Nov

30

US$4.1 Million Grant for Index Linked Insurance in Kenya and Rwanda

Filed Under Africa, Income Protection | 2 Comments

The International Finance Corporation (IFC) – a member of the World Bank Group – has awarded a US$4.1 million (€3.12 million) grant to support the provision of microinsurance in Eastern Africa. The grant will be awarded over the next three years to help 35,000 farmers and 5,000 livestock herders in Kenya and Rwanda.

The grants will be used to finance advisory services, building and infrastructure development and assistance to local insurance companies in the provision of index-based insurance products.

The agreement between the IFC and the regional grant partners is designed to expand access to insurance for Kenyan and Rwandan farmers and livestock herders in order to provide them with protection for their animals, crops and livelihoods against natural disasters and weather-related risks.

The IFC led programme – through the Global Index Insurance Facility (GIIF) – was established in 2009 to help in the development of index-linked insurance facilities in countries which currently have limited insurance resources available. The IFC grant, totaling roughly US$4.1 million (€3.12 million), will be shared between three schemes which include: MicroEnsure weather index insurance project in Rwanda; the Syngenta Foundation for Sustainable Agriculture/UAP Insurance weather index insurance initiative in Kenya and the International Livestock Research Institute (ILRI) Livestock index insurance project in northern Kenya.

The expected breakdown of the grant will see the Syngenta Foundation for Sustainable Agriculture receiving up to US$2.4 million (€1.8 million), which is planned to assist 20,000 farmers in Kenya with insurance protection over the next three years. US$154,000 (€117,540) of the IFC grant will be for the ILRI to help roughly 5,000 households in northern Kenya over the next two years and up to US$1.6 million (€1.2 million) will be for MicroEnsure to cover 15,000 farmers over the next three years in Rwanda.

IFC’s director for Eastern and Southern Africa, Jean Philippe Prosper said: “These partnerships highlight IFC’s commitment to expanding insurance and other financial products where they are needed most in Africa. The Global Index Insurance Facility will facilitate farmers’ access to credit, leading to increased productivity, improved livelihoods and greater food security. We are grateful to the donors that have generously provided funding and to our partners for supporting this programme.”

The establishment of the GIIF is designed to aid the development of local insurance companies and create capacity to provide index-based insurance products. Index-based insurance is designed to protect against catastrophic events taking into account the severity of the events such as droughts, flooding and wind storms and the damage they can cause. The significance of the form of index-linked insurance products proposed is that it will enable the verification of claims on a large scale rather than on an individual basis. This will lower transaction costs, making products and services more accessible in rural and remote regions.

The first donor to commit to the GIIF Trust Fund was the European Union (EU) which donated US$32 million(€24.5 million). Additional donations have been received from Japan’s Ministry of Finance with an initial offering of US$2 million (€1.5 million) and the Dutch Ministry of Foreign Affairs; these funds have been used to finance the initial project and establish the facilities required.

The IFC is the largest global development institution founded to focus on private sector involvement in developing countries. The IFC looks at ways to create opportunities for people to escape poverty and improve their lives. The global institution provides capital for businesses to assist employment and supply needed services by using funding from sponsoring parties. The IFC will also offer advisory services to ensure projects are developed effectively.

Nov

29

Tough Future Predicted for Foreign Insurers in China

Filed Under Uncategorized | 2 Comments

A survey by professional service firm PricewaterhouseCooper (PwC) has shown that foreign insurers operating in China expect their market share of the overall insurance business in the country to remain static in the short to medium term.

PwC surveyed 31 foreign insurers currently present in China. Expectations emerged that the next three years will be stagnant for foreign insurance companies as local based rival insurers take a stronger presence in the market. Life insurers are forecasting that their current market share of this sector of the insurance business will remain at around 5 percent for the next three years, while insurers in the property and casualty sector also expect no growth in China – with a continuing market share of 1 percent.

A combination of facts has been highlighted as obstacles to further growth for overseas insurers in the Chinese insurance market. These include stringent measures imposed by the insurance regulator – the China Insurance Regulatory Commission (CIRC) – and increased competition from local insurance companies operating in the second largest economy in the world.

Commenting on the survey, Tom Ling partner at PwC China said: “Foreign insurance companies operating in China have tried in vain to gain traction and increase their market share. Established domestic insurers and the aggressive geographic expansion of the smaller insurers are giving the foreign players a run for their money.”

During the first 6 months of 2010, the 46 foreign insurers present in China generated total premiums of CNY32.58 billion (US$4.9 billion) – a figure which accounted for 4 percent of total insurance premiums.

The Chinese insurance market has seen a more aggressive approach from local financial institutes. The China Construction Bank Corporation and ICBC have stepped up their operations in the insurance sector in China, taking advantage of the growing demand for protection products from a more affluent population.

Domestic provider Ping An Insurance – one the largest insurers present within the Chinese insurance market – received approval to merge with the Shenzhen Development Bank Co in a move which will increase the Ping An Insurance distribution network. Also, the Industrial and Commercial Bank of China (ICBC) agreed to buy a majority stake in the French-Chinese joint venture AXA-Minmetals Assurance Company giving ICBC – the world’s largest bank by market value – access to the Chinese life insurance market and adding to their non-banking products in the most populous country in the world.

Previously international insurers had been reporting substantial activity from their Chinese operations focusing on the country’s insurance market for global growth and new premium sales. In October 2010, Zurich maintained a 20 percent share in their Chinese joint venture – New China Life Insurance (NCI) – ensuring the Swiss based insurer retained its original holding in the Chinese insurer and profit potential.

The Belgium insurer Ageas – which emerged from the 2007-2008 global financial crises as a leaner business – also aims to strengthen its operations in Asia highlighting China as a key market for future growth. Europe’s third largest insurer Generali is also focusing on China as part of its strategy to accelerate growth for the global Italian insurer.

Canadian insurer Sun Life Financial has undertaken a restructuring of its joint venture in China – Sun Life Everbright – reducing holdings in the company from 50 percent to 24.99 percent, but this has enabled the dominant Chinese influence to expand its distribution network.

Insurance companies, either foreign or domestic based, have been re-positioning and developing within the Chinese insurance market, committing themselves to potential growth opportunities. Multi-national insurers have established offices across China taking a positive foothold in the country and placing a strong focus on activities – with recognition of the prospects for expansion and premium appreciation.

Although the recent survey by PwC highlights the tougher conditions for foreign insurers operating in China, multi-national insurers remain committed to the insurance industry in the country by improving links with local insurance companies in order to maximize opportunities in a market which has yielded positive returns for many insurers in the past.

Companies Mentioned:

Sun Life Financial

Sun Life Financial is an international financial services organization providing a range of protection and wealth accumulation products and services to individuals and corporate customers.

Sun Life Everbright Life Insurance Co. Ltd

Sun Life Everbright Life Insurance was established in April 2002. It’s shareholders include China Everbright Group, Canada’s Sun Life Financial Group, China North Industries Group Corporation and Anshan Iron and Steel Groups, based in Tianjin

Zurich

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

Assicurazioni Generali SpA

The Generali Group is one of the most significant participants in the global insurance and financial products market. The Group is a leader in Italy and Assicurazioni Generali, founded in 1831 in Trieste, is the Group’s Parent and principal operating Company. Generali is one of the leading global players in the assistance sector thanks to the Europ Assistance Group, active in more than 200 countries with services in the motor, travel, healthcare, home and family sectors. In recent years, the Group has made a significant return to 14 central-eastern European markets and has set up offices in the principal markets of the Far East, including China and India.

ICBC

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.

AXA-Minmetals Assurance

AXA-Minmetals Assurance is the first Sino-French insurance company in China and also the first life insurer approved by China Insurance Regulatory Commission. Established in Shanghai in May 1999, the company has boasted stable and sustainable development with its ambition of Becoming the Preferred Company. In September 2010, AXA-Minmetals has achieved a total premium income of RMB 830 million, increased by 54% compared to the same period of last year and its new business volumes have also increased by 75%.

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.

New China Life Insurance

New China Life Insurance Co.,Ltd (NCI?has headquarters in Beijing and was established in 1996 It is a large national insurance company, with products including traditional protection products, bonus products as well as the products that have a strong financial management function. With sustained, healthy and harmonious development of the company, the brand value of NCI is a valuable asset.

Ping An

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.

Nov

26

600,000 People Die from Passive-Smoking Annually

Filed Under Uncategorized | 3 Comments

A recently report has found that nearly one in a hundred deaths worldwide are related to passive smoking, with the study estimating that 600,000 people die from second-hand smoking each year.

The report by the World Health Organization (WHO) is one of the first global assessments of its kind looking into the affects of second-hand tobacco smoking. The results included in the report indicated that 165,000 children die each year due to a tobacco polluted environment. The WHO report – led by Annette Pruess-Ustuen of the WHO – shows that children are more exposed to second-hand smoking than any other age-group.

The report was compiled based on data from 2004 – the most recent available – with figures covering 192 countries. The research reported that two-thirds of the deaths recorded occurred in Africa and South Asia. The assessment of the impact of passive smoking indicated that of people most affected, 40 percent were children, 35 percent were women and 33 percent men.

A mathematical modeling technique was used to compile the results for the WHO sponsored study, with the Swedish National Board of Health and Welfare and Bloomberg Philanthropies providing funding for the research programme.

Of the people around the world who have died due to complications from second-hand smoke, 379,000 are estimated to have died from heart disease, while lower respiratory infections having caused 165,000 deaths, asthma causing a further 36,900 deaths and 21,400 from lung cancer.

Children who are exposed to second-hand smoke are particularly vulnerable to disease and illness, which include pneumonia, asthma and Sudden Infant Death Syndrome (SIDS). In adults second-hand smoke can lead to serious cardiovascular and respiratory diseases, which include coronary heart disease and lung cancer. While passive smoking in pregnant women can contribute to a low birth weight of the baby.

Deaths among children caused by second-hand smoking was mostly confined to poor and middle income countries, while deaths recorded within adult groups was spread across all countries. In high income countries within Europe, 71 child deaths were reported with adult deaths estimated to be above 35,300. Across the African continent, it was estimated that more than 43,000 children and 9,100 adult’s deaths were due to the affects of passive-smoking.

However, the total impact of tobacco related death’s worldwide is estimated to be 5.7 million, when the 600,000 from passive smoking is added to the figure for deaths due to active smoking.

There have been calls for countries to strengthen the enforcement of the WHO’s Framework Convention on Tobacco Control, which highlights measures such as plain packaging of tobacco products, a ban on marketing and an increase in tax on tobacco products; it is thought that implementation of these measures would have a significant and positive effect on exposure to passive and active smoking.

Research has shown that countries which put in place smoking bans in public places such as restaurants and bars see a significant decline in the levels exposure to second-hand smoke. It is also contended that when countries adopt anti-smoking regulations and ensure adherence to these, there can be abatement in the amount of cigarettes consumed by a smoker thus leading to a better chance of quitting the habit. Only 7.4 percent of the global population is estimated to be currently living in an area where there are comprehensive anti-smoking laws, and, in certain cases, the laws are not strictly enforced.

The WHO have stated that the current trend in tobacco consumption is responsible for more than 5 million deaths a year, which could exceed 8 million deaths per year by 2030 if there is no reduction in tobacco consumption. Current data shows that there are over a billion smokers worldwide, with approximately 80 percent living in low and middle income countries. While the overall consumption of tobacco products is increasing globally, there has been a slight decline in some high and upper-middle income countries.

Nov

25

New Drug Developed in Fight Against HIV

Filed Under Uncategorized | 3 Comments

A study organized by the government of the USA and recently published in the New England Journal of Medicine, dubbed iPrEx (Phase III Chemoprophylaxis for HIV Prevention in Men), has shown that a once-a-day pill could be used to treat HIV positive patients in combating the virus. Recent trials of the combination drug Truvada have been completed with nearly 2,500 men participating in the research; it showed signs that the new drug could lower the chance of male-to-male HIV infection.

Gilead Sciences Incorporated – the California based drug manufacture of Truvada – has submitted an application to the FDA (Food and Drug Administration) for permission to market a single combination drug of Truvada (emtricitabine and tenofovir disoproxil fumarate) in addition with Tibotec Pharmaceuticals Ltd.’s TMC278 (rilpivirine hydrochloride) for treating adults infected with HIV. The two companies have been collaborating since June 2009, and the new combination drug is supposed to be a safer follow up to one of Gilead Science’s previous combination drugs Atripla, which combined Truvada and Bristol-Myers Squibb Co.’s Sustiva (efavirenz).

The National Institute of Allergy and Infectious Diseases (NIAID) sponsored the recent study – known as iPrEx – through the non-profit independent research organization J. David Gladstone Institute, which is associated with the San Francisco based University of California. The drugs were donated by Gilead Sciences, with the Bill & Melinda Gates Foundation also providing additional funding.

Research has shown that if Truvada is taken by HIV sufferers, it could reduce the risk of infection by 44 percent – with a higher avoidance of contraction if the drug is taken on a regular basis. Almost 2,500 gay or bisexual men from the United States, Thailand, Peru, Brazil, Ecuador and South Africa were randomly selected to take-part in the trial, with half of the test group given a placebo.

Anthony S. Fauci, M.D., director of NIAID said “We now have strong evidence that pre-exposure prophylaxis with an antiretroviral drug, a strategy widely referred to as PrEP, can reduce the risk of HIV acquisition among men who have sex with men, a segment of the population disproportionately affected by HIV/AIDS,”

Participants from the six countries who took part in the study all received an intensive package of preventive measures to reduce the risk of HIV infection during the trial. The patients in the trial were given HIV testing, counseling on safe sex, condoms and medical treatment for sexually transmitted infections. Half of the test group were given Truvada, which was provided by Gilead Sciences for the study.

The tests were conducted over a 12 month period and found that if Truvada was taken it appeared to cut to the transmission of HIV by 44 percent, when compared with the group taking placebo tablets. The results from the initial studies – confirmed by blood tests – indicated that the pill could reduce transmission levels by up to 73% if taken on a regular and consistent basis.

If Truvada proves to be successful in the fight against HIV, it could be a major breakthrough in combating the spread of AIDS worldwide. A decision on how Truvada can be best used to possibly prevent AIDS occurring is still to be taken.

Further research is planned to be carried out among other groups, including women and intravenous drug users, to see if the drug can be used to control the virus. So far the research into Truvada has proven to be encouraging in controlling the global epidemic, with further studies planned for the future to see if any advances can be made.

There still areas of concern at this early stage, including the long term effect of taking the drug for an extensive period of time; concerns also cover the issues of how often the pill should be taken and the overall cost of the medication. In the USA, the cost of medication could be in the region of US$1,000 per month, while in low-income countries generic versions of the drug could cost a person around US$15 per month. The affordability of the drug is believed to be out of reach for many people who need it.

The key goal behind Truvada is to help stop HIV from reproducing. The anti-HIV drug is designed to combat the virus which attacks the immune system – made up of millions of cells – by helping in the fight against the infection. The recent study into the use of Truvada does not show the affect the drug may cause if taken regularly for a three year period.

The study into the use of Truvada is seen as a major advancement in the fight against HIV. UNAID reports that there is an estimated 33.3 million people HIV positive worldwide – although it is thought the epidemic peaked in 1999, with the number of new infections declining by 19 percent since; the UN now estimates that there are 15 million people living in low and middle income countries who require treatment for AIDS.

Although the virus has declined over the last decade, if the study on the benefits of Truvada evolves and proves to be successful, it is possible that it could cut the

transmission of HIV significantly and be a major step forward in global health. However, it is recognized that Truvada is not a preventive cure for HIV, but early findings show Truvada lowers the risk of the new infections among healthy gay men – emphasis being placed on the consistent application of correct safe sex methods as still the best form of protection against HIV infection.

Anthony S. Fauci, M.D., director of the NIAID further said: “Additional research is needed, but certainly this is an important finding that provides the basis for further investigating, developing and employing this prevention strategy, which has the potential to make a significant impact in the fight against HIV/AIDS.”

The initial results of trials may prove to be significant in the battle against HIV/AIDS. The positive effects on the use of Truvada need to be expanded in order to develop new measures to prevent the transmission of HIV globally. It is vital additional research is completed in the development of medication to fight HIV, with the issues relating to costs, drug-resistant strains of HIV and the long team treatment process fully addressed.

Nov

24

Sun Life Financial Aims for Growth in China and India

Filed Under China, China insurance, Insurance Company, Life Insurance | 2 Comments

The Canadian insurer Sun Life Financial reported third-quarter earnings for 2010, with net income totaling C$453 million (US$444 million). This compared with a loss of C$140 million (US$137 million) during the same period last year. Sun Life Financial also highlighted plans for future expansion through its operations in China and India in order to capitalize on the developing markets in these countries.

Sun Life Chief Executive Don Stewart said: “In Asia, the restructuring of Sun Life Everbright is now complete. We continue to see strong sales growth in China and Indonesia..”

Sun Life Financial reported 2010 third-quarter earnings in Asia totaling C$37 million (US$ 36 million), compared to earnings of C$13 million (US$12.7 million) for the same period in 2009. Significant growth was reported from individual life sales in China and Indonesia, which grew by 178 percent and 54 percent respectively.

Canada’s third largest insurer Sun Life Financial plans to expand throughout China by increasing its presence in major cities across the country, taking advantage of the growing demand for protection and saving products. This will be undertaken through Sun Life Financial’s joint venture with China’s Everbright Group, which started trading in 2002; the JV – Sun Life Everbright Insurance Co – went through a restructuring programme earlier this year to strengthen its presence in the rapidly growing financial market in this country.

The revamp of Sun Life Everbright earlier in 2010, meant Toronto-based Sun Life Financial’s holding in the joint venture decreased to 24.99 percent from its original stake of 50 percent, with Sun Life Financial still providing expertise in areas such as risk management and actuarial services. Under the restructuring of the Chinese JV, Sun Life Financial reported a net gain of C$19 million (US$18.6 million) and set its sights on continued sales growth in the future.

Currently Sun Life Everbright operates in 18 Chinese cities employing more than 2,500 advisors providing individual and group plans for accident, pension, life and health protection products. The foreign linked joint venture became the first recognized domestic Chinese company in the summer of 2010 following its restructuring program. Sun Life Financial has highlighted – like many other global insurers – the significance of the Chinese economy and the part it will play in the future growth for insurance companies re-positioning operations to capitalize on emerging demands.

Birla Sun Life is Sun Life Financial’s joint venture with local Indian partners Aditya V. Birla Group and is one of the top 5 privately owned life insurers in India. Although Sun Life Financial’s sales in India were down by 13 percent in the third quarter of 2010, compared with the same period in 2009, this was partly due to the major changes imposed by Indian regulatory authorities. However, Birla Sun Life expects prospects to bounce back in the future in line with the economic growth forecast to occur in this Asian powerhouse. The Indian insurance sector is set to expand propelled by the country’s economic prosperity and increasing demands from the vast population for insurance products. Birla Sun Life provides life, heath, education, retirement, saving and mutual fund products.

Sun Life Financial and its partners in India and China are upping operations in these two Asian powerhouses, which have both emerged from the 2007-2008 financial crises as pivotal markets for insurers and financial institutions; this reflects emerging demands for protection and investment products from the increasingly more affluent populations in China, India and other Asian countries, which are providing multi-national insurers – such as Sun Life Financial – and their local partners a new outlet for income growth. The demand for insurance products in the Asian region offsetting more static demands in traditional markets in North America, Western Europe and Japan, where economies have been slower to recover from the global financial setback in 2007-2008.

Even though competition in the insurance market in China, India and other Asian countries has increased in recent years, Sun Life Financial believes the expanding savings culture in this region of the world will provide new and profitable business outlets.

In Canada, Sun Life Financial’s third-quarter earnings generated a net income of C$262 million (US$257 million) compared with C$219 million (US$ 215 million) for the same period in 2009; while trading in the USA showed an improvement, with profits of C$41 million (US$ 40 million) in third-quarter 2010 compared to a net loss of C$413 million (US$405 million) year-on-year.

The China Insurance Regulatory Commission (CIRC) and the Insurance Regulatory and Development Authority (IRDA) of India are the gatekeepers of the insurance industries in their respective countries. In recent years each insurance market has been subject to changes, which has resulted in an increase in competition between foreign and domestic insurance providers. Reforms and criteria changes have paved the way for global insurers to enter the Chinese and Indian insurance markets – although some obstacles still remain. Sun Life Financial – through their joint ventures with local insurers – are in a strong position within the Chinese and Indian insurance sectors, offering a large product mix to meet the demands of changing needs and competition within these nascent insurance markets.

Insurance Companies Mentioned:

Sun Life Financial

Sun Life Financial is an international financial services organization providing a range of protection and wealth accumulation products and services to individuals and corporate customers.

Sun Life Everbright Life Insurance Co. Ltd

Birla Sun Life

Birla Sun Life is a joint venture established in 1999 between Sun Life and Indian based Aditya V. Birla Group. Today, Birla Sun Life Insurance is one of the top 5 privately owned life insurers in India, and Birla Sun Life Mutual Fund is the fifth largest Mutual Fund House in the country.

Nov

24

Record Growth in Australia’s Private Health Insurance Market

Filed Under BUPA, Insurance Company, Medical Insurance | 22 Comments

Australia’s public health system, Medicare, provides a substantial cover of healthcare treatment. However the public health system is currently under threat. There is a shortage of medical staff, hospital beds, and medical facilities such as brain scans. Patients under the public health system are therefore having to endure considerably long waiting lists.

Medicare was introduced in 1983, allowing Australian citizens to receive emergency, hospital treatment, diagnostic investigations, and prescribed surgery for free. Under the public health system, General Practitioner appointments, chiropractic, physiotherapy, specialist services, and pharmaceutical medications are either fully or partially subsidized by the Government. Services not included under Medicare include ambulance cover, dental care, elective treatments, and access to private hospital services. Medicare covers 75 per cent of private healthcare costs.

The Australian Government wants more people to obtain private health insurance to ease the impact of large numbers of patients on the public healthcare system. With Government incentives and insurance rebates introduced in the last decade, there are now more reasons for Australians to take out private health insurance.

In 2000, the Government introduced the Lifetime Health Cover (LHC) policy, which provides incentives for younger Australians taking out health insurance. The initiative may have been proven successful, given the last quarterly report reveals the largest increase in Australian private medical insurance coverage were among individuals aged between 20 and 24.

With the LHC policy, people can save considerable amounts on their health insurance costs if they take out hospital coverage prior to their 31st birthday. Individuals who do not have hospital cover on the 1st July following your 31st birthday, will pay a 2 percent loading for every year they are aged over 30. The maximum loading is 70 percent. The exception is for individuals who took out hospital cover before 1 July 2000 and maintained it – pursuant to the initiative, as these individuals pay a base rate regardless of their age.

Further incentives have included the Private Health Insurance Rebate, introduced in 1999, which offers at least 30 per cent rebate on private health insurance costs. The rebate is increased to 35 per cent for people aged between 65 and 69 and 40 per cent for those aged 70 and over.

Many Australians are also taking out private health insurance to enable choice of doctor and hospital, as well as avoiding long waiting lists endured under the public health system.

Given the introduction of Government incentives to purchase individual coverage, private health insurance has soared in Australia, reaching record membership coverage in decades.

“This is the first time there has ever been more than 10 million people in Australia with hospital insurance since the introduction of Medicare”, the Private Health Insurance Administration Council revealed in its’ September 2010 quarterly report.

The Private Health Insurance Rebate has undoubtedly proven successful, given the upswing in private health coverage since the introduction of the scheme. In order to save $1.4 billion, Health Minister Nicola Roxon announced her intentions to reintroduce legislation aimed at means-testing the rebate. Although her initiative was blocked by the Senate, Nicola Roxon aims to use the growth in the number of health insurance policies to gain approval.

Despite high increases in insurance premiums, doubling the inflation rate, last year Australia had the highest incline of new memberships since 2001. Australia’s Health Minister Nicola Roxon argued that the premium increase of 6.0 per cent this year was actually lower than last year’s increase of 6.02 per cent. Although it was higher than 2008′s rise of 4.99 per cent.

On the other end of the scale, the United Kingdom has experienced a record decline in private health insurance members, driven by recession pressures forcing employers and individuals to cut back in costs. This is the lowest record of coverage since the 1970s. The number of private health insurance members have fallen to around 7.2 million, 11.7 per cent of the population. This compares to 12.5 per cent private health insurance coverage among the UK population in 2007, market researchers Laing & Buisson report.

Given the increase in private health insurance coverage in Australia, the industry has grown considerably as a result. Key competitors in Australia on the health insurance market are Medibank Private, BUPA, Hospitals Contribution Fund of Australia, and HBF, listed by market researchers IBISWorld.

Over the last decade, leading health insurers have emerged with Medibank controlling 30 per cent of the private health insurance market. Around 100,000 health insurance policy holders were added in the last year, taking the total number of members to 3.7 million. Bupa Australia also shares a large proportion of the health insurance market with over 3 million members.

Medibank’s revenue of $4.6 billion this year, was a 17 per cent increase on the previous year, with $4.4 billion coming from premium revenue. Medibank Private’s expansion into healthcare, through the acquisition of Australian Health Management in 2009, increased the company’s profit growth further, contributing $19 million in the last year. In the last 18 months Medibank has also purchased Health Services Australia and McKesson Asia-Pacific.

Following the merging of Bupa Australia with MBF in 2008, Bupa has become the second largest health insurer in Australia. In year end report 2009, Bupa Australia announced increased revenues and surplus with membership growth of 1 per cent since year end.

Overall there are good opportunities for further growth in the Australian health insurance market due to the government incentives that encourage the uptake of private health insurance, as well as the country’s strong economy and growing population.

Nov

23

Growth Opportunities for Insurers Forecast in the Middle East

Filed Under Health Insurance, Middle East, UAE Insurance | 10 Comments

Worldwide insurance rating and information agency A.M Best has identified three Middle Eastern insurance markets which are set to grow. The insurance industries in the United Arab Emirates (UAE), Qatar and Saudi Arabia are identified as offering opportunities for significant expansion for insurers with access to these markets.

The insurance markets in these three countries are poised to return combined total gross written premium increases of between 15-20 percent in 2010 – according to A.M. Best’s assessment.

The UAE, Qatar and Saudi Arabia are all members of the Gulf Cooperation Council (GCC) – a political and economic union in the Persian Gulf. This includes insurance company representation in a significant insurance market, with economies driven by buoyant oil prices and high levels of government spending on infrastructure. The market in the non-life insurance sector has been stimulated with demand for healthcare and motor cover in particular being set to grow in line with improving financial prosperity.

Abu Dhabi introduced a compulsory healthcare insurance programme in 2008, making it mandatory for all expatriates to hold private medical insurance, which will continue to drive future sales of private medical insurance.

A.M Best highlighted the opportunities for insurance companies operating in the UAE, Saudi Arabia and Qatar based on the stable economic outlook for the region. In the UAE, despite the impact of the global financial crisis – which caused the postponement of a planned healthcare insurance scheme in 2009 – the insurance market still grew by 3.65 percent, illustrating the general robustness of the insurance business in the region.

Although the general outlook for the insurance industry across the Middle Eastern region is positive, challenges exist for local insurers from increasing competition as new insurers enter the market placing pressure on maintaining profit margins. There are also concerns for insurers who currently operate in the region as the insurance sector is becoming increasingly fragmented, requiring insurers to concentrate on profitable products and services.

The takaful insurance market has been steadily developing across the Gulf region, with forecasts predicting that there is still significant growth potential in this sector. Swiss insurance giant Zurich recently highlighted opportunities in the takaful sector, where demand is poised to increase. In 2010, Zurich expanded their reach in the Middle Eastern region, with the acquisition of Lebanon-based Compagnie Libanaise D’Assurances (CLA); this gave Zurich access to a network of distribution channels in the United Arab Emirates, Kuwait, Oman and Lebanon.

Standard Chartered and Allianz Takaful entered into a 5 year agreement for Alliaz Takaful’s insurance products to be sold through the Standard Chartered Bank in Qatar. Additionally, the two parties also struck a deal for Standard Chartered SME business insurance products to be sold through Allianz Takaful in Bahrain, which includes group health insurance, corporate savings and pension schemes. These deals have strengthened strategic relationships and have enabled both parties to expand their distribution networks and product ranges in the region.

As global insurance markets open up, and multi-national insurers re-position themselves on the world stage, focus is shifting to up-and-coming insurance industries in emerging markets. They are seen as offering better opportunities for growth in premium returns to offset the more static positions in established European and North American markets. Key focal points in this respect have been the Asian and Middle Eastern regions, with the Middle Eastern insurance industry set to flourish in the U.A.E, Qatar and Saudi Arabia.

Cargo, construction and energy risks have been predominant in the UAE, Qatar and Saudi Arabia insurance sector. However, the need for indemnities for motor and health coverage is increasing and is driving the future development of the Middle Eastern insurance industry. Global heavyweights AXA and Allianz are already present in the Gulf region, together with Bupa Arabia in Saudi Arabia in order to take advantage of the increasing demand for healthcare coverage; the Bupa group announced profits for 2010 included earnings from overseas activities in Saudi Arabia and other emerging markets.

Economic success in the UAE, Qatar and Saudi Arabia is set to drive the insurance sector across the Middle Eastern region. This is leading to intensified competition, with global insurers battling to gain access to new business opportunities.

Companies Mentioned:

A.M Best

A.M Best Company was founded in 1899 and is a full-service credit rating organization dedicated to servicing the financial services industries, including the banking and insurance sectors.

Allianz Takaful

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

Standard Chartered Bank Qatar

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

AXA

AXA Group is a worldwide leader in Financial Services. Headquartered in Paris, the AXA Group companies are engaged in life insurance, health insurance and asset management services among others. AXA’s operations are diverse geographically, with major operations in Europe, North America and the Asia/Pacific area.

Zurich

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.

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.

Nov

22

Prudential Funds Purchase of AIG’s Japanese Insurance Units

Filed Under AIG, Insurance Company, Life Insurance, MetLife | 6 Comments

American insurance group Prudential Financial Incorporated has announced completion of financing transactions to contribute to the purchase of Japan-based insurers AIG Star Life Insurance Co and AIG Edison Life Insurance Co from its American rival AIG.

Prudential Financial, one of America’s largest life insurers, raised roughly US$ 2 billion (€ 1.45 billion) through the sale of over 18.3 million shares of Prudential Financial common stock, together with a public offering of US$500 million (€363 million) 4.50 percent senior notes and US$500 million (€363 million) 6.2 percent 30 year senior notes. The financing transactions by the US insurer helping to fund the purchase the two Japan-based insurance companies.

The sale of AIG’s two Japanese assets will help the US insurer repay the US Treasury and the Federal Reserve of New York for the bailout it received at the height of the global financial crisis in 2008; this amounted to approximately US$182 billion (€132 billion) at the time. The deal is expected to be completed in the first quarter of 2011.

The New Jersey based insurer Prudential Financial is aiming to pay US$4.2 billion (€3 billion) in cash and absorb US$600 million (€435 million) in debt from the two Japanese insurance businesses currently held by AIG.

The deal came to light earlier in the year, with Prudential Financial working towards generating additional capital to fund the purchase of AIG’s Star Life Insurance and AIG Edison Life Insurance from AIG. AIG Star Life is engaged in life and retirement plans for individuals and groups. AIG Edison Life offers life insurance services within Japan; the Japanese insurer has established distribution channels operating throughout the country. Prudential Financial stated that current policyholders with Star and Edision will not be affected by the future transaction.

AIG recent released third-quarter earnings for 2010, reporting small gains in core business activities. However, the troubled US insurer posted a loss of more than US$2 billion (€1.45 billion) related to sales linked to the AIG group’s restructuring program. The latest figures indicate the difficulties the AIG group has experienced in generating funds to repay the US government for its bailout.

The Prudential Financial Incorporated announced third quarter 2010 results with net income attributed to its financial services business amounting to US$1.2 billion (€872 million), which is equal to US$2.46 per (€1.7) common share.

Earlier this month John Strangfeld, Chairman and Chief Executive Officer of Prudential Financial, said about the future deal “With our acquisition of AIG Star Life and AIG Edision Life expected to close in the first quarter of 2011, we look forward to augmenting our footprint as a leading foreign life insurer in Japan service protection and retirement needs and building on our success in the Japanese insurance market”.

Earlier in 2010, AIG’s disinvestment program included the sale of Alico – another Japanese subsidiary – to MetLife for US$15.5 billion (€11.2 billion). The move by MetLife allowed it to strengthen its presence in the Japanese insurance industry and to substantially increase its global reach.

The acquisition of the Japanese companies AIG Star Life Insurance and AIG Edison Life Insurance will mean the US insurer Prudential Financial is expanding its reach in a mature Asian market, but in an economy which has struggled to gain stability since the financial tsunami took effect in 2007-2008. Prudential Financial – the second largest life insurer in the US – currently has assets amounting to roughly US$750 billion (€545 billion) under management, with businesses stretching across the USA, Europe, Latin America and Asia providing a range of indemnities which including life insurance, retirement products, mutual funds, investment products and property services.

The acquisitions by Prudential Financial will boost the US-based insurers reach in the world’s third largest economy; “The addition of these operations to our existing businesses in Japan will increase our presence and give us opportunities to provide our quality service to more customers. We look forward to working with the management and employees of Star and Edison to ensure a smooth transition,” said John Strangfeld, chairman and CEO of Prudential Financial Inc.

In June 2010, the Japanese life insurance industry had 47 life insurance companies operating in the country, with the major players being: Alico Japan, ING, Manulife, Midori, Lifenet, SBI AXA Life, Japan Post (Kampo) and AIRIO. The Japanese life and non-life insurance industry is facing difficult times as, similar to the positions of Western Europe and North America, where the insurance market has matured with limited potential for writing new business, compounded by aging populations and declining numbers of younger inhabitants.

Insurance Companies Mentioned:

Prudential Financial Inc

Prudential Financial Inc. is a financial services leader, with approximately US$750 billion of assets under management as at September 2010. Prudential Financial operates in the United States, Europe, Latin American and Asia, with approximately 42,000 employees worldwide

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

MetLife

Possessing over 140 years of insurance expertise, MetLife aims to be an innovator in the field of international Life insurance. Globally, MetLife is able to offer its clients accident and health insurance, life insurance, disability income protection, and retirement and savings products.

Alico

Alico provides a broad and innovative range of insurance and savings products to individual customers, corporate clients and high net worth customers. With products to support every aspect of their customers’ lives, and provide comprehensive cover for the employees and commercial needs of their business clients.

Nov

19

Generali Reports Profit, and Plans for Organic Growth

Filed Under China, China insurance, Health Insurance, Insurance Company, Life Insurance | 8 Comments

The Italy-based insurer, Assicurazioni Generali, has released third-quarter earnings for 2010, with the third-largest European insurer reporting a quarterly profit increase of 13 percent. Overall net income jumped to €440 million (US$602 million) compared to €390 million (US$538 million) generated in the same period in 2009.

Results from Generali’s life-insurance unit offset sluggish figures from their non-life operations during the third-quarter this year; Generali’s non-life unit being adversely impacted by catastrophic events which included the floods in Europe and the earthquake in Chile. In the life insurance sector, Generali produced an 8 percent increase in premiums during the first nine months of 2010 realizing total revenue of €3.72 billion (US$ 5.09 billion) at the end of September 2010, compared to €3.42 billion (US$ 4.68 million) during the same period in 2009.

Following the release of third-quarter results by the Trieste-based insurer, the multi-national group highlighted prospects for organic expansion of global activities, with opportunities in both the European and Asian regions. Within Europe, the company considers that there is scope for growth in its home domicile Italy, along with Germany, France and the Eastern European bloc countries. The shortfall in the pension and savings business in Europe – estimated to amount to over a trillion dollars – is providing insurers such a Generali with a significant target market. In the former Soviet Union countries, scope exists to expand operations and network channels as these markets evolve.

Following in the footsteps of many of the world’s biggest insurers, Generali is looking towards China, India and Vietnam to accelerate premium returns as opportunities in the Asian region emerge after the 2007- 2008 global financial crisis.

Generali has operations across Asia, including Hong Kong, China, India, Indonesia, Japan, Thailand, Vietnam and the Philippines. The Italian insurance giant has a strong base across the Asian region, with distribution networks and partnering arrangements in mature and flourishing insurance sectors.

While Generali has a strong distribution network both in Europe and in the developing Asian insurance markets, rival insurers have also increased their reach in these markets – particularly in the thriving Asian region – with companies such as Aviva establishing an Indonesia partnership and Bupa teaming up with a local insurer in India.

Positive results from its life-insurance unit enabled Generali to obtain preliminary licensing from the Vietnam Ministry of Finance for the group’s Vietnamese operation – the Generali Vietnam Life Insurance Company Ltd – which gives the Italian insurer access to an expanding Vietnamese life insurance sector. However, it faces fierce competition from Prudential Vietnam, Korea Life and Ace Life who have all enjoyed strong growth in the life market during 2010. Vietnam has experienced significant expansion through foreign investment in the country by insurers such as Prudential Vietnam, Manulife Vietnam and Dai-ichi Mutual Life Insurance – all being established insurance providers.

Future Generali – a joint venture in India – with the Mumbai based Future Group provides life and non-life insurance products operated through 97 branches in 84 India cities. Along with China, India has become an economic powerhouse, with the Indian insurance industry flourishing in line with improvements in prosperity. Future Generali faces stiff competition in India, with other European based rivals such as Bupa. Bupa formed a partnership with a local Indian insurer to form MaxBupa in a bid to take advantage of increasing demands for private healthcare.

For the Generali Group to expand through organic growth, it needs to focus on product innovation and expansion of distribution channels in countries like India and China in order to take advantage of the vast populations in these countries with increasing demands for protection products. Future Generali took advantage of changes made by the Indian Insurance Regulatory and Development Authority (IRDA) in 2010, with the development of new products in life and health insurance; the Indian health insurance sector having grown by 25.2 percent between April 2009 to March 2010.

In China – the prime focus for the multi-national insurer’s expansion and establishment of efficient network channels – Generali has formed a joint-venture with the China National Petroleum Corporation (CNPC) to create the Generali China Life Insurance Company Ltd. This company was established in 2002 providing pension, accident, life, medical and education insurance products. The Generali China Life Insurance Company Limited was the first sino-foreign company to be approved by the Chinese authorities. As in other Asian countries, competition is increasing with multi-national insurers expanding operations in this the country with the second wealthiest economy in the world. Major European insurers such as AXA, Prudential, Aviva and Zurich, together with American rivals AIG – through their Asian arm AIA – battling to strengthen their positions in the rapidly expanding Asian insurance industry.

It is becoming more apparent that growth in global insurance markets is shifting east, with emerging demand in Asian countries driving premiums and profit margins. In contrast, traditional markets in Western Europe and the USA are more static but still offer companies good returns and a challenge to retain market share.

Companies insurance Mentioned:

Assicurazioni Generali SpA

Future Generali India Life

Future Generali India is a joint venture between the Indian Future Group and Italian Generali Group, it participates in both India’s life and non-life insurance markets as Future Generali India Life Insurance Co. Ltd. and Future Generali India Insurance Co. Ltd. The company has 91 branches in 83 locations around India, and works with over 44,000 licensed advisors.

Generali China Life Insurance

Generali China Life Insurance Co., Ltd. (GCL) was established 2002 as a joint-venture between China National Petroleum Corporation (CNPC) and Assicurazioni Generali S.p.A. (Generali), was the first Sino-foreign joint-venture insurer approved by Chinese Government after China joined the World Trade Organization.

Zurich

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

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.

Bupa

Dai-ichi Mutual Life Insurance

Established in 1902, Dai-ichi Mutual Life Insurance Co. is the oldest mutual insurer in Japan in Vietnam, Dai-ichi Life ranks third with 50 offices, 400 staff and 13,000 agents. The Dai-ichi Mutual Life Insurance Co. acquired Vietnam’s Bao Minh-CMG joint venture in 2007 to establish Dai-ichi Life Vietnam and increased its chartered capital to US$25 million.

Korea Life Insurance

Korea Life was found in 1950, committed to the growth and development of the life insurance industry by protecting the rights and interests of the industry and policy holders. Korea Life held 4% of the life and non life insurance market in 2009.

Prudential Vietnam

Prudential Vietnam is one the leading insurance providers in Vietnam, offering services to millions of Vietnamese people via the network of over 155 customer service centers, branch offices and general agency and business partner offices nationwide. Prudential Vietnam now takes the lead in the life market with over 40% market share in terms of premium income.

Manulife Vietnam

Manulife Vietnam was the first 100 per cent foreign-owned life insurance company in Vietnam, being its operation in September 1999 as a joint-venture called Chinfon-Manulife Insurance Company (CMIC). Manulife in Vietnam has grown rapidly to become a world class company providing a competitive array of financial protection products and services to Vietnamese customers. Since commencing operations, Manulife has helped more than 300,000 middle to upper-income Vietnamese plan right for their life.

Nov

18

Zurich Sells Stake in Spanish JV to Unnim

Filed Under Insurance Company, Life Insurance, Spain | 4 Comments

Europe’s fourth largest insurer – the Zurich Financial Services Group – has announced that it has entered into an agreement with its Spanish partners Unnim to sell them its 50 percent stake in their Spanish joint venture life and general insurance operation.

Zurich’s decision to sell its equal stake in the Spanish insurance venture follows the merger between Caixa Sabadell, Caixa Terrassa and Caixa Manlieu in July 2010 to form Caixa d’Estalvis Unió de Caixes de Manlleu, Sabadell i Terrassa – also known as Unnim.

The merger has lead Zurich, and the newly formed Unnim, to enter into a definitive agreement for the Spain-based Unnim to buy-out Zurich’s 50 percent share in the joint venture.

The Spanish savings bank Unnim has agreed to pay a cash consideration of €285 million (US$ 388 million) to Zurich in the deal, which will see Unnim become a wholly owned Spanish Insurance Provider. The deal is still subject to regulatory approval, but is expected to be completed in the early part of 2011.

Zurich and Spain based Caixa Sabadell originally entered into a 50-50 partnership in 2008, in a deal which cost Zurich €264 million (US$ 360 million), plus an extra €110 million (US$ 150 million) if agreed performance targets were met.

In recent months Zurich has been positioning its operational focus on emerging markets in the Gulf and Asian regions, highlighting the fact that these nascent insurance markets are evolving in the wake of the global financial crisis. The flourishing Indonesian insurance industry has lead the Swiss insurer to acquire an 80 percent stake in PT Mayapada Life enabling it to gain access to one the fastest growing Asian life markets. Also, Zurich recently invested a further €308 million (USS $420 million) in shares in current Chinese partners New China Life Insurance (NCI) in order to maintain its 20 percent stake in the China-based insurer, enabling Zurich to maintain a strong foothold in the world’s second largest economy.

In October 2010, Zurich also said that it will look for opportunities to expand in the Middle East and Gulf regions, with the international insurers recently acquiring Lebanon based Compagnie Libanaise D’Assurances. This enabled expansion of its operations in the region gaining access to markets in Lebanon, United Arab Emirates, Kuwait and Oman; Zurich has recognized the income potential from premiums in the Islamic insurance sector as demand for takaful products increase in the emerging Islamic markets.

Zurich has stated that it will continue to look for bolt-on acquisitions within emerging markets to ensure it remains competitive in these evolving insurance markets.

In 2009, total premiums in the Spanish insurance industry reached €60.4 billion (US$ 81.5 billion). Although there are still significant returns for insurers operating in the established European markets, higher returns from new written premiums in the developing markets in Asian and the Middle East provide multi-national insurers such as Zurich more profitable returns.

The Swiss based insurer Zurich has reiterated that it remains devoted to the Spanish life and general insurance market and is still committed to its other Spanish bancassurance partners within the country.

Insurance Companies Mentioned:

Zurich

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

New China Life Insurance

Compagnie Libanaise d Assurances

Compagnie Libanaise d Assurances (S.A.L.) was established in the year 1951. Their paid-Up capital is LBP 22,500,000,000 (US$14.98 million) and their activities include insurance and re-insurance, withc offices in Lebanon, United Arab Emirates, Kuwait and Oman.

Nov

17

Protection and Health Business Feature In AXA Growth Plan

Filed Under Aviva, China, China insurance, Health Insurance, Income Protection, Life Insurance | 2 Comments

Insurance giant AXA SA highlighted its 5 year strategy for growth at their autumn investor seminar held in Paris on the 16th of November 2010. The French insurer AXA gave investors a preview of plans to expand operations in emerging markets and to concentrate on high-margin protection policies to ensure future growth.

As one of Europe’s largest insurers, AXA’s strategic plan is to make the company more efficient by creating international growth. Part of the five year action plan proposed by AXA is to review the way the group manages its operational capital to facilitate and accelerate long term values.

“We want to implement a more aggressive allocation of capital towards emerging markets and towards specific segments, such as protection and health. We want also to increase our focus on free cash flow generation.” Henri de Castries, Chairman and CEO of AXA said at the investor seminar.

AXA aims to increase the amount of premiums generated through its protection and health business in the coming years by growing new business sales. AXA stated that the protection and health business typically returns a 40 percent profit margin compared to its life insurance sector which generates around a 20 percent return. Additionally, AXA see scope for opportunities in the investment and saving segment, alongside possibilities open in the property and casualty sectors.

The increasing activities within continental Europe’s investment and saving business was specifically mentioned, highlighting the opportunities present in satisfying European pension shortfalls which are estimated at US$2.6 trillion (€1.9 trillion). AXA’s British-based insurance rival Aviva has recently stated that it will also be engaged within continental Europe in order to take advantage of future saving needs in this insurance sector.

Emerging markets – especially in the Asian region – have become a focal point for global insurers recognizing the financial stability now being enjoyed in this part of the world, with AXA consolidating its position in China through a deal struck with ICBC to acquire a majority stake in the French insurer’s joint venture AXA-Minimetals. The strength of the Asian market has become even more apparent over the last few years as China’s economy has evolved to become the second largest in the world, with other Asian countries also experiencing economical prosperity in the wake of the financial crisis. The Asian region has emerged from the 2007 world financial crisis largely unscathed – compared to Western Europe and the USA – leading international insurers to grasp opportunities for corporate growth – particularly as the more established, mature insurance markets have offered multi-national insurers less scope for new premium returns.

As part of AXA’s focus on expansion in Asian markets, it has launched a joint bid with Australian financial services group AMP for AXA Asian Pacific Holdings Ltd; this amounts to approximately US$13.1 billion (€9.7 billion). If the takeover of AXA Asian Pacific Holdings Ltd is successful, AMP will acquire the Australia and New Zealand operations, with AXA SA taking control of all Asian networks.

If the French insurer’s bid is completed, it will result in their increased presence in nascent Asian insurance market such as China, India, Thailand, Indonesia and the Philippines. Also, AXA will gain increased access to the mature Singapore and Hong Kong markets, which have been generating profitable returns for insurers as the markets stabilize. The insurance markets in China and India offer insurers such as AXA fantastic opportunities to expand and increase revenue due to the vast and increasingly wealthy populations in these countries.

Along with the two economic powerhouses of China and India, Vietnam, Thailand, Indonesia and the Philippines have all shown growth and an appetite for insurance products in recent years. This has caused insurers such as AXA to prioritize efforts in the Asian insurance industry as established markets in the USA and Western Europe have suffered from more difficult trading conditions after the 2007-2008 financial crises.

An ambitious but failed bid by the British-based insurer Prudential for AIG’s Asian arm, AIA, earlier in 2010 emphasized the potential seen in the Asian insurance industry. Prudential aimed to takeover AIA in a bid to further expand its reach across the Asian region in order to take advantage of emerging premium returns in China, Indonesia and India. Global insurers Bupa and Zurich have also entered into joint ventures / partnership agreements in 2010 to gain access to the growing Asian markets. Bupa’s joint venture in India – MaxBupa – was established earlier this year, with the Bupa group enjoying significant growth as a result.

As life-styles change and personal wealth increases, demands for indemnity insurance grow – whether life, saving, motor or health insurance. As needs change, there is scope to develop products to suit demands regionally. In Asia, the products provided under the takaful and mircosurance ranges are proving particularly successful.

Speaking on the future of AXA, Henri de Castries said: “We will finalize it in the coming months and will present our deployment plan in the first semester of 2011. The aspirations and priorities we are sharing today are at the core of our ambition, which aims at better preparing AXA for the opportunities created by the growing needs for insurance and protection worldwide.”

As AXA enters a new phase of global operations, it is focusing on becoming a more profitable insurer by cutting costs, improving efficiency and taking a more aggressive approach with capital allocation. In order to become more competitive globally AXA – like other international insurance companies – is concentrating on expansion of its activities in Asia, with the French insurer taking serious action reflected in its US$13.1 billion (€9.7 billion) joint venture bid with AMP to acquire AXA Asian Pacific Holdings.

Insurance Companies Mentioned:

AXA

Bupa

Zurich

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

Aviva

Aviva Insurance 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.

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. Prudential’s Asian operations include Hong Kong, India, Malaysia, Singapore, Indonesia and other Asian countries.

AIG

The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.

Nov

16

Aviva Takes Full Control of French Insurer SEV

Filed Under Aviva, Insurance Company | 5 Comments

Aviva has confirmed that it has exercised its option to buy out the remaining 16.3 percent stake in French based company Société d’Epargne Viagère (SEV). On the 10th November, Aviva announced that it had acquired full ownership of the French life insurance company SEV, in which it already held a majority 83.7 percent stake.

The news of the purchase comes shortly after the Aviva group reported strong sales growth in the first nine months of 2010. Total sales amounted to €43 billion (US$ 57.4 billion, £35.9 billion), with European sales amounting to €14.7 billion (US$20.9 billion, £13.1 billion). However, sales in the French market sector specifically declined by 3 percent, generating revenue of €650 million (US$915 million:£570 million ).

SEV is a French life insurance company and is a joint underwriter of AFER life insurance products in France alongside Aviva Vie, a wholly owned subsidiary of Aviva. AFER of France is the largest savings association in the country, which has half a million members and also provides life-insurance products. There was a year on year increase in sales of 39 percent for Aviva products through AFER, totaling €1.863 billion (US$2.64 billion, £1.55 million) for the first half of 2010 compared to the same period in 2009.

The 16.3 percent minority shareholder stake in SEV was purchased for a cash consideration of €121.5 million (US$ 170 million, £101.4 million). Having completed the takeover of SEV, Aviva has strengthened its position in the continental European insurance market. Recent research has indicted that over the next 5 years the European life and pension market is set to deliver total returns of as much as €1.22 trillion (US$1.7 trillion, £1.05 trillion) in pensionable assets – a predicted level of activity which exceeds any other region in the world.

When Aviva released its third quarter results for 2010, the group highlighted that it is looking for growth opportunities across Europe. France, being a key member of the European Union, is part of a region where it is forecast that there is going to be annual pension shortfall of €1.9 trillion (US$2.6 trillion, £1.6 trillion); Aviva’s full acquisition of SEV will boost their presence in a country with a population exceeding 64 million people.

In related news, Aviva France’s, Chairman and Director General Jean-Pierre Menanteau announced that he will resign from his post, which he originally took up in the autumn of 2008.

Along with other international insurers such as Prudential, AXA and Zurich, Aviva has also expanded its presence in the nascent Asian insurance industry to take full advantage of growing premium returns. However, Aviva still feels that there are substantial returns to be made from the more mature European pension market as this region works towards curbing a pension shortfall. Aviva’s recent acquisition means that the London-based insurer is broadening its sales potential in France to take full advantage of the prospects for growth in the European insurance industry.

In France Aviva’s product range includes car, home, retirement, health, savings and life insurance. Aviva’s completion of the deal to fully acquire SEV will augment their presence in an insurance market which is also home to such major players as AXA, Groupama, Generali France, AGF Allianz, Credit Agricole and BNP. In 2008, the French life market was valued at €139.8 billion (US$190 billion, £118 billion), with non-life premiums amounting to €64.4 billion (US$91.4 billion, £53.5 billion).

Insurance Company Mentioned:

Aviva

Nov

15

Germany Approves Healthcare Reform

Filed Under Health Insurance, Healthcare, International Healthcare | 41 Comments

Final approval has been granted by the German parliament to reform the country’s mandatory health insurance scheme. The overhaul of the healthcare system is seen as vital for Germany to stem increasing costs associated with its public healthcare system, which covers more than 72 million insured people in the country. The move by the German government comes at a time when the country, with the largest economy in Europe, struggles to contain raising healthcare costs and seeks to avoid a predicted €11 billion (US$13.2 billion) shortfall in German public healthcare finances, expected to occur in 2011. The German public healthcare system is calculated at being one the most expensive in the world, with the new reform on mandatory health insurance coming into effect in 2011 in a bid to curb the ever growing cost of health costs on public finances.

The controversial reform of the German compulsory health insurance is seen as one of the most important decisions passed by the German parliament in recent years. The debate surrounding the details of the German healthcare reform has lead to clashes between the government and opposition parties in Germany, with Chancellor Angela Merkel’s centre-right coalition government facing strong opposition about the hike in both employer and employee compulsory contributions.

Public disapproval has been wide ranging across Germany and has lead to Chancellor Angela Merkel’s approval ratings falling, while the reform has divided the Chancellor’s Christian Democrat party’s coalition government.

In the wake of the financial Tsunami which impacted the world markets, economies and governments, Germany announced an ambitious austerity program designed to reduce the European nation’s spending by as much as € 80 billion (US$ 95 billion) within the next 4 years. Like many developed nations, Germany is facing the difficult prospect of adjusting budgets and cost cutting measures. With Germany taking numerous steps to curb government spending, the move to increase contributions towards mandatory health insurance through increased taxation on gross wages in a bid to beat the expected public healthcare deficit of €11 billion (US$ 15 billion) in 2011 has drawn skepticism on its potential for long term success.

Under the new proposal, the mandatory health insurance contributions will require an equal split between employers and employees in Germany, with the contribution increasing by 0.6 percent from 14.9 percent to 15.5 percent of gross wages; the increase being applicable from January 2011 forward. Any future increases in mandatory contributions will be borne solely by employers – a move which is also regarded as being unfair.

The reform of German mandatory health insurance has drawn widespread criticism from opposition parties, German insurers and trade unions across the country. Many feel the planned reform is purely focused on off-setting increasing costs rather than tackling the problem of cost control within the public healthcare system. Also, many feel that the burden is going to adversely impact low-income earners in Germany and has not given significant consideration to the large number of German pensioners.

Although there are large numbers of Germans opposed to the rise in mandatory health insurance, the reform in German health law is seen as a fair way to maintain the high standards of the Germany public healthcare system. However, some analysts feel that there needs to be more stringent measures taken to ensure German healthcare reform includes measures to contain costs rather than to simply raising additional revenue. Criticism of the current reform package also includes the failure to address issues concerning the aging population and a shrinking German work force.

Germany, like other western countries including the United Kingdom and the world’s richest nation, the USA, have taken steps to undertake radical reforms in their healthcare systems to meet changing circumstances and rising healthcare costs, coupled with nation state’s varied economic problems after the 2007-2008 global financial crisis. Germany has a healthcare system, which accounts for approximately 11 percent of GDP – amounting to € 245 billion (US$ 294 billion) annually.

The German healthcare system is noted for the high standards of medical care provided. It covers more than 72 million people under the mandatory health insurance system and a further 8.5 million through private German health insurance. The Federal Ministry of Health’s (Bundesministerium für Gesundheit) network of health provision is comprised of nearly 2,200 hospitals and 300,000 doctors, with the German healthcare system responsible, either directly and indirectly, for roughly 4.3 million of the country’s total workforce.

Nov

12

Growth for Ageas in Asian Insurance Markets

Filed Under Uncategorized | 8 Comments

Belgium-based insurers Ageas – formerly known as Fortis – announced third-quarter net profits of €153 million (US$211 million) from its global insurance operations during the third-quarter of 2010. This reflected a year-on-year increase of 17 percent in premiums generated by Ageas, with receipts of €4.1 billion (US$5.71 billion) between July and September 2010.

Ageas highlighted that its Asian operations had been notably robust with inflows totaling €4.7 billion (US$6.48 billion) – a 55 percent increase for the year-to-date, while European business inflows were up by 20 percent to €13.7 billion (US$18.9 billion) for the same period.

In Ageas’ home domicile Belgium, the group was stable with in-flows reported at €5.1 billion (US$ 6.9 billion) from January to September 2010. Inflows for the third-quarter totaled €1.6 billion (US$2.2 billion) – an increase of 1 percent year-on-year. There were negative figures from the Belgian life insurance business, with inflows declining by 3 percent to reach €3.8 billion (US$ 5.17 billion) for the year-to-date period, but this was offset by gross inflows in non-life premiums written increasing by 5 percent to total €1.2 billion (US$1.65 billion) – with motor and healthcare cover driving results.

The Ageas life business reported net profits of €105 million (US$144.9 million), with non-life generating a further €47 million (US$64.8 million) and other insurance amounting to €1 million (US$1.38 million) in the third quarter of 2010.

Ageas emerged from the global financial crisis which commenced in 2007-2008 with a new corporate strategy involving the streamlining of business activities, asset relocation and disinvestment in non-profitable segments. This has produced a strong performance in year-to-date results including the latest third quarter period between July and September 2010 in both life and non-life insurance business. Ageas non-life business in particular experienced strengthening trends in its motor and fire units after corrective measures were taken.

After shareholders approval in April 2010, the rebranding from Fortis to Ageas was adopted. The group’s global strategy was announced in September 2009 starting with the streamlining of its portfolio in order to improve overall profitability.

Ageas – like other multi-national insurers – has been strengthening its operations in Asia; especially in China and India, which are seen as key markets for future growth.

In China – the world’s second largest economy – the Ageas group reported gross inflows of € 2.9 billion (US$4.0 billion) up by 65 percent for the third-quarter of 2010. The Chinese single premium new business contributed €1.4 billion (US$1.93 billion), with regular premium new business accounting for €585.1 million (US$ 807.4 million). Ageas achieved this increase by taking steps to expand its distribution capacity and by providing innovative protection products to meet local Chinese market demands.

Ageas Indian joint venture IDBI Federal Life Insurance was established in 2008 and has reported health profits for the third-quarter of 2010. IDBI Federal Life Insurance reported growth in inflows of €100 million (US$138 million) – an increase of 98 percent over the previous year. The success of the Ageas Indian operations involves their partners – IDBI Bank and Federal Bank‘s – large distribution network in an expanding life and non-life Indian insurance industry. This is linked to the general economic expansion in India, which the country is currently enjoying. The IDBI Federal Life Insurance Company provides protection products which include, wealth, home, income, micro, loan and health insurance meeting the needs of the 1.17 billion population

Other Ageas Asian operations include the partnership with Muang Thai Life of Thailand, which grew by 56 percent in the third-quarter 2010 to generate €529 million (US$730 million). Ageas are in a strong position within the Thai insurance market, which is set to experience significant growth.

EtiQais Ageas a Malaysian insurance unit is a joint venture with domestic based Maybank, which saw gross inflows increase by 46 percent to €577 million (US$796.2 million). The strong growth was down to new product innovation and the evolving takaful mortgage related life insurance products, which are distributed through Malaysian banking channels.

Some Ageas divestments were made under its former Fortis Insurance brand and included the sale of its Turkish life unit – Fortis Emeklilik ve Hayat – to French based BNP Paribas. Fortis Emeklilik ve Hayat reported gross written premiums in 2009 of €62 million (US$85.5 million)

In September 2010, the private equity fund manager – Horizon Capital – announced that it was buying AgeasFortis Life Insurance Ukraine, resulting in Ageas exiting the Ukrainian life market as it continued with its policy of streamlining its portfolio.

In July of this year, Ageas brought UK-based Kwik-Fit Insurance Services (KFIS) in a strategic move to accelerate its growth in the UK market – one of Ageas core insurance markets. The acquisition of Kwik-Fit by Ageas is part of the groups restructuring, with the aim of developing new insurance products, using the multi-channel distribution network already established within the UK. Also in 2010, Ageas formed a partnership with the largest UK supermarket chain Tesco to provide household and motor insurance in Britain.

Ageas operates in Continental Europe, the UK and Asia, with Asian countries such as China and Thailand presenting Ageas with a platform for future expansion. However, Ageas believes that there are still strong opportunities for premium returns in traditional insurance markets such as the UK, particularly with the acquisition of Kwik-Fit.

Ageas current strategy of streamlining and rationalization is producing sound rewards in 2010. Following in the footsteps of other global insurers, Ageas has achieved financial benefits from focusing on their Asian insurance operations particularly in China and India. Additionally, the South East Asian insurance industry is pigging-backing on the success of the two regional powerhouses and offers Ageas another avenue to increase revenue from markets such as Thailand.

Insurance Company Mentioned:

Ageas

Nov

11

Asian Insurance Markets Drive Prudential Growth

Filed Under China, Hong Kong, Insurance Company, United Kingdom | 5 Comments

Prudential plc has reported a 17 percent increase in third quarter sales for 2010, driven by flourishing Asian insurance markets. The UK based insurer reported that Prudential Group’s sales reached £809 million (US$1.3 billion) for the third-quarter of 2010 – a figure which beat analyst’s predictions of £773 million (US$1.23 billion).

Prudential’s highly published failed bid for AIG’s Asian arm, AIA, earlier this year, highlighted the Prudential Group’s intention to gain a stronger foothold in the Asian insurance market in order to increase its presence in this expanding region of the world for insurance and protection products. Although Prudential abandoned its pursuit of AIA (Link), the British based insurance group’s Asian operations continue to accelerate with sales up by 32 percent to £1.066 billion (US$1.7 billion) – up from £806 million (US$.1.28 billion) year-on-year.

New business profit for Prudential was up by 34 percent to £621 million (US$993.6 million), with the Asian arm of the group’s activities representing 46 percent of that amount. The Asian arm of the operations for Prudential is predominately focused on writing high quality regular premiums, with a substantial element of business coming from Prudential’s health and protection products across this region.

Prudential remains the market leader within the UK insurance industry. UK business activities amounted to £548 million (US$877 million) in total sales, an increase of 3 percent year-on-year for the third-quarter of 2010. The UK market generated a 14 percent increase in new business growth for the third-quarter 2010, which amounted to £192 million (US$307 million).

Prudential’s US operations returned an increase of 33 percent with sales totaling £850 million (US$1.36 billion) for the third-quarter of this year. In total, the group’s new business profit was reported at £532 million (US$851 million) reflecting a 10 percent increase year-on-year.

While the UK insurance market has remained fairly stagnant – partly due to the mature market presenting minimal opportunities for growth, combined with the more challenging economic conditions in Britain – global insurers, such as Prudential, have shifted their focus to the more robust Asian market, which has provided international insurance firms with scope to expand and develop.

Prudential remains well positioned within the Asian region, which is part of the group’s strategy for growth and its aim to maximize strong returns from its Asian insurance operations. Prudential’s Asian arm has developed a strong network of distribution channels and created insurance products specifically designed for the communities in the region. Prudential is, therefore, well position to take full advantage of the improving prosperity in Asia and the increasing wealth among the population.

In China – the world’s second largest economy – Prudential’s 50-50 joint venture CITIC-Prudential recorded a 24 percent increase in business and reported that sales in the country totaled £42 million (US$67.2 million) for the first nine months of 2010. CITIC-Prudential, has been rationalistic non-productive agents, as it seeks to improve returns from operations in a Chinese insurance market which has been increasingly competitive this year; these measures have placed the JV company in a position to challenge insurance rivals in China for higher premium business.

The more mature Asian insurance markets of Hong Kong and Singapore remain profitable for Prudential. In Hong Kong, sales increased to £195 million (US$312 million) from £150 million (US$240 million) year-on-year for the third quarter of 2010 – an increase of 30 percent. In the Singaporean insurance industry, Prudential’s new business volume was up by 48 percent, generating £118 million (US$189 million) over the third-quarter of 2010. The news follows Prudential UK-rivals – Aviva – reporting positive third-quarter figures from mature insurance markets in Asia.

The more advanced Asian insurance industries such as those in Hong Kong and Singapore are currently indicting that financial stability and growth are returning to the Asian region, which supports the global insurer’s strategy to focus on the Asian region insurance markets.

Growth was also reported by Prudential in Indonesia and Malaysia recording sales at £188 million (US$ 300.8 million) and £129 million (US$206.4 million) – representing a 49 percent and 54 percent increase respectively. However, low premium returns from the Korean insurance market, saw Prudential report a decline of 28 percent with sales of £69 million (US$ 111 million) reported for the third quarter 2010 – down from £96 million (US$ 155 million) for the same period last year.

The Philippines, Thailand and Vietnam all saw growth in business for Prudential, with sales up by 100 percent, 82 percent and 17 percent respectively. Sales in these three countries totaled £64 million (US$ 103 million) in the third-quarter 2010 an overall increase of 40 percent. Vietnam, Thailand and Philippines have emerged from the 2007-2008 global financial crisis as strong markets for international insurers to penetrate and develop the non-life and life insurance products.

Chief Executive of Prudential, Tidjane Thiam said regarding the future of the Group: “We remain well positioned to deliver strong growth and generate strong returns for our shareholders, based on the Group’s proven strategy, our brand and market position in the countries where we choose to operate, the power of our distribution and the quality of our teams. South East Asia, with its high rates of GDP growth, saving habits and low penetration of insurance products, remains the most attractive long-term opportunity in our industry and the primary focus for our growth and investment”

In India, the ICICI-Prudential JV reported a 44 percent increase in sales generating a total of £167 million (US$267.2 million) for the third-quarter 2010. However, Prudential has highlighted that, in the short term, the insurance business in India is likely to suffer adversely from the recent changes imposed by Indian insurance regulators in the country; these changes are expected to hamper growth. In the medium term, however, the changes in the regulations in India are expected to have a positive impact for major insurers like Prudential operating in this second most populous country in the world.

Prudential will face increasing competition from rival international insurers, with the likes of Zurich, Allianz, AXA, AIA and UK rival Aviva all stepping up their presence in the Asian region and setting out corporate strategies to benefit from the prosperous Asian economy. Within the Asian region, China, India, Indonesia, Thailand, Vietnam and the Philippines have all emerged from the 2007-2008 global financial crisis as developing economies with fantastic opportunities for expanding insurance sales.

Deals such as the Zurich joint venture in Indonesia – giving them access to one of Asia fastest expanding life markets – and the French insurer AXA’s possible takeover of AXA Asia Pacific Holdings Ltd – will increase competitiveness in Asia. However, Prudential is also well positioned to take full advantage of the fast-growing Asian market, offering the group potential for an increase in premium business to offset stagnation in the UK market.

Currently Prudential is one of the biggest foreign-owned insurers operating in the Asian region and is well positioned to challenge its insurance rivals and generate further expansion.

Insurance Company Mentioned:

Prudential

Nov

10

New Philippine Insurance Requirements to Impact Hong Kong

Filed Under Health Insurance, Hong Kong, Philippines | 2 Comments

The compulsory Philippine insurance coverage scheme took effect on the 8th of November 2010. This means that it is mandatory for all overseas Filipino workers (OFWs) to be covered by Philippine government imposed compulsory insurance. The insurance law, which has been enacted by the government of the Philippines, is causing controversy in Hong Kong where many thousands of Filipino domestic helpers are employed.

The Philippines Overseas Employment Administration (POEA) released the news that implementation of the compulsory insurance scheme will start slightly earlier than initially planned, making it mandatory for all Filipino agency-hired workers to be covered by the Philippine insurance policy, with the cost of the scheme being borne by the recruitment agency or the foreign employer in the country of employment.

The introduction of the Philippine compulsory insurance scheme is in accordance with the Philippine government Migrant Workers and Overseas Filipinos Act of 1995 – as amended in 2010 – which requires recruitment agencies to provide the stipulated insurance cover for all Filipino workers seeking employment overseas; the policy covers both land based and sea based employment. Penalty payments will be imposed for failure to comply with the requirements of the new guideline.

Hong Kong – a special administrative region (SAR) of China – is one of the main destinations for Filipino domestic helpers. Imposition of the new requirement for mandatory insurance was met with large scale disapproval by employers in Hong Kong, with many seeing the compulsory Philippine insurance scheme unnecessary and counter-productive. Migrant workers from the Philippines working in Hong Kong are already protected under SAR law in respect of insurance cover. The insurance cover stipulated under Hong Kong SAR law costs around HK$ 900 (US$ 115) for a 2 year period – a cost met by the employer. Additionally, Hong Kong employers often obtain private comprehensive insurance for overseas workers covering medical expenses; annual premiums for this cover usually starts at HK$ 700 (US$ 90).

The new Philippine law on compulsory insurance requires cover to include: HK$ 116,300 (US$15,000) for death in an accident, HK$ 77,540 (US$10,000) for natural death and HK$ 58,150 (US$7,500) in case of permanent disablement; cover also includes repatriation and medical evacuation. The policy cost is HK$1,123 (US$144) for 2 years of cover. It is estimated that nearly 130,000 Filipino domestic helpers working across Hong Kong will be affected by the new insurance law, which was enacted in Manila.

The need for two forms of insurance protection for Filipino workers in Hong Kong is seen as unnecessary as the compulsory insurance required by SAR law provides an appropriate level of insurance cover for these migrant employees – with approximately 280,000 migrant workers already covered under the local insurance law. Strong calls have been made by interested parties in Hong Kong to get the government to repeal the Philippine compulsory insurance cover requirement for agency-hired OFWs. The view is that compliance with the new requirement could adversely impact on the hiring of Filipino domestic helpers.

Also the new insurance scheme has been criticized for the lack of transparency as it is not completely clear if the foreign employer or hiring-agency needs to bear the compulsory insurance cost. The government of the Philippines amended the Migrant Workers and Overseas Filipinos Act of 1995 recently with the amendment being unclear and lacking clarity. Insufficient detail has also lead to the suspension of applications for Filipino workers by Hong Kong employers.

In addition to the financial burden facing Hong Kong employers if they employ a Filipino worker, there is also the issue of the political fallout between Hong Kong and Manila over the bungled Manila hostage crisis and the tensions this is causing. The general view in Hong Kong is that the new Philippine government imposition of the compulsory insurance scheme for OFWs is needless as Filipino domestic workers are already amply protected through SAR’s own laws and, even in many cases, by additional private insurance taken out voluntarily by Hong Kong employers. There is evidence that Hong Kong residents are canceling the hiring of domestic helpers from the Philippines in favor of workers from alternative sources.

The implementation of the compulsory insurance coverage for agency-hired Filipino workers does not just affect those seeking employment in Hong Kong, it includes all countries seeking Filipinos workers hired through an agency in the Philippines. Since the 8th November 2010, all agency-hired overseas Filipino workers – either for land or sea based employment – are required to obtain compulsory insurance coverage issued by an accredited insurer through the Insurance Commission in the Philippines.

Nov

9

Standard Life and Bank of China JV On the Table

Filed Under China, China insurance, Insurance Company, Life Insurance, United Kingdom | 45 Comments

Britain’s Prime Minister David Cameron is leading the largest British delegation to China ever undertaken. The latest visit to China – which has the second largest economy in the world – could pave the way for increased relations between Chinese and British businesses, with the Standard Life insurance company set to become a possible beneficiary of the current trade talks.

China has become a pivotal country for international governments and businesses, with a strong emphasis on building relationships as the emerging economy becomes a business hub for multi-national companies. As part of this process, the Chinese insurance industry has become one the most valuable in the world.

The high-profile trade mission to China includes 50 top businessmen from British firms looking to improve trading arrangements with China, with Standard Life’s chief executive David Nish also being part of the delegation. Highlighted in the trade talks is the possible ground-breaking joint venture between Standard Life and the local based Bank of China (BoC), in a deal which could see Standard Life becoming one-of-few foreign companies to own a stake in a domestic Chinese financial company.

If the deal is finalized between the UK’s Edinburgh based Standard Life and BoC, it will give the British insurers a huge advantage in one the fastest growing insurance markets in the world. The deal is still subject to final approval of both BoC and Chinese insurance regulators.

The British insurer and pensions group Standard Life, already has a Chinese joint venture named Heng An Standard Life (HASL), which is classified as an international insurance company in China. Standard Life entered into a JV agreement with TEDA Investment Holding Corporation in 2003, with its headquarters in the northern Chinese city of Tianjin. The company started with a registered capital of RMB 1.302 billion (US$184:£115 million). Since HASL’s inception, it has extended its reach across China, including opening offices in Guangdong, Beijing and Nanjing. With over 5000 employees, it has become one the largest Chinese insurance joint ventures involving an overseas insurer. Initially, HASL was created to provide plans for investment, protection, education and healthcare in an emerging Chinese market.

Under the proposed deal with BOC, Standard Life’s current 50 percent stake in joint venture HASL will fall to 25 percent. If the BoC and Standard Life do enter into partnership, the Chinese financial institution will hold the majority share, with Standard Life and current partners Teda International becoming minority shareholders.

Bank of China’s third quarter earnings for 2010 were positive with the bank recording a post tax profit of RMB 82.96 billion (US$ 12.38 billion: £ 7.6 billion), an increase of 27.48 percent compared to the same period in 2009. BoC operates in a total of five financial market segments: insurance, investment banking, corporate banking, personal banking and treasury operations, with more than 10,000 domestic and international branches.

In 2009, Standard Life announced that the China Insurance Regulatory Commission (CIRC) were in the final stages of accepting the new business venture in China. Since last year, commercial details have been worked out between all parties to ensure all requirements set by the Chinese Regulators are met, which will transform HASL to a domestic insurance company. Currently, HASL is restricted in the insurance business it can write because of its status as an international insurance company in China.

China has one the fastest growing life insurance markets in the world and the proposed joint venture between Standard Life and BoC will benefit from BoC’s extensive distribution network, enabling improved market penetration and full advantage to be taken of the prosperous Chinese economy.

Recently Standard Life released its third quarter’s earnings for 2010, reporting that the group continues its trend of strong growth in assets and net inflows. Group assets under administrations (AUA) were up by 13 percent to £192.4 billion (US$3.1 billion), giving the Standard Life Group profits of £7.2 billion (US$ 11.5 billion) for the first nine months of the year.

The scope of the nascent domestic Chinese life and non-life insurance industry offers global insurers huge potential for international growth. If Standard Life’s joint venture with BoC comes to fruition, it will mean that HASL will no longer be restricted in the business it can write. It will also facilitate an increase in the distribution network across China and improve its competitiveness in a market which has seen more global insurers gaining access over recent years.

Part of Standard Life Group’s corporate strategy for future global growth is the building of stronger strategic positions in the two Asian powerhouses – China and India – through joint ventures to create more opportunities as global shifts in financial markets occur and demands for insurance products increase. The potential new joint venture between Standard Life and BoC will be critical for the Standard Life Group’s global growth.

Companies Mentioned:

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.

Heng An Standard Life

Heng An Standard Life (HASL) is a Chinese Joint Venture between Standard Life and TEDA Investment Holding Corporation and was launched in the Chinese city of Tianjin in 2004. HASL provides health, education, pension, group and bank insurance.

Bank of China

Bank of China Group Insurance Company Limited was established in July 1992. It mainly underwrites general insurance business and provides professional services and comprehensive coverage to customers. Since its establishment, the Company strives to achieve ‘Service Excellence, Product Diversification, Accountability and Customer Satisfaction’ by making effort in developing sources of business, implementing risk management, and adjusting effective marketing strategies. The Company has been in the forefront in the Hong Kong general insurance market for over 10 years.

Nov

8

AMP Renews Interest in Axa Asia Pacific Holdings

Filed Under AXA PPP, Insurance Company, Life Insurance | 115 Comments

AXA, the France based insurer, has reportedly entered talks with Australian wealth management group AMP in a bid to take over AXA Asia Pacific Holdings Ltd. The joint bid – in excess of A$ 10 billion (US$ 10 billion) – has come to light after previous takeover pursuers National Australia Bank (NAB) had their bid rejected by regulators.

The potential deal follows the failed takeover valued at A$13. 3 billion (US$13.5 billion) for AXA Asia Pacific Holdings Ltd by National Australia Bank (NAB) after it was blocked by the Australian competition watchdog, which ended NAB’s pursuit. It has now emerged that AMP has entered into fresh talks with AXA to acquire AXA Asia Pacific. It is thought unlikely that AMP will be able to top their 2009 bid of A$12.2 billion (US$12.2 billion), which was comprised of cash-and-shares.

A previous move by AMP in 2009 would have seen France’s AXA SA takeover AXA Asia Pacific’s Asian operations, with the Australia and New Zealand operations left to AMP. Initially, AXA teamed up with AMP, but that approach was rejected; subsequently AXA launched an improved deal with NAB which amounted to A$13.3 billion ($13.5 billion). This bid was finally blocked in September 2010 on the grounds of competition concerns.

If the proposed bid is completed, AXA of France will assume direct control of the Asian arm of AXA Asia Pacific and gaining access to the fast-growing Asian region, while AMP will take control of the Australian and New Zealand operations. AXA Asia Pacific Holdings operates in Hong Kong SAR, China, Thailand, Indonesia, Singapore, Philippines, India, Malaysia, Australia and New Zealand, providing life insurance and wealth management services across the region.

The potential joint agreement between AXA and AMP for AXA Asia Pacific is in the early stages of discussion, with all parties still seeking to agree basic terms; there is no official confirmation of transactions at this time. However, even though AMP’s original bid was trumped by NAB, the Australian Competition & Consumer Commission stated that AMP’s possible acquisition of AXA Asia Pacific would not have an adverse impact on competition and Australian regulators would be minded to clear a revised bid on this basis.

AXA is Europe’s second-biggest insurer and has stated that emerging insurance markets remain a prime target for the group in order to boost its position on the global stage; the Asian region, therefore, offers significant potential for the international insurance company.

AMP provides banking, loan, insurance, investments and retirement services, and, if successful in acquiring AXA Asia Pacific’s New Zealand and Australia operations, will be able to enhance its presence in a mature Australia and New Zealand financial services market; a market which has remained robust since the global financial crises in 2007-2008.

If the deal is completed, it will mean the French insurer AXA will strengthen its presence in the Asian region – a move which will see them increase their reach in countries such as China, India and Indonesia; countries which have emerged from the 2007-2008 world financial crisis as leading insurance markets.

AXA recently entered into arrangement will ICBC of China, over the joint venture AXA-Minmetals in a move which will specifically reinforce operations in the Chinese insurance market.

Companies Mentioned:

AXA

APP

AXA Asia Pacific Holdings Ltd. (AAP) is responsible for the Global AXA Group’s life insurance and wealth management businesses in the Asia-Pacific region. We have operations in Hong Kong SAR, China, Singapore, Indonesia, Philippines, Thailand, India, Malaysia, Australia and New Zealand. Established as National Mutual in Australia in 1869, AXA Asia Pacific has grown significantly over time. In 1995, the company demutualised and AXA SA acquired 51% of the company. National Mutual listed on the Australian and New Zealand stock exchanges in October 1996 and adopted the AXA brand in 1999.

AMP

AMP Group (AMP) is one of Australia’s largest retail and corporate superannuation providers, and one of the region’s most significant investment managers with more than A$104 billion in assets under management (as at 30 June 2009), with a market-leading network of more than 2,000 qualified financial planners. AMP Limited has one of Australia’s largest shareholder registers, with more than 820,000 shareholders. Individual investors comprise around 46 per cent of AMP’s shareholder base and live in more than 100 countries around the world. Institutional investors constitute around 54 per cent. AMP traces its heritage back to 1849 as a mutual company, AMP Limited listed on the Australian and New Zealand Stock Exchanges in mid-1998.

NAB

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.

Nov

5

Singapore’s Insurance Industry Grows

Filed Under Health Insurance, Insurance Company, Life Insurance | 10 Comments

There are more signs that the Asian economy is leading the way in global financial recovery, with the Singaporean life insurance industry announcing robust earnings during the third quarter of 2010, including a 17 percent growth in new insurance sales during the first nine months of this year.

The not-for-profit Singaporean trade body – Life Insurance Association (LIA) – which is licensed by the Monetary Authority of Singapore – released figures for the first 9 months of 2010. The figures demonstrated an increase in life insurance sales of 17 percent over the same period last year, with total insurance premiums registering SGD$1.125 billion (US$878 million) up from SGD$963 million (US$751 million).

The strong performance by the life insurance industry in Singapore comes as the Island and the Asian region enjoys healthy economic conditions and increasing demand for life insurance protection as the economy stabilizes.

LIA President, Mr Tan Hak Leh, commenting on the sales growth said: “The strong showing came largely on the back of robust annual premiums sales during the period under review,” adding “We are optimistic that the trend will continue with the year ending on a high note.”

Over the nine month period Singapore’s life insurance market, generated annual premiums amounting to SGD$763.7 million (US$595 million), which is a 22 percent improvement in sales so far this year; the Singaporean life insurance market has seen improvements in this sector of business in each of the three successive quarters in 2010.

The single premium sector within the Singaporean life-insurance market also experienced a significant increase with total sales reaching SGD$361.9 million (US$282.2 million) reflecting a total improvement of 7 percent year-on-year.

A total of SGD$115 million (US$89.7 million) was generated by health insurance sales in the third quarter of 2010 representing an 8 percent increase over the same period last year. The health insurance sector in Singapore has been affected by rising healthcare costs across the island nation, with residents recognizing and acting on the potential need for medical protection. The majority of new Singaporean health insurance sales were generated through integrated plans and rider policies, which accounted for 85 percent of total health insurance sales.

In September 2010, there were a total of 2.32 million people in Singapore covered by private health insurance amounting to a total of SGD$719 million (US$561 million) in premiums.

The positive position for Singapore’s insurance industry follows UK-based insurance giant Aviva reporting an 80 percent growth in its Singaporean insurance operations in the third quarter of 2010, accounting for SGD $984 million (US$ 769 million) in premium income for the group. Recognizing the increasing demand for health insurance in Singapore, Aviva adopted a rigorous marketing campaign, which paid dividends for the British based insurers.

Local based insurer Great Eastern is one of the market leaders within Singapore’s insurance industry. The Great Eastern Group reported a profit of SGD$ 442.1 million (US$ 344.7 million) for the third quarter of this year compared to SGD$368.3 million (US$287.2 million) during at the same period in 2009. Great Eastern results were driven by strong sales of regular premium protection products, which were 30 percent higher than last year because of the strong performance achieved through their Singaporean distribution channels. However, Manulife reported a less positive position in the Singaporean insurance market, largely due to the collapse of partnership arrangements with a local distribution channel; this was offset by more positive results in the Asian region generally where sales totaled US$293 million for the third-quarter of this year.

Singapore’s insurance industry is home to some of the major multi-national insurers such as AXA, China Life Insurance, Manulife, Prudential, Zurich, Ace and Allianz. It is one of the most mature insurance sectors in the Asian region, with strong foundations and a solid economy, which has stabilized since the 2007-2008 global financial crises. The results in 2010 have provided insurers with strong premium returns. The growing demand for Singaporean protection products offers particular scope for insurers in the healthcare sector due to the need for individuals to cover rising medical costs.

Insurance Companies Mentioned:

Great Eastern

Great Eastern is the oldest and most established life insurance group in Singapore and Malaysia. With $50.9 billion in assets and 3.8 million policyholders, it has two successful distribution channels – the tied agency force and bancassurance. The Company also operates in China, Indonesia, Vietnam and Brunei.

Manulife

Manulife (International) Limited is a member of the Manulife Financial group of companies. Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 22 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners.

Aviva

Nov

4

Admiral Generates Improved Profits And New Reinsurance Agreements

Filed Under Auto Insurance, Insurance Company, United Kingdom | 5 Comments

UK-based insurer Admiral has announced that it has entered into new agreements with Bermuda-based XL Re and Spain-based Mapfre Re, which will augment existing arrangements between Admiral and other reinsurers such as Munich Re, Swiss Re, New Re and Hannover Re. The new agreements will gradually replace its existing deal with Hannover Re, which will have a reducing share of Admiral’s business over the next two years before the deal expires in 2013.

Admiral is highly regarded for its ability to underwrite its risks and for the provision of competitive insurance products, which are primarily for motor vehicles including motor cycles, but also for the home, travel, life and health sectors. The addition of two new reinsurance firms to its portfolio of risk bearers will see a shift in the underwriting percentage between the four companies currently involved.

The news of Admiral’s new reinsurance deals comes on the back of healthy third-quarter earnings, which saw the car insurance specialist accumulate £ 446 million (US$ 716.5 million) in profits – an increase of 50 percent year on year. Admiral’s profits were driven by strong growth in motor vehicle insurance premiums, which rose by 28 percent over results from 12 months ago; this means that six percent of cars on Britain’s roads are insured by Admiral. Admiral’s non-UK motor insurance business achieved an 87 percent increase in premium generation, reaching £19.3 million (US$ 30.8m) for the third-quarter of 2010.

XL Re and Mapfre Re will be part of Admiral’s underwriting network, which is praised for its quality. The newly agreed deal with XL Re and Mapfre Re will mean the share of motor risk Admiral retains falls from 27.5 percent to 25 percent as the new reinsurance companies integrate into Admiral’s underwriting arrangements over the next three years.

The agreement between Admiral and New Re has been extended, while the contract with reinsurance firms Swiss Re will be unchanged. Admiral newly released results showing profits of £ 446 million (US$716.5 million), including premiums passed on to its current reinsurers.

The deal will see Mapfre Re take a 2.5 percent share of risks next year, increasing to 3 percent in 2012; XL Re will take a 2.5 percent share in 2011, continuing for 3 years until 2013. German based Hannover Re will maintain a 10 percent share of risks this year which will reduce to 8.75 percent in 2011 and 2012 and will subsequently expire in 2013. Admiral will increase New Re’s share of reinsuring Admiral’s business from 10 percent to 11.25 percent in 2011, which will climb to 13.25 percent in 2012-2013. Munich Re’s share is being cut from 45 percent to 40 percent from the end of next year, with Swiss Re’s share remaining unchanged at 7.5 percent. There will be an 8.75 percent share of risk which is flexible and could be allocated to one of the existing or new reinsurers.

International reinsurer XL Group saw net income for the third quarter of 2010 increase by 61 percent to US $397.4 million mainly due to a 75 percent decline in net realized investment losses to $166.3 million. That improvement benefited XL’s offsetting of a 46 percent decline in underwriting income which amounted to US$152.7 million and was achieved on earned premiums of US$3.75 billion – down 3.8 percent. The combined ratio rose to 95.9 percent from 92.8 percent. Also, XL’s Group’s life premiums fell 33 percent to US$287.9 million.

Admiral’s introduction of two new reinsurance firms – XL Re and Mapfre Re – to add to their existing reinsurer’s Munch Re, Swiss Re, New Re and Hannover Re – is leading to a reshuffling of its risk exposure over the next three years. This will result in Admiral being able to lower its own motor insurance risk from 27.5 percent to 25 percent. Admiral’s new reinsurance partners will be underwriting business for the British insurer’s operations in the UK, Italy, Spain, USA and the planned expansion into France in the near future.

Companies Mentioned:

XL Group

XL Group plc, through its subsidiaries, provides insurance and reinsurance coverage to industrial and commercial firms, insurance providers, and other institutions worldwide. The XL Group operates in three market segments – Insurance, Reinsurance and Life Operations.

Mapfre Re

Mapfre Re is based in Spain and is part of the Mapfre Group. Mapfre Re is one the largest reinsurers in the world, and is prominent in Spain and Latin America.

Swiss Re

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

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.

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