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The multi-national German insurer the Allianz Group – Europe’s largest insurer by gross premium income – reported that annual net income in 2010 increased by 22.4 percent to total €5.2 billion (US$6.94 billion), driven by substantial growth in Allianz’s life and health insurance businesses.

Allianz’s year-on-year net profit rose by 11 percent in the fourth quarter of 2010 to reach €1.13 billion (US$1.54 billion) on the back of improved business in the property-casualty sector, together with the life and health insurance segments against the background of tough global trading conditions.

Revenues for Allianz reached €106.5 billion (US$145.9 billion) in 2010 – the first time in 5 years that the German insurer’s yearly income has surpassed €100 billion (US$137 billion). Operating profits totaled €8.2 billion (US$11.23 billion), an increase of 17 percent over 2010. The German’s insurer’s yearly profits were partly influenced by favorable foreign currency fluctuations.

Speaking on Allianz’s annual results, the CEO of Allianz, Michael Diekmann said: “We are proud of having achieved substantial growth in 2010. Revenues were above our historical best and our operating profit exceeded our own expectations. Allianz has managed its risks well and emerged highly profitable and financially stronger from the financial crisis years 2008 and 2009. This is the foundation for the resilience and stability our customers, investors and employees expect from us.”

One of Allianz flagship health insurance brands – Allianz Worldwide Care – which has over 75 million customers globally – helped the German insurer’s total life and health insurance premiums to reach €57.1 billion (US$78.2 billion) in 2010, reflecting a 12.5 percent increase year-on-year. The high demand for investment-oriented and traditional life insurance products helped operating profit in this segment to grow by 7.4 percent to €2.9 billion (US$3.97 billion) in 2010 despite prevailing low interest rates.

“Our strong performance in Life/Health exceeded our expectations. Increasing customer demand for Allianz products and solutions fueled double-digit growth in revenues. This shows that our customers want the attractive returns and stability Allianz can offer. Operating profit beat our annual target. Our new business value and margins also improved, despite the tough low interest rate environment,” said Oliver Bäte, member of the Allianz Board of Management.

There was improved business in Allianz’s property and casualty line, with total gross premiums reported at €43.9 billion (US$60.1 billion) – a 3.2 percent increase on results achieved in 2009. The rise in this category was partly down to positive pricing trends in Allianz’s core markets, coupled with efficient underwriting practices during the year.

Operating profits jumped by 5.9 percent to generate €4.3 billion (US$5.9 billion) for the property and casualty business, which was due to improved results despite some exposure to a high volume of natural catastrophe claims in 2010. However there was a significant increase in new business and renewals of contracts, especially among customers in Australia, France, Italy and the UK.

Allianz’s Asset Management business grew by 26.2 percent to reach a record of asset values amounting to €1,518 billion (US$2,079 billion ) in 2010. Allianz’s operating profit from asset management jumped by 47 percent in 2010 to report a record total of €2.1 billion (US$2.8 billion) up from 2009’s total of €1.4 billion (US$1.9 billion). Allianz’s asset management business has become more profitable as the inflow of business increased and higher margins were achieved.

However, while Allianz were able to report strong profits in 2010, the impact of the new regulations being introduced by the European Union for capital requirements to protect company solvency is expected to impact on insurers operating in this major sector of business activity from 2013. While uncertainties exist surrounding how capital requirements under the European Solvency II regulations will influence insurers in Europe, Allianz has stated that it will not be entering into large acquisitions until they know the full extent of the impact of the new regulatory requirement.

While multi-national insurers have been reporting mixed financial results for 2010, with Allianz’s European rival, AXA recording a 24 percent decline in profits, Allianz has been able to overcome the tough market conditions reporting profits in all segments of insurance activity. This has been achieved by applying strict underwriting practices to business transactions, with relatively minimal exposure to losses for claims arising from natural disasters.

Allianz has a global presence stretching from the mature markets of Europe and North America to the emerging markets in the Middle East, North Africa, Latin America, and Asia, which are presenting the best opportunities for new premium growth in the future.

The Allianz group’s presence in key developing Asian economies exists through joint ventures such as Ayudhya Allianz in Thailand, PT Asuransi Allianz Utama Indonesia, Allianz China Life and Bajaj Allianz in India. These networks offer Allianz prime access to rapidly expanding Asian economies which are driving, in particular, the demand for protection and saving products as the wealth of the massive populations in these nations increases.

Insurance Company Mentioned:

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.

Several prominent Ukrainian based private insurance companies have disclosed that a state health insurance scheme could be introduced to the Ukraine as early as 2014. The discussion on healthcare and insurance reform has been brought forth following Deputy Parliament Speaker Tetiana Bakhteeva’s prediction that the Ukranian health system will be ready for a comprehensive health insurance option by 2014.

Since independence from the former Soviet Union, Ukraine has undergone a dramatic demographic decline and health crisis. The central European nation has the fastest rate of depopulation on the continent, with a third of all Ukrainians dieing prematurely before the age of 65 years. Political flux, including frequent changes in the Ukrainian government and the leadership of the Ministry of Health have led to protracted delays in institutional change in the health system and the reorganization of ambulatory health care. Ukraine’s development into a more modern insurance driven health care sector has been further maligned by the financial crisis of 2007 – 2010 which has seen the value of their currency, the Hyrvina, fall when utility costs across the board are rising.

Voluntary health insurance presently plays a very insignificant role in Ukrainian healthcare financing; voluntary health insurance serves to supplement government provided health services within the country. Mrs. Bakhteeva, who chairs the parliamentary committee on health, has advocated for a state-sponsored insurance medical system.

Olena Tarovska, the Director of the Department of Sales for Personal Insurance at Oranta Incorporated, revealed that “compulsory health insurance in Ukraine may be introduced in Ukraine in 2014. I think that the leading insurance companies in Ukraine will participate in organization and implementation of this project.”

Mrs. Tarovska further believes that health insurance in Ukraine should be mandatory for emergency services, and for providing time-sensitive ambulatory aid. Voluntary health insurance plans would be offered for additional medical operations. “Because a sort of tandem between compulsory and voluntary health insurance will be created if compulsory state insurance is introduced,” she said.

The administration and financing of the proposed compulsory health care services could in fact be provided by accredited private insurance companies. If private firms do take on this burden, only the model of insurance payments would need be adjusted. A unified regulatory agency for compulsory medical insurance could be created to monitor finance, distribute cash flows, and oversee the quality of services.

According to INGO, one of Ukraine’s major private health insurance providers, the introduction of a compulsory health insurance scheme could be possible in 2014 or 2015. Hennadii Mysnik, a Deputy Board Member of INGO Ukraine, has stated that “the prospect for introduction of compulsory health insurance in Ukraine will become a reality no earlier than three or four years,” he said.

Mr. Mysnik, maintains that the persistent under-funding of the health care sector has been the catalyst for the introduction of a compulsory health insurance scheme in Ukraine. The factors now preventing its implementation involve financial management and responsibility issues, and are not about what would change for the patients and practitioners in the Ukrainian health care sector. Whether the public itself is ready for introduction of compulsory health insurance is another issue entirely.

NATSA, a Russian health insurance company and subsidiary of Zurich Financial Services, has reportedly been involved in discussions with the Ukrainian government regarding healthcare reform for the past 15 years, according to Halyna Bobyr, NASTA Insurance’s Deputy Director for the Department of Underwriting and Methodology of Personal Insurance. During this period dozens of preliminary draft laws on compulsory health insurance have been discussed, many of which have been registered in the parliament.

Mrs Bobyr is of the opinion that drastic reforms are needed within the Ukrainian healthcare sector, stating that she believed “that Ukraine is at least 10 years late in terms of introduction of compulsory health insurance.”.

Ineffective protection of the Ukrainian population against health expenditure risks, and health finance inefficiency are core problems for health sector development. All respondents intimated that reform was long overdue. However, there remain strong institutional obstacles present in the system. Continued inaction could present the Ukranian health care industry with further problems in the future.

Insurance Companies mentioned:

Oranta Incorporated: Oranta Incorporated provides Ukraine health insurance services. The company offers a wide range of insurance options for legal entities and individuals. Oranta was originally named Ukrderzhstrakh at its founding in 1921 and later changed its name to ‘Oranta Incorporated’ during 1933. The company is headquartered in Kiev, Ukraine. As of January 2009, Oranta Incorporated operates as a subsidiary of Universalna Insurance Company OJSC.

INGO Ukraine: INGO Ukraine provides wide array of both compulsory and voluntary insurance service options to corporate and retail clients within The Ukraine. INGO Ukraine has an administrative network of 26 branches and over 100 customer service offices throughout the country. The company was founded in 1994. It is a member of INGO International Insurance Group and an affiliated company of Ingosstrakh.

NASTA Insurance: Founded in Moscow in1993, NASTA Insurance was a leading insurance provider for both individuals and legal entities in Russia. As of April 4, 2007, NASTA Insurance Group is a subsidiary of Zurich Financial Services. The company, now operating under the name Zurich Insurance Company Ltd., has more than 3,000 employees and 3,500 tied agents as well as an extensive network, with 67 branches and over 300 representative offices across Russia

The American International Group (AIG) reported net income of US$11.2 billion for the fourth quarter period in 2010, which ended on 31st December 2010. The bailed out insurer’s income included the sale of assets as it restructures its business in order to repay the loan received from the US government in 2008 following the global collapse of financial markets.

The New York based insurer’s full year earnings for 2010 totaled US$7.8 billion, reversing the loss in 2009 which amounted to US$10.9 billion. AIG’s fourth quarter 2010 earnings of US$11.2 billion compares with the loss of US$8.87 billion in the same period last year.

However, after disregarding income generated from the sale of AIG assets in 2010, the insurer had an operating loss of US$2.2 billion from its global operations, compared to an operating loss of US$1.3 billion last year.

The troubled insurer received a total of US$182 billion from the US federal government to rescue the insurer from the brink of collapse in 2008, after the US sub-prime mortgage crisis triggered a domino effect in the world financial markets. Since receiving the US government bailout, AIG has been restructuring global operations, which has included selling off international insurance subsidiaries, in order to generate capital to repay the US taxpayer.

Robert H. Benmosche, AIG’s President and Chief Executive Officer, said: “We completed several key restructuring milestones in the quarter and we remain focused on long-term growth and building value at our ongoing insurance operations and other businesses.”

Included in AIG’s fourth quarter earnings was a net charge of US$4.2 billion for AIG’s property insurance arm Chartis. The injection of capital was necessary to strengthen Chartis’ provision against losses as the insurer is expected to face stiff competition in this segment of business. Chartis worldwide net premiums written amounted to US$7.6 billion in the last quarter of 2010.

AIG has sought to restructure the specialist property insurance business with Chartis by rationalizing activities and concentrating on less volatile markets, seeking to write more business with higher margins.

Part of AIG’s restructuring programme saw the insurer sell its Alico subsidiary for US$16.2 billion to US rival Metlife, with the cash from the sale – included in the fourth quarter 2010 results – going towards repaying the US Federal Reserve Bank.

AIG also negotiated the sale of its Japanese insurance arms AIG Star Life Insurance and AIG Edison Life Insurance to another US insurance rival, Prudential Financial, for approximately US$4.8 billion; the sale being completed on the 1st February 2011. The proceeds from the sale will be used to make further repayments to the US government.

Meanwhile in Taiwan, AIG had a bid for its Nan Shan Life company from a Hong Kong led consortium, Premium Financial, rejected in September 2010. This was on the grounds that it did not meet local regulatory criteria. However, in January 2011 a US$2.16 billion cash bid from Taiwan-based Ruen Chen was accepted by AIG for the Nan Shan operation, with the funds again being used to help repay the outstanding US government loan.

Speaking on the future of AIG, Mr. Benmosche said: “In 2011, as we emerge from our restructuring, AIG will focus on growing our already strong businesses domestically and around the world, risk and capital management, strategic asset management, and cost savings throughout the organization.”

AIG’s restructuring of its global insurance network has meant that it has divested business operations in foreign and domestic ventures which did not offer significant returns for the New York based insurer. However, while AIG continues its streamlining, it has retained its profitable Asian arm – the American International Assurance Group (AIA) – which is the leading life insurer in the dynamic Asian region.

AIA is seen as AIG’s jewel in the crown, with the latest company report reflecting the importance this market holds for the group as full year profits jumped by 54 percent in 2010 to reach a total of US$2.7 billion. In 2010, AIA was subject to a US$ 35.5 billion takeover bid from the major UK insurer Prudential; this was finally dropped by the British insurer because shareholders were not prepared to underwrite the initial bid price and a lower bid was not acceptable by AIG. This subsequently lead to AIA being floated on the Hong Kong Stock Exchange in October 2010 in one of Hong Kong’s largest initial public offerings (IPOs), which generated US$17.9 billion. As a result of the better than expected trading results for the year ending 30th November 2010, shares in AIA valued the company at US$32.6 billion at the close of trading on the Hong Kong stock exchange on the 24th February 2011.

Although AIG, along with other insurers, is facing challenging trading conditions in 2011 – particularly in the mature markets in the USA and Europe – with the effects of government imposed austerity measures likely to impact on disposable incomes, the group is well placed in the emerging growth market which exists in the Asia-Pacific region through its AIA business.

The AIA operation is now well placed to exploit the growth potential in the emerging markets in China, Thailand, Vietnam, Indonesia and Malaysia and is expected to make a significant contribution to AIG’s financial results in 2011.

Insurance companies mentioned:

AIG

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

AIA

The AIA Group is a leading life insurance organisation in Asia Pacific that traces its roots in the region back more than 90 years. It provides individuals and businesses with products and services for life insurance, retirement planning, accident and health insurance as well as wealth management solutions. Through an extensive network of more than 320,000 agents and approximately 23,500 employees across 15 geographical markets, the AIA Group serves the customers of over 23 million in-force policies in the region. The AIA Group has branch offices, subsidiaries and affiliates located in jurisdictions including Australia, Brunei, China, Hong Kong, India, Indonesia, Macau, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

Chartis

A leading property-casualty and general insurance company, Chartis has over 45 million policyholders in 160 countries worldwide. With more than 90 years experience in the insurance industry, and a range of progressive products, Chartis aims to help clients comprehensively manage risk

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

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.

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.

Nan Shan

Nan Shan Life Insurance Company, Ltd. was established in July 1963. After its restructuring in January 1970, Mr. K.K. Tse, the then Chairman of American International Underwriters, became the first Chairman of the company. In forty years, Nan Shan has become a super insurance company with the most professional management, the best operational performance, and a solid financial foundation. Its agency force has been recognized as the best in Taiwan’s life insurance industry.

The major French insurance company AXA reported a decline in overall net profit of 24 percent in 2010 to €2.75 billion (US$3.7 billion) compared to €3.61 billion (US$4.9 billion) achieved in the previous year 2009. The company stressed that 2010 was a year of transition and strategic restructuring.

The major factor contributing to the steep decline in AXA’s profits in 2010 was the sale of its UK life operation to Resolution, which had a negative impact on results. AXA has been shifting focus away from mature markets, such as France, Japan and the USA – where growth has been stifled by difficult trading conditions linked to the imposition of austerity measures in order to cut national budget deficits – concentrating on activities in emerging markets in Asia – particularly China and India – where growth opportunities exist.

AXA’s group operating profit increased by 1 percent to generate €3.8 billion (US$5.2 billion) on a constant basis but overall fell by 3 percent due to unfavorable exchange rates, with operating profits from the property and casualty sector declining by 2 percent to generate €1.7 billion (US$2.3 billion) – although revenue increased by 1.3 percent to reach €27.4 billion (US$37.6 billion). Total turnover was almost static year-on-year, amounting to €390.9 billion (US$535 billion) – an increase of 0.9 percent.

AXA results, like those of other global insurers, have been impacted by continuing low interest rates, leading to lower returns on investments. AXA’s core life and savings business saw revenues decline by 3 percent to €56.9 billion (US$78 billion) primarily due to lower sales within developed markets partly offset by improvements in operations in the Asian region, especially China and Hong Kong.

AXA’s life and saving business is currently present in more than 30 countries, with a number of worldwide customers in excess of 40 million; this helped new business to jump by 2 percent in 2010 with the protection and health lines being the most profitable. The insurer has highlighted AXA’s health insurance business as the major prospect for growth in 2011.

The fast-growing Asian economy has become a pivotal market for global insurers and AXA is currently engaged in acquiring AXA Asia Pacific Holdings’ (AAP) Asian arm in a joint bid with AMP, in a move to maximize their reach in the region – particularly China.

The Asian powerhouse countries – China and India – along with neighbors such as Thailand, Indonesia and the Philippines are key markets for international insurers seeking business growth. This reflects the rapidly expanding economies and resultant improvements in individual wealth driving demand for protection and saving products. AXA’s new business levels in 2010 amounted to 58 percent in the Asian region, while in Europe it was 16 percent.

AXA has identified Hong Kong, Indonesia, Thailand and Poland as having been strongly performing markets for the insurer. Also, if AXA is successful in its proposed take-over of AXA PPH, it will vastly improve the French insurer’s network and distribution power in the Asian region.

AXA’s, Chairman and CEO, Henri de Castries said: “2010 was also characterised by significant strategic moves and organizational changes. I would emphasize in particular our decisive developments in high growth markets, the partial sale of our life operations in the UK, the ramp up of our new organization by business line and the changes in our senior management teams.”

AXA is optimistic that improvements in profits can be achieved in 2011 by focusing on the growth markets in Southeast Asia and high earning sectors in the mature markets for healthcare and health protection. The prospects in the Middle East and Africa are still considered to be sound despite recent political upheavals in the region. AXA is also considering the scope for establishing activities in the fast growing markets in Latin American countries.

Meanwhile, AXA’s Chinese venture AXA-Minmetals secured an important deal with China’s Industrial and Commercial Bank of China (ICBC), which saw the Chinese bank acquire a 60 percent stake in the Chinese insurance venture; the deal gave AXA a major boost in the Chinese insurance market by rapidly expanding its distribution network through the ICBC’s established outlets.

AXA has been criticized for not taking such an aggressive approach in emerging markets compared to rivals of similar size; the French insurer has now stated that it will take a more proactive approach in Asia – especially China – and focus on prospects which have been identified in Russia, Azerbaijan, Ukraine, Mexico and Colombia in a bid to exploit growth opportunities in these markets.

It is evident that Asian markets will be the focus for multi-national insurers in 2011 with AXA’s rivals – Allianz, Aviva, Generali and Prudential – all having expressed strategies to exploit opportunities in the Asia-Pacific region – so competition for new business in this region will be fierce.

Insurance Companies Mentioned:

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.

AAP

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.

South Africa’s Discovery Holdings has reported a jump in net earnings for the six month period ending on 31st December 2010 to total ZAR 941 million (US$132 million), representing a 25 percent increase on the previous six monthly period.

Normalized operating earnings in the period increased by 28 percent to ZAR 1.33 billion (US$ 186 million), excluding the one-off cost of the take-over of UK’s Standard Life Healthcare which amounted to ZAR 6 billion rand (US$223.4 million).

There was a 15 percent growth in new business to reach ZAR 3.7 billion (US$ 519 million) with embedded value up by 15 percent to total ZAR 24 billion (US$ 3.3 billion).

Speaking on the insurer’s 6 months earnings, Adrian Gore, Discovery’s Chief Executive Officer, said: “While the period under review has been complex, impacted by both the lingering effects of the financial crisis and the considerable policy debates that affect the markets in which Discovery operates, we are satisfied with the overall performance and continue to focus on providing our customers with high quality, innovative and relevant products.”

Discovery performed well in its domestic market, South Africa, with new business growing by 10 percent helping operating profits to increase from ZAR 555 million (US$ 77 million) to ZAR 619 million (US$ 86 million), reflecting a 12 percent increase over the 6 month period.

The Discovery Health Insurance business in South Africa now has 2.5 million members enrolled in private medical schemes managed by the insurer, following a 12 percent increase in numbers between June and December 2010.

Membership of the largest scheme in South African medical insurance – the Discovery Healthy Medical Scheme – grew by 10 percent, with client renewals of health policies amounting to almost 98 percent.

The Discovery Health business is working on improving access to private healthcare in South Africa for low-income sectors of the population in a bid to increase overall membership in the country.

Also, within Discovery’s domestic market, the health insurer said it remains committed to working in unison with the National Health Insurance system in South Africa which is currently in a transition period with reform implementation expected next year. The South Africa planned National Health Insurance system is being set-up in order for the country to provide universal healthcare coverage for the core population.

The Johannesburg-based insurer’s life insurance business – Discovery Life – performed well, with an increase of 14 percent over the 6 month period to generate operating profits of ZAR 768 million (US$ 107 million) up from ZAR 675 million (US$ 94 million); the growth being due to improvements in mortality and morbidity policy rates.

Discovery’s joint venture in the UK with PruHealth was boosted in 2010 with the acquisition of Standard Life Healthcare, which helped leverage its position in the UK private health insurance market. The Discovery and PruHealth insurance business covers over 674,000 lives within the UK, and is one of the major players in the private medical insurance (PMI) market in Britain; the United Kingdom operating profit for Discovery was ZAR 35 million (US$ 4.9 million) during the last six month trading period.

“The quality of the Standard Life Healthcare business surpassed our expectations, with the loss ratio, levels of lapses and profitability levels exceeding our expectation. The combination of the management action undertaken within PruHealth, and the acquisition of Standard Life Healthcare, has created a business with strong fundamental drivers of value and one that represents significant prospects for Discovery.” Mr.Gore said on the PruHealth venture.

In China’s thriving insurance sector, Discovery’s Ping An Health business received local regulatory approval from the Chinese Insurance Regulatory Commission (CIRC) to commence operating in a market which has becoming increasingly important for global health insurers. The Ping An Health venture was initiated in 2009, with the South African based insurer buying a 20 percent stake in the Chinese business.

Speaking on the Chinese health business Mr.Gore said: “From a product perspective, significant work has taken place to tailor Discovery’s capabilities to the Chinese market. We remain excited by the potential of the Chinese private health insurance market in the long-term.”

Discovery will be seeking other opportunities to enhance its global operations in the future in order to continue its planned growth and, following the announcement of Discovery’s last 6 month results, the insurer has reported that it has entered into an agreement with American insurer Humana to offer wellness and loyalty scheme programmes to 10 million of the US insurers customers. Discovery’s link will give Humama’s members the opportunity to purchase discounted gym memberships and other health incentive benefits.

Humana is the fourth largest health insurer in the USA and has agreed to invest ZAR 107 million (US$15 million) in Discovery’s Vitality Group subsidiary – a wellness programme provider. The deal means the South African group increases its exposure in the US health insurance sector, as the US health insurer seeks new opportunities for developing client incentives and the promotion of healthier living.

The Discovery and Humana partnership will see the South African insurer offering incentives for Humana’s 10 million clients to live healthier lifestyles, and comes at a time when concerns are growing about rising medical costs and the increase of chronic diseases among Americans; these factors having caused a hike in healthcare premiums within the USA health insurance market. The South African and US venture is designed to offer US clients incentives to take-up healthy activities such as regular gym work-outs to improve their long term health.

Discovery’s core health business in South Africa has been growing in recent years, mainly due to the buoyant economy driven by the burgeoning mining and agricultural sectors. With a significant proportion of the South African population enjoying middle to upper middle class status, private health insurance has expanded rapidly. Discovery offers a series of health plans under the branding of executive, comprehensive, priority, saver, core and keycare, which have helped the Johannesburg based insurer become the leading healthcare insurer in South Africa.

Insurance Companies Mentioned:

Discovery Holdings

Discovery is a financial services provider based in Johannesburg, South Africa, and was founded in 1992. Discovery offers health and life insurance in different markets as well as investment services and credit cards. They also have a joint venture life and health insurance companies with Prudential called PruHealth and PruProtect, which are structured under the PruProtection banner.

PruHealth

PruHealth is part of a joint venture named Prudential Health Holdings Limited, between Prudential Assurance Company of the UK and Discovery Holdings. The joint venture was started in 2004 and offers private medical insurance in the United Kingdom. Currently Discovery Holdings owns a 75 percent stake in the joint venture while Prudential Assurance holds the remaining 25 percent.

Humana

Humana is based in Louisville and is one the leading US health insurers, with approximately 10.2 million medical members. Humana is a full-service benefits and well-being solutions company, offering a wide array of health, pharmacy and supplemental benefit plans for employer groups, government programs and individuals, as well as primary and workplace care through its medical centers and worksite medical facilities.

Zurich Financial Services, the Swiss based multi-national insurer, has announced plans to increase its presence in the Latin America insurance market by entering into an agreement with the major Spanish financial services group, Banco Santander.

The deal will involve Zurich paying an initial US$1.67 billion for a 51 percent share in the Banco Santander’s Latin American insurance arm; which covers operations in Argentina, Brazil, Chile, Mexico and Uruguay. This with make the Swiss based insurer the fourth biggest insurance company operating in Latin America.

The agreement will mean Zurich gains access to Santander’s extensive distribution network covering 5,600 of the bank’s outlets, with a total of over 36 million customers in Latin America. The distribution agreement will last for 25 years between the two parties, with Zurich paying the agreed fee to Santander plus annual performance payments over this period subject to targets being reached. The transaction is expected to be fully completed in the first half of 2012.

The newly formed partnership between the Swiss insurer and Spanish bank will create a new company called Zurich Santander Insurance America S.L with the holding company based in Madrid; Zurich will be responsible for the management of the Latin American business.

Zurich will acquire a 51 percent share of Spain-based Banco Santander’s existing non-life, life insurance and pension business in the five Latin American countries covered by the agreement.

“This alliance with Banco Santander is another milestone in the implementation of Zurich’s emerging-market strategy in both Global Life and General Insurance. It significantly expands our presence in Latin America with a well-established insurance business.” said Martin Senn, CEO of Zurich.

Brazil, a member of the renowned BRIC group of countries consisting of Brazil, Russia, India and China, has one of the largest developing economies in the world, and with the number of people living in the country standing at over 200 million, has the fifth largest population on earth. The new trading link will provide Zurich with access to this young, vibrant and increasingly wealthy population. Also Santander’s distribution network in Latin America is primarily through its banks in Brazil.

Latin America has become increasingly attractive to insurers since the global recession in 2007-2008 as the region did not suffer the same adverse impact on its economy as the USA and Europe, and because it offers huge potential for growth with a total population of around 590 million people and a market with low penetration.

The Latin American alliance creates a key strategic distribution channel for Zurich and Santander’s operations in the Latin American region, subject to the merger and would have delivered some US$3.9 billion in gross written premiums in 2010 on a combined basis plus US$2.9 billion in pension contributions.

The strategic benefits from the extensive insurance product knowledge that Zurich is able to contribute to the partnership combined with the comprehensive distribution channels provided by Santander is clearly a recipe for expansion of the business previously dealt with as single entities.

The new business will conducted through exclusivity agreements between Zurich’s local insurance units and Santander’s individual branch outlets.

Insurance Company Mentioned:

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.

Bangkok Dusit Medical Services (BGH) has acquired shares which will give the hospital group an 11 percent stake in rival private hospital operator Bumrungrad Hospital as the private health operator continues to strengthen the group’s position in the Thailand healthcare market.

The share purchase covers over 46 million ordinary shares in Bumrungrad Hospital representing 6.32 percent of the total issues and paid-up capital, together with 35 million units of non-voting depository receipts valued at 4.79 percent of the Bumrungrad business. The Bumrungrad Hospital is listed on the Stock Exchange of Thailand, with a total investment valuation in the region of US$91 million.

Read the rest of the Bangkok Dusit Medical Services Invests In Thailand’s Bumrungrad Hospital article

Sun Life Financial has announced that it has reached an agreement with GPL Holdings – part of the Southeast Asian multi-industry conglomerate, the Yuchengco Group – in order to acquire a 49 percent stake in its subsidiary Grepalife Financial. The deal will enhance the multi-national Canadian insurer’s presence in the Philippines insurance market.

The deal will see the rebranding of Grepalife as Sun Life Grepa Financial as soon as local regulatory approval has been granted; this is expected to be obtained in the third quarter of 2011. GPL Holdings will maintain the majority share in the venture at 51 percent, with Sun Life being responsible for the operational management of the new company.

The joint venture will strengthen Sun Life’s distribution network in the Philippines through the newly established bancassurance relationship with its local partners. This will be facilitated through Yuchengco’s lending arm, the Rizal Commercial Banking Corporation (RCBC). The agreement will provide Sun Life Grepa Financial with an exclusive distribution platform to distribute insurance and wealth management products to Filipino customers.

RCBC has approximately 2 million customers and over 350 branches currently across the Philippines. The new relationship will provide for synergy between Sun Life and Grepalife operations in the Philippine insurance market and allow both parties to benefit from existing strengths and increase the range of insurance and saving products available through the new Sun Life Grepa Financial venture in an expanding Southeast Asian insurance market.

Speaking on the agreement Sun Life Financial Philippines (SLFP) President & CEO Rizalina Mantaring said: “We’re extremely excited about this deal. Sun Life Philippines has a long history in the country and is already one of the leading players in the insurance industry. This alliance allows us to take advantage of the growing opportunity in the bancassurance sector and positions Sun Life Philippines for even greater growth.”

The Toronto-based insurer’s net income in 2010 totaled US$1.6 billion a significant improvement over the previous year 2009 when total net income reached US$541 million. The increase in net income over the 12 months was down to a strong performance across the range of Sun Life operations. Along with its presence in the Philippine insurance market, Sun Life has a strong foothold in the Canadian, Chinese, Indian, Indonesian, Irish, UK and US insurance markets.

In addition to Southeast Asian neighbors Thailand and Indonesia, the Philippines potentially offers insurers huge increases in written premiums as improvements in wealth levels, within a growing middle class population, takes place. This follows the progress in the growth of returns from business in the Asian powerhouse economies of China and India.

Sun Life currently holds a position in the Philippine insurance market through its Sun Life Financial business – which was established in 1995 – and has become one of the main insurers in the Filipino market. It has established a reputation as one the main protection and savings product providers in the Philippines and will continue to operate as a separate entity from the new insurance venture with Grepalife.

It is estimated that Sun Life’s existing share of the Philippine insurance market is around 17-20 percent, but with the new partnership the Canadian insurer is aiming to increase that to more than 25 percent in the short to medium term.

The parent company of GPL Holdings and Sun Life’s new partners Grepalife – the Yuchengco Group – has over 60 companies within its portfolio making it one the largest conglomerates in Southeast Asia and, with the RCBC banking link, is planned to provide a formidable combination to enhance Sun Life’s bid to penetrate the Philippine’s insurance market.

Sun Life is one of Canada’s largest life insurers and has been building its multi-national operations through joint ventures with local operators, rather than outright acquisitions, to gain a presence in emerging markets currently offering insurers greater scope for improving premium returns.

Insurance Company 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.

Ageas has announced plans to enter the growing Turkish non-life insurance market through a partnership with local conglomerate Hac? Ömer Sabanc? Holding A.?. (Sabanci). This will see the Belgian insurer acquiring a 31 percent share in Sabanci subsidiary Aksigorta for US$220 million (€160 million).

Ageas agreed the deal with current owner’s Sabanci, a leading industrial and financial business in Turkey, with the price tag reflecting the potential returns from Turkey’s fourth largest non-life insurer Aksigorta.

Turkey’s insurance sector remains generally untapped, with the non-life insurance markets generating roughly 1 percent of gross domestic products (GDP) against the European Union (EU) average for the non-life insurance sector of approximately 3 percent of GDP.

On completion of the deal, Ageas and Sabanci will each hold 31 percent in the Turkish non-life insurer; the remaining 38 percent of shares will continued to be traded on the Istanbul Stock Exchange.

In 2010 Aksigorta generated US$ 562 million (€415 million) in gross written premiums and held an 8 percent market share in Turkey’s non-life insurance market. Almost 50 percent of Aksigorta business comes from motor insurance, followed by fire and health insurance at 18 percent and 14 percent respectively.

Aksigorta operates through two distribution channels in Turkey – a network of agencies and a bancassurance link with Akbank – one of Turkey’s largest banks, which is controlled by current owners Sabanci. Part of Ageas’ new agreement with Sabanci, will see Akbank extend its bancassurance deal with Aksigorta for 15 years, through an established network of 913 branches and 8 million customers in Turkey.

The potential in Turkey’s growing non-life insurance sector comes as the economy expands, alongside the requirement for motorists to take-out a minimum third party insurance cover and, since 2009, a mandatory requirement to have a policy to cover protection against the high risk of earthquakes in the country.

The transaction is Ageas’ second major venture outside its core home market in Belgium since re-banding from Fortis, with the Aksigorta deal following the US$351 million (€257 million) acquisition of the UK’s Kwik-Fit insurance business in 2010.

Both the Kwik-Fit insurance deal and the current Aksigorta proposal have been carried out by Ageas to expand its position in markets which offer the insurer new avenues for premium growth following the rebranding which took place in 2010.

Ageas is the insurance arm left after the Fortis group was taken over by France’s BNP Paribas – after a short period of nationalization – following the global financial crisis in 2008. Prior to the break-up, Ageas was present in the Turkish life insurance market through Fortis, but subsequently exited operations in Turkey when the group was dissolved.

Ageas CEO, Bart De Smet said: “I welcome this partnership as an important step in the execution of our strategy as announced at the end of 2009. Turkey is an exciting and fast-developing country with attractive growth potential in non-life insurance and currently low insurance penetration levels. I am very pleased that we can access this growth market together with Sabanci, a well-reputed and leading group with extensive experience in partnerships.”

The deal between Ageas and Sabanci comes as both partners drive to augment their position in a developing insurance market, with huge potential for new premium growth through Turkey’s population of 75 million people and an expanding economy. However, although the insurance sector in Turkey remains generally untapped, some analysts believe the potential for growth of profitable business is limited as competition increases in Turkey’s non-life insurance sector.

“After a rigorous selection process spanning the last several months, we have concluded that Ageas, one of Europe’s leading insurance groups, is the best partner to help us realise our aim of making Aksigorta the leading non-life insurance company in Turkey. We have set new, demanding performance targets for Aksigorta and we are better positioned to achieve them with Ageas as our partner.” said Sabanci Holding CEO Zafer Kurtul on the Ageas agreement.

As global financial markets return to stability, insurers have been looking for opportunities to reposition in international markets and secure future premium growth. Turkey has emerged as a country with particularly good potential for growth in the Euro region, with foreign insurers being attracted to the Turkish insurance market where market penetration has been historically low.

The deal is still subject to regulatory approval and is expected to be completed in the second quarter of 2011.

Ageas will enter an insurance market which includes some of Europe’s largest insurers including AXA, Aegon, Allianz, Aviva, and Ergo. Some of the world’s leading insurers have been attracted to Turkey because of its young and expanding population, its dynamic economy and its strategic role in global terms reflecting its location at the crossroads of Europe and Asia.

The Belgium-based insurer generated a US$211 million (€153 million) third-quarter net profit in 2010, driven by its operations in Asia which offset results in Ageas’ domestic market in Belgium where activity remains relatively static in line with the rest of Western Europe.

Insurance Companies Mentioned:

Ageas

Ageas is an international insurance company with a heritage spanning more than 180 years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to concentrate its business activities in Europe and Asia, which together make up the largest share of the global insurance market. They are grouped around four geographic 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.

Aksigorta

Aksigorta was founded in 1960 operating in the Turkish insurance industry. The company provides fire, transportation, accident, machine assembly, hail, life, animal life, and health insurance in Turkey.

The State Council of China has announced plans to expand medical insurance coverage for workers and residents within the country’s urban centers. The reform will see 90 percent of the costs associated with medical treatment covered by insurance for 440 million individuals throughout the People’s Republic of China.

The plans were outlined in a document released on the State Council’s official website on the 17th February 2011. The plans also cover the intention to increase the level of reimbursement of inpatient fees for China’s urban retirees, the unemployed, and farmers, with the ultimate aim of covering 70 percent of medical costs as part of the latest steps in China’s pursuit of health reform.

The increase in the levels of coverage offered through the central government, and provision of subsidies to cover at-risk individuals, is being taken in recognition of the current inadequacies existing in China’s public healthcare system and the detrimental impact this has on the Chinese economy. Currently a majority of Chinese nationals are forced to pay for healthcare treatment out-of-pocket prior to admission to a hospital or medical facility, causing severe hardships in a country where the average urban worker’s wage is estimated to be US$ 4,397 annually. The latest plans follow reforms introduced in 2009 primarily covering people working or living in cities or in rural areas.

As China’s State Council announces the latest plans for expanding medical insurance coverage across urban areas of China – where approximately a third of the country’s population is domiciled – the economy in China recently became the second largest in the world. As the results of economic success in trading activity and wealth creation emerge, the government is set to focus on reforming a fragile public healthcare system, which has been underfunded for many years.

China’s leaders now want to ensure that there is adequate basic medical insurance in place to cover both urban and rural residents – in addition to city dwellers where benefits were introduced as part of a reform process introduced in 2009 – by raising the level of insurance protection for this element of Chinese society in later stages of the ongoing health reform. The State Council has declared that there will be an increase in the level of government funded health subsidies involving the country’s two public health insurance schemes; the scheme for urban workers will be increased to 200 yuan (US$30) and the rural co-operative to 120 yuan (US$18) per person.

The cost of healthcare in China has placed tremendous financial burdens on China’s poorer rural population, with payments for treatment of a serious illness potentially wiping out a family’s life savings. There have been calls to address this major weakness currently blighting the Chinese healthcare system. The measures now proposed, with an increase in insurance cover for a substantial part of medical costs, should eliminate the impact of high out-of-pocket payments.

Earlier reform measures in rural areas have been fairly successful, with medical insurance coverage expanding on arrangements introduced in China’s cities and towns, resulting in an improvement in primary healthcare. However, steps taken to provide better state hospital care in rural areas have been criticized for not being adequate to meet patient needs.

Currently Chinese state hospitals rely on profits generated from the sale of drugs to patients, which has caused a problem with doctors taking advantage of the population by over prescribing unnecessary medications in order to increase profitability. Issues have also arisen in respect of the relatively high cost for medical treatment in state hospitals causing people to avoid seeking vital treatment.

China is working towards a landmark healthcare reform program, which is planned to be fully implemented by 2020. As the country progresses the reforms, its main aim is to make healthcare in China affordable and modern for a population which exceeds 1.3 billion people.

The initial steps for implementation in 2011 are expected to cost the state 850 billion yuan (US$128 billion) which will expand medical coverage across the vast country from the cities to rural villages. It is estimated that 90 percent of China’s rural population is currently covered by a public health insurance scheme.

In 2009 China’s state council released plans for a three year program, which involved the government investing 200 billion yuan (US$30 billion) into the nation’s healthcare system as part of a reform package. As China takes steps to expand the medical insurance programme, the country’s huge and diverse population presents the Beijing central government with major tasks.

Part of China’s overall reform program is to improve the supply of healthcare in the country by the easing of government regulations for foreign investment in private hospitals. This move was made to relieve some of the burden on state funding, with the private health sector catering for the more affluent element of the country’s population.

As China advances, the country is faced with an increasing aging and consequently ailing population. This places extra strains on the Chinese healthcare system. As life expectancy increases across China, the reform of the health sector needs to take into account the specific issues involved with a population including 167 million people over the age of 60.

Despite China’s rise as a leading economic power, the poor and high numbers of migrants have been impacted the most by failings in the state healthcare system, with some hospitals changing exorbitant prices thus making healthcare inaccessible to huge waves of society. The migrant work force has played a pivotal role in China’s economic success and is expected to continue to do so in the future. However, current flaws in the medical insurance scheme often means treatment is beyond the reach of millions of Chinese migrant workers.

While China’s State Council is working towards establishing an efficient and affordable healthcare system, with the expansion of medical insurance schemes, which meets the needs of patients, the country’s huge population, vast geographical area and migrant population means completion of healthcare reforms will be a long process which can only be implemented in stages.

The Chinese government is hoping that the knock-on effect of expanding medical insurance coverage will be the positive impact that can bring China’s economy sustainable growth in the long term. By establishing a comprehensive and reliable medical insurance scheme, it is hoped that the population will spend more money in the local economy rather than retaining savings to cover possible healthcare costs.

The wealth gap between China’s rich and poor communities has grown over the last decade, with millions still struggling with rising healthcare costs. The reforms to the funding of healthcare now planned are seen as an essential step towards the country establishing an equitable healthcare system available to its 1.3 billion population.

In December 2010, over 45 million migrant workers joined China’s urban workers’ medical insurance system, increasing coverage to approximately 424 million Chinese residents. The medical insurance scheme for China’s migrant workers is vital as it is their main source of healthcare cover. The urban workers’ medical insurance system allows workers to seek treatment in Chinese cities and towns and is considered essential for the huge workforce population in China; were the employment of the migrant population is key to the Chinese economy.

Urban workers’ health insurance covers residents of China in employment with medical coverage, while those unemployed are covered by resident’s health insurance. In addition to these two forms of state provided health insurance, there is urban civil servants and retired workers insurance cover enabling free medical care in China. Apart from the state provide medical insurance, there is also private health insurance with has grown in popularity as the economy has become more buoyant.

From July 1st 2011, health insurance policy holders in India will be able to change insurance providers, without the fear of losing their benefits from their previous policy.

With the new initiative issued by the IRDA (Insurance Regulatory and Development Authority), industry leaders in India predict an increase in competition among health insurance providers, as policy-holders will be afforded greater freedom in moving their policies among insurers. Health insurance service standards are also expected to rise in return, as insurance companies will increasingly compete on the quality of customer service.

The IRDA issued a media release on 10th February 2011, indicating that insurers should allow for portability of health insurance policies. The central thrust of the IRDA plans for health insurance portability is the ability to transfer credit for pre-existing conditions in regards to waiting periods on cover, provided that there has been no lapse in the policy. The IRDA also seeks to allow portability if the policy lapses due to delay by an insurer.

Prior to the regulatory change, policy holders were often at a disadvantage. If a policy-holder wanted to change to a different health insurer, particularly if they have acquired a chronic illness, they may face obstacles such as long waiting periods or exclusion of cover for pre-existing conditions when taking out the new policy.

Policy-holders should be happy with the recent changes in IRDA laws, which will allow them to carry their policy to another insurer, keeping the benefits of their previous policy. “It is essential to protect policyholders against discontinuity and consequential loss of pre-existing disease cover… The portability will ensure the policyholder is not tied to one insurer for the pre-existing disease cover” said the IRDA in the February 10th media release.

CEO of Apollo Munich Health Insurance, Antony Jacob, explains changes regarding the new law “a customer opting to choose our product (at similar sum insured level) can transfer indemnity based health policy from any insurer with the accumulated benefits”.

The IRDA aims to protect the interests of policy-holders and this is one of their most recent regulations on health insurance companies in India. The IRDA, appointed by the Government of India, are ultimately setting its targets to not only protect the rights of consumers, but to protect the state in the burden of medical treatment placed on the public health system.

Looking ahead, as suggested by leading insurers, what we can expect to see is an increase in competition among insurers. Policy holders in India will find shopping for another insurance provider an easier process.

Increased competition on the market may initiate a drop in health insurance premiums; as insurers provider try to draw in customers. However, Dr BS Powdal, Head of Health Insurance, Bajaj Allianz, explains that this is unlikely to occur. With customers moving to different companies there is usually a particular reason for it, such as poor service, given the benefits under their policy will remain the same. ‘Quality of services’ will therefore be the likely motivator in the near future for customers within India moving to different health insurers.

Dr BS Powdal of Allianz explains, “he is going to pay some extra amount for the added quality of service so it is unlikely that there will be a price wars because of portability but the customer benefits because he gets the benefit of the waiting period which he has already stayed with the previous insurance company”, further adding that premiums are in fact likely to rise “if there is a person who has say suffered a heart attack with the previous insurer’s policy period when he moves to the next insurer that insurer probably will charge a higher premium… prices may go up to some extent for those who have a claim history with the previous insurance company”.

In the meantime, competition is on the increase in India with more and more individuals taking out health insurance policies in the country. The number of policy holders increased to 6.88 million from 4.57 million in the 2008-9 year, according to data issued by Third Party Administrators (TPA) and Insurers in India. With increasing numbers of policy holders, premium collection by health insurers has almost doubled along with the submission of claims.

Key players on the health insurance market in India include Star Health & Allied Insurance, Apollo MUNICH and Max BUPA; with other leaders including National Insurance Company, United India and Oriental Insurance and ICICI Lombard.

Insurance Companies mentioned:

Star Health & Allied Insurance

Star Health and Allied Insurance is a specialist health insurance provider and was the first stand alone health insurer in India. Star Health and Allied Insurance provides health, accident, student, travel, and life insurance products.

Apollo Munich Health Insurance

Apollo Munich Health Insurance Co. Ltd. (previously known as Apollo DKV Insurance Co. Ltd) is a joint venture between the Apollo Hospitals Group and Munich Health. Apollo Munich Health Insurance provides health, personal accident and travel insurance.

Max BUPA

Max Bupa Health Insurance is a 74:26 joint venture between Max India Limited and UK-based Bupa. Bupa is a leading private healthcare provider with more than 10 million customers worldwide and over 60 years experience in the health sector. The Max India Group has expertise in both healthcare and insurance related services including hospitals, clinical research and life insurance.

Bajaj Allianz

Bajaj Allianz is a joint venture between Bajaj Finserv and Allianz SE, one of the world’s largest insurance companies. Bajaj Finserv is engaged in life insurance, general insurance and consumer finance business. Allianz SE has over 119 years of industry experience and is present in over 70 countries around the world.

ICICI Lombard

Founded in 2001, ICICI Lombard is a 74:26 joint venture between ICICI Bank Limited, India’s second largest bank, and Fairfax Financial Holdings Limited, a Canada based financial services company. ICICI Lombard is a general insurance company offering a wide range of insurance policies including, business, liability, motor, travel, rural and health insurance products.

National Insurance Company

Founded in 1906, National Insurance Company Ltd (NIC) is one of the leading public sector insurance companies of India, carrying out non life insurance business. Headquartered in Kolkata, National Insurance has a large market presence in Northern and Eastern India.

United India Insurance

Incorporated in 1938, United India Insurance Company Limited is one of the leading General Insurance Companies in India. With headquarters based in Chennai, India, the company has more than three decades of experience in Non-life Insurance business. It was formed by the merger of 22 companies, consequent to the nationalization of General Insurance.

The results of a comprehensive survey into opportunities for insurance companies in the Asia Pacific region highlighted China and India – the two powerhouse nations in the region – as the markets with the most potential. Opportunities in Indonesia, Vietnam and Malaysia were the next highest placed in the survey conducted by the Norton Rose Group – a leading international legal practice.

The survey took into account the views of 92 professionals from the insurance sector across the Asian Pacific region, taking into consideration their knowledge and practical experience in the insurance industry across the region in compiling of the report. The report named ‘Asian Pacific Insurance Survey 2011′ focused on six key criteria taken into account by insurers in decision making; these included growth prospects, regulatory controls, solvency issues, risk management, capital input and claims procedures.

Read the rest of the Survey Ranks Prospects For Insurers In Asia-Pacific Region article.

Despite a growth in business volumes, AXA Asia Pacific Holdings (AXA APH) announced a fall in profits for the year ending 31st December 2010. While the company generated a profit of AU$601.6 million (US$601.2 million), this was an 11 percent decline compared with results achieved in 2009 when a profit of AU$679.2 million (US$677.7 million) was delivered; results in 2010 being adversely influenced by the strength of the Australia dollar against other major currencies.

AXA Asia Pacific’s Chief Executive Officer, Andrew Penn said: “This is a strong result with Group Operating Earnings up 13 percent, after taking into account the impact of the strengthening Australian Dollar. We saw particularly strong performance in the second half of the year. After more than a year of ownership uncertainty, I am very pleased with the professionalism and focus of our teams and the exceptional performance of our businesses. The AXA APH operations are well positioned to continue to grow, and we will be handing the businesses over in good shape if the merger with AMP and the sale of the Asian business to AXA SA are approved.”

Although there was a sharp decline in profits over 2010, the life insurance and wealth management specialist in the Asia-Pacific region enjoyed positive results from South East Asian operations. Revenue from new business in 2010 climbed by 46 percent to AU$659.2 million (US$657.7 million) up from AU$451.7 million (US$450.8 million) generated in 2009. Notable contributions were delivered by AXA Asia Pacific’s operations in Indonesia, Thailand and the Philippines, reflecting strong performances from bancassurance channels.

In a break-down of the new business generated in Southeast Asia during 2010, increases were achieved in Indonesia – up 81 percent to total AU$324.9 million (US$324.4 million), in Thailand – up 37 percent to AU$222.8 million (US$222.3 million), the Philippines improved by 77 percent to AU$44.3 million (US$44.2 million), while activity in the Singapore market declined by 9 percent to AU$41.1 million (US$41 million) and in Malaysia 95 percent to reach A$26.1 million (US$26 million).

Speaking on Southeast Asian operations, Mr Penn said “Operating Earnings in South East Asia continued to grow strongly, up 44 percent as our growth momentum continued and the region now contributes more than half of Asian new business.”

AXA APH’s business in Asia’s two largest and fastest growing economies of China and India also showed signs of growth. New business in India increased 8 percent in 2010 compared to 2009, reaching AU$96.7 million (US$96.5 million), while in the rival powerhouse in the Asian region, China, AXA APH saw new business increase by 79 percent to AU$85.9 million (US$85.7 million). Within China, AXA APH opened two new operations last year expanding their presence into14 Chinese cities.

Despite the generation of new business in China and India, operating earnings were still negative at AU$15.2 million (US$15.1 million), although this was an improvement compared to 2009 when operating earnings showed a deficit of AU$24.5 million (US$24.4 million) – an AU$9.3 million (US$9.2 million) improvement in trading results. The life insurer highlighted particularly tough conditions in India, with AXA APH carrying out a reduction in ownership coupled with the adverse impact of the introduction of changes to regulatory conditions.

One of the world’s largest insurers AXA and the Australian wealth management group AMP are in the process of acquiring the AXA APH business with an AU$13.3 billion (US$13.1 billion) bid made in November 2010. The joint bid launched between AXA and AMP envisages the French insurer taking 100 percent control of the AXA APH Asian business, with AMP acquiring 100 percent of the life insurer’s Australian and New Zealand operations in order to merge with their existing business in these countries. The deal is subject to approval from regulatory bodies, which is expected to be concluded during the first quarter of 2011.

If the takeover of AXA Asia Pacific is successful, AXA will end up owning the life insurer’s Asian assets in a move which will cement the French insurer’s presence in rapidly growing Asian markets. Asia has become an essential region for multi-national financial institutions to maintain a presence in, especially insurance companies seeking new opportunities to generate business and premium growth; Asia’s strengthening economy providing insurer’s with a massive opportunity to increase their profitability.

AXA Asia Pacific’s existing activities in Australia and New Zealand would be acquired by AMP – one of the region’s leading wealth management companies – enhancing their market position in these two major trading nations. Australia and New Zealand both being mature markets, with minimum exposure to the global recession being experienced by the USA and European countries, and are well positioned for further growth.

Although there was a fall in AXA Asia Pacific’s earnings in 2010 – predominantly due to unfavorable movements in currencies – the life insurer and wealth manager is well positioned in the mature markets of Australia and New Zealand, and the emerging markets of Southeast Asia as well as the powerhouse economies of China and India – justifying the substantial bid by AXA and AMP for acquisition of the company. The latest bid for AXA APH supersedes a previous bid by the National Australia Bank (NAB) which was blocked by Australian Securities & Investments Commission (ASIC) due to concerns over marketplace competition.

Companies Mentioned:

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.

AAP

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.

The Toronto-based insurance company Manulife Financial Corporation has reported a positive turnaround in profitability in the fourth quarter of 2010. Earnings totaled close to US$1.8 billion, helped by sales in the burgeoning Asian region which showed a 56 percent increase in overall activity.

While action taken to stem earlier losses in 2010 improved performance in its key markets in the USA and Canada contributed to the production of the positive results, the strategic steps taken by Manulife to expand its operations in Asia were the key driver in the return to profitability in the fourth quarter of 2010.

Manulife’s Chief Executive Officer Mr. Guloien said: “We had strong growth in Asia, diversification in Canada and continued progress in the strategic repositioning in the U.S. We are proud of our continuing expansion and growing sales levels across Asia as a whole.”

Asia is emerging as the key target market for business growth as multi-national insurers look for long term expansion. This is linked to the exceptional growth in the economies of Asian nation’s off-setting the more difficult trading conditions in western hemisphere countries blighted by the implementation of austerity measures.

Manulife’s growth in the fourth quarter in 2010 is primarily down to a global strategy adopted by the insurer in 2009 which focused on driving up insurance sales especially in the buoyant Asian insurance market and growing distribution channels in emerging markets with the creation of a wider range of diversified saving and insurance products.

Manulife’s report on earnings achieved in the fourth quarter of 2010 highlights how much of a pivotal market Asia has become to global insurers seeking to generate written premium growth. While Manulife’s main domestic markets in North American have been basically static since the 2007-2008 global financial crisis, the Asian insurance markets have been a feature of the insurer’s profitable business in recent years, with the markets in China, Indonesia, Vietnam, Malaysia and the Philippines achieving double digit growth.

Speaking on Manulife Asian operations, Robert Cook, Executive Vice President and General Manager said: “Achieving insurance sales of US$1 billion was an important milestone for Manulife Asia. I am very pleased with these 2010 results, and I am also proud of the steps we took last year to invest for the future. These initiatives, aimed at building our distribution capacity in both agency and bank channels, are expected to pay off in continued growth of our businesses in the years ahead.”

Manulife’s Asian Division achieved fourth quarter insurance sales totaling US$307 million representing a 56 percent increase in quarterly year-on-year earnings. A significant 43 percent growth was achieved in fourth quarter 2010 Asian insurance sales, with the Japanese market achieving insurance sales totaling US$563 million – an increase of 72 percent compared to quarter four of 2009. Manulife’s strong growth in the Japanese insurance sector was down to robust sales of its new whole life products and an increase in sales of term life insurance products distributed through Manulife’s well established Japanese sales channels.

Manulife’s Hong Kong business reported insurance sales growth of 23 percent over the 12 month period in 2010 reflecting an increase in marketing efforts and growth in the agency distribution network.

In other Asian operations, Manulife’s insurance sales jumped by 22 percent in the fourth quarter 2010 compared with activity in the same period in 2009. The Canadian based insurer reported record growth in insurance sales in China, Indonesia and Vietnam.

The Chinese, Indonesian and Vietnamese insurance sectors have all become essential markets for insurers looking to expand global operations with new premium business being predominately driven by the improvement in wealth and rise in middle class demographics. Overall, Manulife’s insurance sales in China, Indonesia, the Philippines, Malaysia and Vietnam grew by 15 percent in quarter four 2010 compared to the equivalent period in 2009. Manulife has increased the number of contracted agents in these countries in order to ensure maximum exposure in the flourishing Asian insurance and wealth generation industries. In other Asian markets, Taiwanese sales grew by 53 percent over the yearly period in 2010, driven by successful sales in the whole life business. However, the loss of a distribution partnership in the developed Singaporean insurance market, meant Manulife experienced a steep decline in sales in this segment of the Asian business.

Manulife – one of North America’s largest insurers – targeted the Asian insurance market as a key strategic development in order to expand and generate improvements in profitability, which proved successful as demonstrated by the results in the latest report on earnings. This sector of business will clearly be a focus for activity in 2011 in order to turn the page on 2010’s overall loss of US$ 395 million, which stemmed from poor results in the first half of the year, and develop it into a platform of sustained profitability.

However, competition within the Asian insurance markets has become more intense recently, with European and American multinational insurers gaining access to the region through acquisitions, partnerships or self-started new businesses. These developments are initiating the provision of innovative insurance and wealth generation products in order to achieve market penetration.

As far as Manulife is concerned, in addition to targeting the Asian markets, it has repositioned activities in its significant USA and Canadian operations to meet the changing market conditions in these countries with positive results being manifest in the later part of 2010.

Insurance Company Mentioned:

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.

As the Asian region enjoys economic expansion, investment in life insurance products has enjoyed double digit growth. There are more signs that the Asian economy is gathering pace, with the latest figures from life insurance sectors in Singapore and India demonstrating substantial growth in 2012.

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The Agricultural Bank of China Ltd, China’s third largest bank, has announced that it plans to acquire new shares to enable it to take a controlling 51 percent stake in the Jiahe Life Insurance Company Ltd. The subscription for new shares will amount to approximately 2.59 billion yuan (US$393.2 million).

The Agricultural Bank of China’s Board of Directors approved the bid for the Beijing based Jiahe Life Insurance Co. Ltd as it embarks on strengthening its position in the substantial Chinese insurance market.

The bank released a statement via the Hong Kong Stock Exchange stating that it plans to subscribe to 1.04 billion new shares to be issued by the Jiahe Life Insurance Company, which will provide the Agricultural Bank of China with a sufficient stake to enable it to take a controlling interest in the established Chinese insurance company.

Following the banks acquisition of the 51 percent majority shareholding, the existing five shareholders in Jiahe Life – Beijing Zhong Guan Cun Science City Construction Holding, Chongqing International Trust, China New Era, China Sigma, and Shanghai An Shang Industrial – will each hold a 9.8 percent stake in the life insurer.

Jiahe Life Insurance was created by a group of Chinese companies in 2005 and since its inception has established a network across 15 Chinese cities. The Beijing based insurer offers life, health and medical, and accident insurance products to consumers in China. The insurers total assets reached 17.6 billion yuan (US$2.6 billion) by the end of last year and its premiums amounted to 4.52 billion yuan (US$685 million) in 2010.

The Agricultural Bank of China’s board voted unanimously to proceed with the proposed purchase of new shares to enable the takeover of Jiahe Life Insurance to proceed. The deal is still subject to formal approval from China’s financial service regulator – the China Insurance Regulatory Commission (CIRC).

The Chinese insurance market has become a pivotal sector for insurers looking to gain premium growth, linked to the prodigious expansion in the Chinese economy.

The Agricultural Bank of China floated on the Hong Kong and Shanghai Stock Exchanges in 2010 for an initial public offering (IPO) of US$19.2 billion; this made it the world’s largest first-time share sale. The action by the bank enabled it to cement its presence as a global financial institution as world financial markets returned to stability after the 2007-2008 global financial crises.

The Agricultural Bank of China’s acquisition of a 51percent stake in Jiahe Life Assurance follows similar deals completed in 2010 with ICBC’s (Industrial and Commercial Bank of China) – China’s biggest bank – purchase of a 60 percent stake in the French/Chinese JV – AXA Minmetals, the Bank of Beijing’s acquisition of a stake in ING Capital Life and the Bank of China’s action to obtain a 25 percent share in Heng An Standard Life. These developments followed the Chinese government’s easing of restrictions and regulations in September 2009 affecting banking sector involvement in the insurance business in China.

Companies Mentioned:

Agricultural Bank of China

The Agricultural Bank of China Limited is engaged in offering services in the areas of international banking, personal banking, corporate banking, treasury operations and e-banking. The bank offers financing and other financial services including commercial banking, deposits, loans, wealth management, cards, and foreign exchange services to customers across China.

Jiahe Life Insurance Company

Jiahe Life Insurance Company Ltd was founded in China in 2005 and offers life, health, medical, and accident insurance products. The company has 15 subsidiaries nationwide.

In Saudi Arabia authorities are warning hosptials in Jeddah of a dengue fever outbreak, following floods which have provided a perfect breeding ground for mosquitoes.

According to the Ministry of Health Saudia Arabia, since the January 26th floods in Jeddah, six cases of dengue fever and 4 cases of malaria have been confirmed in the country. Further to this, dysentery and other secondary flood related illnesses have caused an influx of patients in Jeddah’s hospitals.

Authorities have asked hospitals in Jeddah to prepare for an increase in dengue fever cases. In order to monitor the situation carefully, the Health Affairs Department has supplied hospitals with the appropriate dengue fever and malaria testing equipment. Health Affairs director, Dr Sami Badawoud, has mandated hospitals to treat all patients with symptoms of dengue fever, whether citizen or foreigner. Despite efforts, patients are flocking to hospitals with secondary illnesses relating to the Jeddah floods which killed 10 people, 8 who were expatriates.

Anas Al-Baloushi, head of Social Affairs Preventative Medicine Department, warns the number of dengue fever cases are expected to rise next week given the end of incubation period for mosquitoes. Dengue parasites are transmitted after a mosquito ingests blood from an infected specimen, and takes approximately 8 to 12 days for the mosquito to be a carrier of the dengue virus. While only female mosquitoes will drink human blood, and then only when pregnant, an infected mosquito can transmit the virus to humans during its entire lifespan, which is typically 15 to 65 days long. As such, the risk of dengue fever transmission will largely increase over the next coming weeks.

Flooding in the Jeddah area has caused a range of secondary illnesses, which are expected to increase further. Following the floods, 161 patients have been admitted to hospitals with flood related illnesses. Patients have presented with dysentery related symptoms, as well as asthma attacks caused by stress relating to the floods. The Saudi Department of Health Affairs has informed the Jeddah populace to strictly drink bottled water, as water tanks will variably be contaminated with bacterial infections such as dysentery and cholera. Sami Badawoud has further warned that pesticides, used to eradicate mosquitoes, are harmful and can exacerbate chest and respiratory illnesses.

Given the low doctor-patient ratio in Saudi Arabia’s public hospitals, similar to other healthcare systems across the globe, what we can expect to see is an overcrowding of public health facilities in Jeddah over the next coming weeks to months. Although the public health care system is well equipped to adequately treat malaria and dengue fever patients, lack of staff will not be able to sufficiently cope with an outbreak such as this.

In the even of an outbreak, patients are likely to steer towards treatment at private health care facilities, given that public hospitals are likely to fill up quickly. An International Health insurance policy is therefore deemed necessary when visiting areas at risk of water and vector borne disease outbreaks.

Patients that suffer from serious dengue fever cases, including life-threatening complications of dengue hemorrhagic fever (DHF), must be treated immediately in hospitals. With no hospital treatment the mortality rate is 26 per cent in severe DHF patients. The dengue mortality rate is reduced to 3 per cent with adequate hospital treatment. Hospital admission is required to control hemorrhage and shock, with treatment duration depending on the severity of the virus. Intravenous fluids are used to treat shock and dehydration, and a blood infusion may also be required. Various complications can result from DHF including respiratory problems, liver failure, neurological, pleural effusion, and gastrointestinal hemorrhage.

Countries across the globe, particularly in sub tropical climates, are fighting vector borne diseases with no current vaccination or successful eradication plan. Pre-exposure treatment, such as anti-malarial medication, is available however not entirely effective and too expensive for third-world countries. The Saudi Arabian Government is making continuous efforts to control outbreaks of vector borne diseases with applications of pesticide spray to stagnant water in the post-flooded Jeddah area. There are also developments in relation to a genetically modified (GM) mosquito that would be used to eradicate the dengue fever virus in affected areas worldwide. GM mosquitoes are male, therefore do not drink blood and pose no threat to spreading the disease.

American International Group’s (AIG) general insurance arm Chartis has announced that it has made a cash tender offer to complete a full take-over of Fuji Fire & Marine Insurance of Japan.

Currently Chartis holds a controlling stake of 54.66 percent in Fuji Fire & Marine, which it acquired in 2010. Chartis will spend approximately US$ 571 million (¥47 billion) to acquire 100 percent control of the Japan based insurer. Chartis has offered a purchase price of US$1.7 (¥ 146) per-share, representing a near 30 percent premium over Fuji Fire & Marine closing price at the end of share trading on the 9th February 2011.

The directors of Fuji Fire & Marine support the tender offer as it will reinforce the insurers operations in Japan. Shareholders of Fuji Fire and Marine – the Orix Corporation – an international financial service company, which currently holds a 15.53 percent share in the insurer, are expected to offer their stake in the Japanese based insurer.

Following the tender offer, Fuji Fire & Marine, will be delisted from the Tokyo Stock Exchange. The tender offer is scheduled to commence from Monday the 14th February and run through to March the 24th 2011. The transaction will benefit both parties, with Chartis consolidating its position in Japan – the second largest insurance market in the world. Fuji Fire and Marine will strengthen its presence through Chartis’ global network, financial capacity and product range.

Jose A. Hernandez, CEO of Chartis Far East Holdings K.K. Said: “Including Fuji Fire and Marine as a full member of the Chartis group is a natural progression of the excellent partnership we have developed over the past ten years, most recently as Fuji Fire and Marine’s majority shareholder. Our expanded distribution platform enables us to accelerate our delivery of innovative products and superior services through our loyal agency force to a broader range of Japanese customers.”

The offer is still subject to regulatory approval from the Financial Service Agency in Japan. When the deal is completed Chartis expects to operate under the Fuji Fire and Marine brand in Japan.

The AIG group recently retreated from the Japanese life insurance market by selling AIG Star Life Insurance and AIG Edison Life Insurance to US insurance rival Prudential Financial for US$4.8 billion (¥437.7 billion). AIG, the US-based insurer, will now increase its presence in the Japanese insurance market through the Chartis brand and the full acquisition of Fuji Fire and Marine – a Japanese insurance company which was established in 1918 and now has a national distribution network.

AIG has been going through a period of transition since the world financial markets experienced a recession during 2007, which subsequently lead to the global insurer requiring a US$182 billion (¥15 trillion) bailout package from the US federal government in 2008. Since then AIG has been restructuring its global operations, which has seen them sell-off the Alico brand to Metlife and place Nan Shan its Taiwanese insurance arm up-for-sale – in addition to the recent sale of Star Life and Edison Life to Prudential Financial.

As AIG works towards streamlining its international operations through divestment – as part of a process to repay the US government for the bailout loan – the insurance company has been keen to consolidate its business in core insurance markets that produce substantial written premiums for the group. Along with AIA – AIG’s lucrative insurance arm in Asia – Chartis has become a pivotal general insurance business for the group with a global reach that generated operating income of US$1.1 billion (¥ 98 billion) in the third quarter of 2010.

Chartis has emerged as one of the world’s leading property-casualty and general insurers with more than 45 million clients worldwide. The insurer offers personal line products including: travel, automotive, home and accident care. In business line insurance, Chartis offers: risk solution, special risk cover, travel, accident and healthcare.

AIG has reported that it will boost Chartis’ reserves following the credit rating agency – Fitch Rating – downgrade of the property and casualty insurers status from a +A to A. The grade was made as Fitch believes the insurer may not be able to underwrite strong results as in previous years.

Insurance companies mentioned:

Chartis

A leading property-casualty and general insurance company, Chartis has over 45 million policyholders in 160 countries worldwide. With more than 90 years experience in the insurance industry, and a range of progressive products, Chartis aims to help clients comprehensively manage risk.

Fuji Fire and Marine

The Fuji Fire and Marine Insurance Company Limited was founded in 1918 and through its subsidiaries offers life and non-life insurance products and services for individuals and small and medium-sized companies across Japan.

AIG

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

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

The burden of heart disease, diabetes and other non-communicable illnesses are taking their toll on the vulnerable members of society in the South Asian region according to a recent report by the World Bank.

The report highlights the worrying increase of illness impacting the populations of South Asian countries, with impoverished people being affected by consequential out-of-pocket payments for subsequent healthcare services. The report covers studies undertaken in Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan, the Maldives and Sri Lanka and identifies alarming health concerns across South Asia.

Heart disease is the biggest killer in the region for those people aged between 15 and 69; the studies also found that non-communicable diseases are responsible for 55 percent of all diseases in the region.

South Asia is at a cross roads: while the region is developing from an economic viewpoint, there is a substantial proportion of society still living in poverty. The urbanization of populations in the region has increased bringing more pressurized lifestyles and a resultant heightening of risks to health from heart disease, diabetes and obesity. The average life expectancy is 64 years of age for a person living in South Asia.

Problems arise from poor nutrition and smoking causing exposure to obesity, high blood pressure and high cholesterol and glucose levels. This has, consequently, placed enormous pressure on healthcare systems as more people seek treatment for chronic illness and disease. However, as economic and social change in the region evolves, the state run healthcare systems have failed to develop to meet changing patient needs. This has placed even more pressure on inadequate services – also required to deal with communicable diseases such as tuberculosis and water and vector-borne diseases – with vulnerable members of the community being most severely affected.

A major concern highlighted in the report covers the impact of out-of-pocket payments required to be made by patients seeking medical treatment; impoverished patients being unable to fund proper medication for rehabilitation in order to return to work.

Speaking on the findings from the study, co-author, Michael Engelgau, a World Bank senior public health specialist, highlighted to concerns by saying: “This unfair burden is especially harsh on poor people, who, after heart attacks, face life-long major illnesses, have to pay for most of their care out of their savings or by selling their possessions, and then find themselves caught in a poverty trap where they can’t get better and they can’t work.”

The World Bank’s reports recognizes that efforts to control the growing burden of heart disease, diabetes and other non-communicable illnesses, could cost an additional 4 to 10 percent of South Asia’s gross domestic product (GDP); however, the report did acknowledge that this was an unrealistic goal.

It is recognized that action needs to be taken to control the impact of non-communicable diseases in South Asia, with a pro-active approach being adopted including measures such as reducing the use of tobacco and cutting alcohol and unhealthy food consumption. In India, Bangladesh and Pakistan, it is estimated that a 10 percent reduction in the consumption of salt would prevent 70 deaths per 100,000 people over the next 10 years. If such health strategies can be implemented across South Asia there would undoubtedly be a significant improvement in the standard of health.

In evaluating the findings, the World Bank said that the South Asian healthcare system needs to overcome a number of challenges to ensure health services improve in the region. These include: collaboration to enable the group purchasing of medications, establishing a health technology assessment network, combining education and training in the region and the creation of a surveillance and burden assessment hub.

The report states that 71 percent of the South Asian population live in rural areas, and that the gross domestic product (GDP) in the region has increase by 6 percent annually over the last two decades. However, even though there has been steady economic growth in the region, and a decline in poverty rates, South Asia has the highest density of poor people in the world – reaching over 1 billion in number. Among these 1 billion people, it is estimated two-thirds live on less than US$2 a day and two-fifths on less then US$1.50 a day. It is this element of the South Asian population most at risk because of inadequate access to healthcare services and the subsequent financial burden from treatment provided.

As average life expectancy ages rise, and more elderly people require treatment, there are growing concerns surrounding the current standard of healthcare available in the region. The major issue is the future accessibility and quality of healthcare, with proper education and resources to meet the needs of vulnerable elements of society in South Asian countries. The report identifies concerns about the potential for worsening health burdens developing across South Asia.

Beazley the Dublin based insurance specialist has posted a pre-tax profit of US$250.8 million (£155.6 million:€84.7 million) for 2010. This is up from US$158.1 million (£98 million:€116.4 million) recorded in 2009, representing an increase of 59 percent for year-on-year results.

A breakdown of Beazley’s operations in 2010 shows that the insurer generated a 21.4 percent return on equity reflecting an increase from 16 percent last year. There was a 1 percent decline in gross written premiums, which totalled US$1.74 billion (£1.08 million:€1.28 million).

Beazley, a member of the Lloyd’s syndicate, highlighted the competitive pressures across all segments of the insurance business during 2010, although the insurer was able to deliver an improvement in the combined ratio from 90 to 88 percent representing a profit of US$19.2 (£12:€14.4) for every US$160 (£100:€120) from premiums obtained.

The increase in profits was partly driven by favorable foreign exchange rates – contributing US$33.7 million (£20.9 million:€24.8 million) to overall results. However, this was offset by a 57 percent fall in returns from investments as Beazley adopted a lower risk strategy to speculative trading, coupled with the impact of exceptionally low interest rates. Premiums from business renewals declined by 2 percent, but these were more than offset by skilled underwriting practices balancing the insurer’s portfolio.

Beazley’s exposure to the Chilean earthquake in February 2010 is estimated to have cost the insurer approximately US$55 million (£34.1 million:€40.5 million) to US$75 million (£46.5 million:€ 55.2 million) in claims; a figure which has been taken into account in trading results for the year.

The specialist insurer also expected to incur a loss of up to US$35 million (£21.7 million:€25.7 million) from the New Zealand earthquake disaster. However, future claims resulting from the devastating Australian floods this year are unlikely to affect Beazley.

“Our 25th year in business was distinguished by excellent profits and an enhanced underwriting result in the teeth of worsening market conditions. The expertise of our underwriters helped us achieve a combined ratio of 88%, an improvement of two percentage points over 2009. Since we began underwriting in 1986, we have achieved an unbroken track record of profitability through often turbulent market conditions. Our underwriting teams have shown they possess the skills needed to perform strongly in the current challenging environment.” said Andrew Horton, Chief Executive Officer of Beazley, when details of 2010 profits were released.

Beazley, which operates in the UK, the US, Europe and Asia, said it was looking for possible deals to augment its business in 2011 and has not ruled out a future acquisition; Beazley failed in an attempt to take-over rival Hardy Underwriting in 2010 but stressed that any future bids will only be made at the right price. Beazley’s final bid of US$290 million (£181 million:€212 million) for Hardy Underwriting was made in mid-December 2010 but was turned down by the company.

Beazley acquired Momentum Underwriting Management Limited (MUM) in 2008, which helped the company to grow its life, accident and health business delivering revenue of US$78.1 million (£48.4 million:€57.5 million) in 2010 – a figure which was better than expected.

Beazley has established a reputation as a renowned specialist insurer operating on the global stage providing cover for activities such as employment practice liability, directors and officers liabilities and risks associated with mergers and acquisitions. In addition to providing specialty insurance lines, the company provides insurance cover for conventional risks involving property, marine, life, accident and health insurance together with reinsurance products.

The USA is a pivotal market for Beazley and is a sector in which the specialist insurer has grown its presence over the years – accounting for approximately 60 percent of its current business. Business activity in Europe is also an important market for the company, with expansion through an acquisition a possibility. Likewise, Beazley has not ruled an acquisition in the Asia-Pacific region where it currently operates through a small network of outlets.

Beazley highlights the difficult trading conditions in 2010 with limited opportunities for growth. However, the insurer experienced positive returns through organic trading and the acquisition of MUM. A significant part of Beazley’s organic growth came from reinsurance and from an increase in demand for date breach insurance in the USA.

During 2011, Beazley’s expects to strengthen its life, accident and health insurance business in the USA and to strengthen its presence in the specialist insurance accident and health risk segment with the development of a team in the USA to offer simple and streamlined corporate healthcare insurance products to US companies.

Over the last two decades Beazley has increased its market share and has become a renowned specialist insurer on the global stage. As Beazley’s product range expands and its portfolio increases, with the prospect for further acquisitions, the company is well placed to continue its successful results in 2011 when trading conditions are expected to be very competitive.

Insurance Company Mentioned:

Beazley

Beazley plc, was founded in 1986 and is a specialist insurance company, provides underwriting and claims services. Beazley operates in five insurance segments: Marine, Political Risks and Contingency, Property, Reinsurance, and Specialty lines. The company has operations in Europe, the United States, Asia, and Australia.

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