007, following the acquisition of Etalon Life by its predecessor company Fortis Insurance. Fortis Life Insurance Ukraine had developed a successful business establishing an agency network across the Ukraine, with broker, bancassurance and corporate activities; it became the sixth largest life insurance company in the Ukraine.
The move by Horizon Capital is part of its long term strategic plan to extend expansion in the emerging European financial services industry and follows previous ventures with the Universalna Insurance Company in Ukraine, MTBank in Belarus, the Fincombank in Moldova and the Platinum Bank in Ukraine.
The cost of the transaction has not been disclosed by either party, although Horizon Capital will be using EEGF II (Emerging Europe Growth Fund) funds raised in 2008; this fund amounts to US$390 million. The deal is expected to be completed by the end of 2010, subject to final approval by regulators.
The move by Horizon Capital is its first company acquisition since the onset of the world financial crises took effect in late 2008. The further expansion into the Ukrainian insurance market is part of a wider strategy for Horizon Capital, who specializes in mid cap investments in the financial service industry in the Ukraine and Moldova region.
The new owners will obtain access to current Fortis Life Insurance Ukraine insurance products, which include life insurance products for children’s education, weddings, and retirements. This will expand the range of existing products offered by Horizon and strengthen their presence in the Ukrainian insurance market; it will enable them to compete with the likes of Alico Insurance for a slice of the premium life insurance market, which was estimated at 5% of total volumes in 2007.
Horizon Capital Co-Managing Partner Natalie Jaresko said “With the investment into Fortis Life Insurance Ukraine we continue to back sector leaders. The Company has an effective business model and is well-positioned to capture a considerable share of an underpenetrated market in the future. The experienced management team has proved it knows how to achieve growth in the number of satisfied customers by providing value to them and thus growing the company’s top and bottom lines.”
There are more than 50 Ukrainian insurers backed by foreign capital investment. The insurance market in the Ukraine is regulated by the State Financial Markets Commission, with restrictions on Ukrainian resident’s ability to make insurance payments abroad.
The Ukrainian insurance market continues to develop and has experienced vigorous growth over recent years. Horizon Capital will be well placed to exploit the market potential in the Ukraine where they have considerable expertise.
Companies Mentioned:
Ageas
Ageas is an international insurance company with a heritage spanning more than 180 years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to concentrate its business activities in Europe and Asia, which together make up the largest share of the global insurance market. They are grouped around four segments: Belgium, United Kingdom, Continental Europe and Asia. It is an undisputed leader in the Belgian market for individual life and employee benefits, as well as a leading non-life player, through AG Insurance. Internationally Ageas has a strong presence in the UK, where it is the third largest player in private car insurance. The company also has subsidiaries in France, Germany, Turkey, Ukraine and Hong Kong. Ageas has a track record in developing partnerships with strong financial institutions and key distributors in different markets around the world and successfully operates partnerships in Luxembourg, Italy, Portugal, China, Malaysia, India and Thailand.
Horizon Capital
Horizon Capital is a private equity fund manager that originates and manages investments in mid-cap companies with outstanding growth and profit potential in Ukraine and Moldova. The firm prefers to invest in industry leaders in fast growing sectors, or younger companies in sectors with consolidation potential and in the case of buy-out opportunities, it identifies companies in more mature industries with solid revenues and unrealized profit potential. Horizon Capital. prefers to invest in financial services, fast moving consumer goods, retail, and industrial goods sectors.
Sep
17
NAB Bid for AXA Rejected by Australian Watchdog
Filed Under Aviva, AXA PPP, Insurance Company | 1 Comment
The takeover bid by the National Australian Bank (NAB) for AXA Asia Pacific Holdings (AXA APH) has been rejected by the Australian Competition and Consumer Commission (ACCC) on the grounds of insufficient certainty that the proposed undertakings offered by the parties satisfy its competition concerns.
At the heart of the concerns for the commission were the distribution of financial services products through electronic investment platforms, and more specifically, the impact that the merger of NAB and AXA APH would effect on such distribution channels.
The precedent of NAB having bought the Australian operations of Aviva last year, with the purpose of gaining access to its successful Navigator platform, were also taken into consideration by the ACCC. Were the AXA APH acquisition to have gone ahead NAB would have gained control of the new North platform, which is regarded to belong to the next generation of electronic distribution platforms, and would have been able to capture a majority of the market in this area.
To address this concern NAB had proposed to sell the new North Platform, wealth.net, to IOOF, a 160-year+ Australian financial services organisation managing funds. However, the ACCC was not persuaded that this move would have helped to free up market competition in the distribution of retail investment products. In a statement released by the ACCC, Deputy Chairman Peter Kell said, “The undertakings as proposed place a heavy reliance upon IOOF having sufficient distribution capability to provide an effective competitive constraint upon existing key players in the foreseeable future.”
Analysts believe that the merger between NAB and AXA APH would not have given the bank a dominant position in the Australian retail life insurance market, noting that the decision by the ACCC appears to have rather been focused on the distribution of investment products.
AXA and NAB have indicated that they both will review in detail the rejection by the ACCC before making a decision on their next step.
Companies mentioned:
AXA Group is a worldwide leader in Financial Protection. AXA’s operations are diverse geographically, with major operations in Europe, North America and the Asia/Pacific area.
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.
National Australian Bank (NAB) is a financial services organisation of nearly 40,000 people, more than 1800 branches and service centres, and more than 450,000 shareholders. NAB provides products, advice and services through its major Australian franchise and businesses in the United Kingdom, New Zealand, the United States and Asia. NAB is motivated to make a positive and sustainable impact in the lives of their customers and communities, and so build a business that can deliver on their goal of superior returns to shareholders.
For over 160 years, IOOF has accompanied Australians’ journey towards a secure and rewarding financial future. IOOF’s strength and reputation as a financial services organisation was cemented with the merger between Australian Wealth Management in April 2009 and the acquisition of Skandia in March 2009. The Group’s products and services are designed to accompany the lives of around 700,000 Australians from wealth accumulation into retirement and across to the next generation.
Sep
16
Merger of Ping An and Shenzhen Development Banks Cleared
Filed Under China, Hong Kong, Insurance Company, Life Insurance | 2 Comments
Ping An Insurance (Group) Co. Ltd., listed on the Hong Kong Stock Exchange, has recently announced that its board of directors has approved the plan to merge Ping An Bank Co. with the Shenzhen Development Bank Co.
Through a private placement, Ping An group will buy 1.639 billion new shares issued by Shenzhen Development Bank worth US$4.3 billion (EUR 3.3 billion), equivalent to 32 percent of the bank’s enlarged capital. To finance this deal, Ping An group will use US$398 million (EUR 306 million) in cash, plus its entire 91 percent stake in Ping An Bank.
Earlier this year, Ping An group had obtained approval from the Chinese authorities to acquire a stake in Shenzhen Development Bank. Once the private placement has been completed, the stake of Ping An group in the Shenzhen Development Bank will increase from 30 percent to 52 percent.
The immediate hurdles to clear ahead, consist of getting the corresponding approvals from the Chinese banking, insurance and securities regulators, plus the motions of approval by shareholders of both Ping An group and Shenzhen Development Bank.
For some time in the past recent years, Ping An group, which is the second-largest insurer in the world by market value, had been looking at ways to gain control of a Chinese bank with a national network, especially after it lost a bid for Guangdong Development Bank Co. back in 2006 to a consortium formed by participants that included China Life Insurance Co. and Citigroup Inc.
Companies mentioned:
Ping An Insurance (Group) Company of China, Ltd. (Ping An) is engaged in providing a range of financial products and services. The Company focuses on three businesses: insurance, banking and investment. The Company operates in five business segments: life insurance business, property and casualty insurance business, banking business, securities business, corporate and other businesses. The Company’s subsidiaries include Ping An Life Insurance Company of China, Ltd. (Ping An Life), Ping An Property & Casualty Insurance Company of China, Ltd. (Ping An Property & Casualty), China Ping An Trust & Investment Co., Ltd. (Ping An Trust), Ping An Securities Company, Ltd. (Ping An Securities), Ping An Bank Co., Ltd. (Ping An Bank), Ping An Annuity Insurance Company of China, Ltd. (Ping An Annuity) and Ping An Health Insurance Company of China, Ltd. (Ping An Health), among others.
China Life Insurance (Group) Company and its subsidiaries constitute the largest commercial insurance group in Mainland China. It is the only domestic insurance group with an asset exceeding 1 trillion RMB yuan. It is also one of the largest institutional investors in China’s capital market.
Shenzhen Development Bank Company Limited (SDB) is the first commercial bank in the People’s Republic of China that launched IPO and got listed in the Shenzhen Stock Exchange, with its IPO launched on May 10, 1987, taking the form of free subscription of RMB-denominated ordinary shares and was established on December 28, 1987. After 20 years of rapid development, SDB has gradually boosted its comprehensive strength and expanded increasingly, with 266 branches in 18 major economic cities, namely Beijing, Shanghai, Tianjin, Chongqing, Guangzhou, Shenzhen, Hangzhou, Nanjing, Jinan, Dalian, Qingdao, Chengdu, Kunming, Haikou, Zhuhai, Foshan, Ningbo and Wenzhou, with representative offices in Hong Kong and Beijing, and with more than 600 banks as correspondent banks in over 70 countries and regions abroad.
Sep
15
CIGNA Corp., the Philadelphia-based healthcare service provider, has announced at the Morgan Stanley Global Healthcare Conference in New York that it expects to meet its forecast consolidated adjusted income from operations as per estimates for the whole of 2010, currently set at between US$1.13 billion (EUR 869.2 million) to US$1.21 billion (EUR 931 million).
Included in the forecast by CIGNA for the full year 2010 are the results of Guaranteed Minimum Death Benefits, which are expected to reach a break-even level. However, CIGNA sounded a note of caution on reaching their targets, depending upon economic volatility and persistent low levels of interest rates, since these unpredictable factors would call for an increase in reserves, producing losses in the second half of 2010 to cover these benefits.
Under the category of special items for 2010, CIGNA may include items such as potential adjustments related to cost reduction, litigation and taxes. Other than these special items, at present CIGNA doesn’t have additional information available to reasonably identify or estimate any more than these items for the full year 2010.
In its 8th annual chapter, the Morgan Stanley Global Healthcare Conference aims to contribute towards the visionary goals set back in 1935, defining the company as the pre-eminent financial advisor to companies, governments and investors from around the world.
Insurance Company mentioned:
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, behavioural 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.
Sep
14
AIA and ICBC Agree On Strategic Bancassurance Partnership in China
Filed Under AIG, China, China insurance, Hong Kong, Insurance Company | 3 Comments
American International Assurance Co. Ltd. (AIA) is set to form a long-term and strategic bancassurance partnership with the Industrial and Commercial Bank of China (ICBC) with the aim of becoming a more prominent player in the Chinese insurance market.
The term ‘bancassurance’ is often used to refer to the Bank Insurance Model (‘BIM’), which describes the partnership or relationship between a bank and an insurance company whereby the insurance company uses the bank’s sales channels, including branch offices, in order to sell insurance products. Bancassurance allows the insurance company to maintain smaller direct sales teams as their products are marketed and sold through the bank to customers by bank staff. Replacing the role of an insurance salesperson, bank staff and tellers become the point of sale and contact for the customer. Bank staff are advised and supported by the insurance company through product information, marketing campaigns and sales training.
AIA, the life insurance operations in Asia of American International Group Inc. (AIG), and Beijing-based ICBC, have reached a working agreement to set-up a bancassurance platform. The purpose of which, according to a recent statement by Mark Tucker, Group executive chairman and chief executive-designate of AIA, would be to “further strengthen its business developments in China and provide innovative products and services to meet the protection and savings needs of the people of China.”
As set out in the bancassurance agreement, both companies will endeavour to develop systems covering sales and marketing under this platform, further grow direct marketing, telemarketing and wealth protection planning, whilst continuing pushing for product innovation, service quality and at the same time, strengthening its agency force.
ICBC, purportedly the largest listed bank in the world by market capitalisation, deposits volume and profitability, will work with AIA to continue developing its banking businesses including bank deposits, asset and cash management, investment banking, internet banking, credit cards, customer services, fund-raising, credit lending and staff training.
According to analysts and recent local media reports AIG is looking to spin off AIA through a listing in the Hong Kong stock market, after the collapse of negotiations with Prudential on the sale of AIA.
AIA has approximately 320,000 agents and 23,500 employees across 15 branches geographically dispersed across Asia, and in excess of 23 million policies in-force in the Asian region. It also possesses the bancassurance expertise on a range of models applied across several markets in Asia.
Companies mentioned:
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
AIA is a Hong Kong-based life insurance company doing business across Asia that has been in business since 1919. They service over 20 million policies through 23,000 employees and 300,000 agents throughout markets in Asia, including; Vietnam, Thailand, Taiwan, South Korea, Singapore, Philippines, New Zealand, Malaysia, Macau, Indonesia, India, Hong Kong, Mainland China, Brunei and Australia.
By the end of 2008, ICBC had altogether 385,609 employees and 16,386 domestic and overseas branches, providing extensive and high-quality financial products and services to 190 million personal clients and 3.1 million corporate clients.
Sep
13
What is Happening to Bupa in the International Private Healthcare Business
Filed Under BUPA, China, Expat Insurance, Health Insurance, Insurance Company, Life Insurance, Medical Insurance, United Kingdom | 6 Comments
In 2007, Bupa took a major strategic decision to sell its network of private hospitals in its long established core market in the United Kingdom (UK). This generated a capital fund of £1.44 billion (US$2.2 billion) at a time when the UK – along with other major trading nations – were starting to feel the effects of the financial tsunami. The sale provided the company with liquidity to penetrate the expanding international market for privately funded healthcare.
Bupa started in the 1970′s, when the UK healthcare sector lacked private healthcare facilities for private health insurance holders. After more than three decades of providing direct patient care with its network of UK healthcare facilities, Britain’s largest medical provider, took the decision to shift its focus to opportunities worldwide and exit the direct hospital market in the UK – which was becoming increasingly competitive.
Nowadays, Bupa has ten million customers across 190 countries, and is the largest expatriate health insurer, providing a range of services from hospital, care homes, health assessments units and insurance products, including cover for repatriation and evacuation.
Bupa recently released first half year figures for 2010, generating a surplus of £428 million (US$ 657 million). Difficult economic conditions in the UK, USA and Europe, have been offset by positive operating conditions globally and, in particular, Australia and Saudi Arabia, where economies have not been so badly affected as those in the western hemisphere; in the six month period between the 1st January and the 30th June 2010, Bupa memberships numbers rose from 10.8 million to 10.9 million, with 57% of Bupa’s income now being generated outside the UK.
One of Bupa’s prime business transactions recently has been the joint venture with private insurer Max India facilitating the establishment of a standalone private health insurer, named Max Bupa, in a rapidly developing Indian economy – where only 2 per cent of 1.2 billion population holds private health insurance. The long term goal for Max Bupa is to capitalize on the growing middle class market in India.
In a bid to capitalize on new Russian legislation, which states that all expatriates working in Russia must have ‘Russian Approved’ private health insurance, Bupa has formed a partnership agreement with Russian based insurer Ingosstrakh. The two private health insurers joined forces in 2009, using Ingosstrakh local knowledge and Bupa’s expertise in private expatriate health insurance, to offer a range of Russian health insurance products for both expatriates working in Russia and Russian citizens employed abroad. Part of Bupa’s focus in the Russian health insurance market is based on the oil, gas and maritime industries, which play a big part in one on the world’s fastest developing economies.
While Bupa International has established itself in the private health insurance markets in Indian and Russia, it has taken the decision to stall further expansion in the faster growing Chinese market. This reflects the competitive position in a market where the population favors continued reliance on state run healthcare provision. However, Bupa’s competitors, Allianz and AXA PPP, have taken aggressive steps to seize opportunities in the Chinese insurance market in the sectors where increased demand for private health insurance exists.
The view is that considerable scope for growth exists in the international healthcare and insurance markets – especially the BRIC countries of Brazil, Russia, India and China and other countries such as Thailand, Dubai and various other countries in Latin America. While the established markets in the UK, USA and Europe are now beginning to show signs of economic recovery, with major structural overhauls of healthcare provision in the UK and USA potentially offering prospects for expansion.
Bupa’s Chief Executive Ray King commented on the healthcare reforms by saying “The UK and US governments started to articulate their plans for reform of their health care systems and we believe that this should offer new opportunities for our businesses in the future.”
Taking into a account the long term trends of increasing aging population, the advances in medical technology, the burden of chronic diseases, coupled with the growing wealth in emerging countries, and the revamping of healthcare systems in the major UK and USA markets, the future for Bupa remains positive. Although in the short term, lingering high unemployment levels and economic austerity measures present Bupa with challenging goals.
Bupa has taken greats strides to expand and diversify in recent years, creating new insurance products and services to meet the needs of international clients, coupled with keeping established and trusted policies. The expertise of the Bupa Group, and, where completed joint ventures with local partners, means Bupa are able to deliver a wide range of health plans to meet local needs.
With their expert knowledge of expatriate healthcare plans, Bupa provides such products as worldwide evacuation, repatriation, medical insurance plus coverage and specialist products; such as Bupa’s oil and gas healthcare plans which cater for the needs and specific local demands of this industry. Bupa’s wide range of plans provides the basis to offer policyholders comprehensive services, and Bupa International endeavors to combine the best products, with customer satisfaction focusing on service and value for money.
Bupa’s balanced international portfolio and strong market positions throughout the world is considered satisfactory to enable it to withstand the challenging conditions in the short to medium-term, with trading conditions not expected to change materially in the second half of 2010. Some recovery is forecast for 2011 and overall the future for Bupa is considered positive.
Insurance Companies 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.
Max India
Incorporated in 1988, Max India Limited is a holding company with business interests working in the healthcare and services industries. Their wide range of health related interests include a joint venture life insurance company, Max New York Life, a healthcare services company, Max Healthcare, and a clinical services company, Max Neeman Medical International. The Max India Group reported US$ 860 million in revenues for 2007-2008 and will soon add Max Bupa to their list of businesses.
Ingosstrakh Insurance Company
Ingosstrakh Insurance Company was established in 1947, operating in Russian and international markets. Ingosstrakh provides insurance products and services to retail and corporate clients. It offers life, accident, car, property, mortgage, boat and yacht, voluntary health, and travel insurance products. The company also provides liability, motor, agricultural, trade, marine, voluntary medical, and aviation and space risks insurance products.
Allianz
Allianz Group is one of the leading global services providers in insurance and asset management. With approximately 153,000 employees worldwide, the Allianz Group serves approximately 75 million customers in about 70 countries. On the insurance side, Allianz is the market leader in the German market and has a strong international presence.
AXA PPP
Originally known as PPP Insurance, the company became part of the Global AXA Group in 1999 and changed its name to AXA PPP in 2002. AXA PPP is now an international health insurance company with over 2 million customers around the world.
Sep
10
CIRC Allows Chinese Insurers to invest in Property & PE
Filed Under China, China insurance, Health Insurance, Healthcare, Insurance Company, Life Insurance, Medical Insurance | Leave a Comment
China’s insurance regulator, the China Insurance Regulatory Commission (CIRC), has laid out new rules allowing Chinese insurance companies to diversify their investment channels to include Private Equity and Real Estate.
The new rules afford Chinese insurers the chance to invest up to 10 percent of assets in real estate, as well as investing a further 5 percent of assets into private equity investments and associated financial products. Some analysts estimate that the new asset investment rules will release up to CNY 100 billion (USD 14.76 billion) into the Chinese private equity and property markets.
The CIRC announced the pending changes last month but did not provide detailed rules at the time. Under the new rules issued through the CIRC website in the first few days of September, Chinese insurance companies can now directly invest in unlisted insurance-related businesses, such as pension, medical and auto services. The new rules bar insurers from investing in venture capital funds, and caps indirect private equity investments, which usually happen through funds, at 4 percent of total assets.
Chinese insurance companies do face some restrictions when investing in real estate; they are prevented from investing in residential property, being limited to commercial and office-related projects, as well as real-estate projects pertaining to the company’s own uses. Insurers are further prohibited from engaging in real estate development, establishing a real estate company of their own, or investing in unlisted real estate companies.
China Life Insurance Group’s project company, China Life Property will be unaffected by the new rules as it sets up to manage China Life Insurance’s office buildings. China Life Insurance also holds a stake in Sino-Ocean Land Holdings, but as it is only a 24 percent stake and a non-controlling one, it will not have to sell its shares under the new rules.
The new investment opportunities could lead to a lot of money flowing into the private equity and real estate industries in China, as Chinese insurers’ assets totaled CNY 4.5 trillion (USD 664.7 billion) by the end of the second quarter in 2010. This means there could be an influx of as much as CNY 450 billion (USD 66.5 billion) of insurers’ money into real estate and CNY 220 billion (USD 32.5 billion) into private equity.
The new diversification of potential asset investment targets comes at a good time for Chinese insurance companies, as both China Life Insurance and Ping An Insurance Group saw their 2010 investment income drop from the previous year. Despite the fact that China Life Insurance raised their net profit 7.4 percent year on year to CNY 18.03 billion (USD 2.66 billion) for the first half of 2010, their investment income slid 4.3 percent to CNY 32.37 billion (USD 4.78 billion).
Ping An Insurance Group, China Life Insurance Company’s biggest domestic competitor, also saw its total investment income drop for the first half of 2010, down about 25.6 percent from the same period a year ago, to CNY 10.37 billion (USD 1.53 billion). Ping An’s return on total investment rate dropped from 4.8 percent to 3.7 percent.
So far Yuan-denominated private equity funds have raised approximately CNY 61.6 billion (USD 9.1 billion) in 2010, which raises some worries about the potential flood of cash that could flow into the private equity markets of China. The CNY 220 billion (USD 32.5 billion) that Chinese insurers could put into the industry vastly outstrips the fund-raising efforts from current private equity houses.
Not only does it appear that the Chinese private equity markets are not prepared for that size of incoming investment, but some believe that larger Chinese insurers like Ping An Group and China Life Insurance Group may set up their own private-equity businesses. Should this happen it may have a knock on effect on the private equity business by increasing competition for both funds and targets for investment, which could cause asset prices to rise.
Considering the State Council of China has previously said that commercial health insurance will play a large part in any healthcare reform in China, the ability for Chinese insurance companies to invest in insurance-related businesses, including those in the medical industry, may play a part in long term healthcare and health insurance reform in China.
Insurance 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.
Ping An Insurance Group
Ping An Insurance (Group) Company of China, Ltd. (Ping An) is engaged in providing a range of financial products and services. The Company focuses on three businesses: insurance, banking and investment. The Company operates in five business segments: life insurance business, property and casualty insurance business, banking business, securities business, corporate and other businesses. The Company’s subsidiaries include Ping An Life Insurance Company of China, Ltd. (Ping An Life), Ping An Property & Casualty Insurance Company of China, Ltd. (Ping An Property & Casualty), China Ping An Trust & Investment Co., Ltd. (Ping An Trust), Ping An Securities Company, Ltd. (Ping An Securities), Ping An Bank Co., Ltd. (Ping An Bank), Ping An Annuity Insurance Company of China, Ltd. (Ping An Annuity) and Ping An Health Insurance Company of China, Ltd. (Ping An Health), among others.
Sep
9
Healthcare Reform Caveat for Back-to-School International Students in US Colleges
Filed Under Aetna, Expat Insurance, Health Insurance, Healthcare | 4 Comments
An unintended side effect of some provisions in the Obama administration’s new healthcare plan has the potential to prevent public and private universities in the US from offering certain types of health insurance to their students, including international students.
Certain plans self-funded by US universities, or those administered through licensed health insurance companies, are in danger of not being compliant under some provisions stipulated by the Patient Protection and Affordable Care Act, according to the American Council on Education (ACE), a national organization trying to alert the White House and the US Department of Health and Human Services on these potential consequences once the new health care plan comes in effect.
The standard set for “minimum essential coverage” as mandated by the healthcare reforms becoming effective in 2014 affects individual health insurance coverage, and may be unattainable by some university student plans; forcing their students and parents to seek coverage from another insurance provider, or pay a tax penalty.
The effect of the “minimum essential coverage” provision would mean that many American colleges and universities, which have comprehensive healthcare infrastructure and personnel already in place, would not be able to provide quality health coverage for students who need it. One possibility would be for the students to get a policy for a limited period, usually lasting for less than one year, which under the Health Insurance Portability and Accountability Act classify as being short-term.
At this point in time, even students under a comprehensive student health plan would not meet the said minimum essential coverage requirement due to what is termed as a “definitional technicality,” according to ACE; this is something that the organization has attempted to clarify with the US government.
The way forward for the institutions falling in the case described above would be to negotiate for health insurance with a coverage period lasting up to, or including the whole of, 2014. Due to the geographical limitations in the health insurance plans often provided to parents of international students through their overseas employers, the interim coverage can be seen as an extremely valuable benefit. Once the health reform bill becomes effective, individuals will be able to remain under the health insurance plan of their parents up until 26 years of age. Individuals not eligible under this provision, would also be able to enjoy coverage under this type of interim health insurance plans.
International students at US universities whom are required to show proof of health insurance, may be given the choice to buy health insurance through a company like Academic Health Plans, managed by Aetna, unless they already have their own health insurance. In other cases, the universities may make it compulsory for their international students to purchase health insurance through the Academic institution they are attending. Domestic students are generally given the freedom to choose the health insurance from the provider of their preference, as an option to purchasing it directly from the university.
Given the current uncertainty of how much the implementation of the health reform will impede the current way some US universities and colleges are handling the sale of health insurance plans to their international students, a feasible choice would be to recruit the services of insurance brokers, so that the institutions are freed from playing the role as insurance agents. This clean cut approach would ensure that their international students deal directly with the insurance company underwriting their health insurance plan.
Insurance Company mentioned:
Aetna is a leading global diversified healthcare benefits company head-quartered in the US, serving approximately 35.8 million people with information and resources to help them make better informed decisions about their healthcare. Aetna offers a broad range of traditional and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioural health, group life and disability plans, and medical management capabilities and healthcare management services for Medicaid plans. Our customers include employer groups, individuals, college students, part-time and hourly workers, health plans, governmental units, government-sponsored plans, labour groups and expatriates.
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