Feb
28
Allianz Profits Grow
Filed Under Allianz, Health Insurance, Insurance Company, Life Insurance | 4 Comments
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.
Feb
28
Ukraine Debating Health Insurance Reform
Filed Under Health Insurance, Healthcare, Medical Insurance | 34 Comments
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
Feb
25
AIG Reports Improved Results
Filed Under AIG, Chartis, MetLife | 6 Comments
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.
Feb
24
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.
Feb
23
Discovery Holdings Reports Jump in 2010 Profits.
Filed Under Africa, Health Insurance, Insurance Company, Medical Insurance, USA Health Insurance | 3 Comments
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.
Feb
23
Zurich Expands Insurance Operations In Latin America
Filed Under Insurance Company, Life Insurance | 8 Comments
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.
Feb
22
Bangkok Dusit Medical Services Invests In Thailand’s Bumrungrad Hospital
Filed Under Uncategorized | 4 Comments
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.
The move by BGH to invest in the highly regarded Bumrungrad Hospital is part of the group’s strategy to achieve synergies between medical operations in a bid to lower costs and strengthen its position in the expanding private healthcare market in Southeast Asia.
After the initial acquisition of the 11 percent stake in the Bangkok-based hospital company, the Bangkok Dusit Group said that it might consider the acquisition of more shares in Bumrungrad if the investment represents value for money.
The new partnership is expected to benefit both parties as combined operations will help with the control of medical costs, resource management and general overheads at a time when healthcare costs are under pressure from inflationary increases.
This recent move by BGH follows its merger in 2010 with private hospital chain the Health Network Group (HNG) in Thailand. The deal which is set to be completed later this year will cost Bangkok Dusit approximately US$315 million, providing access to the Phyathai Hospital and the Paolo Memorial Hospital and six other private hospitals in HNG’s ownership.
Bangkok Dusit has been initiating investment schemes recently to consolidate its position in the private health market in Southeast Asia especially Thailand. Following the take-over of the Health Network Group, Bangkok Dusit becomes the second largest hospital group in the Asia-Pacific region outside Japan.
The private healthcare sector plays an increasingly important role in the provision of health service for the more affluent population in Thailand. Along with domestic patients, the Thai private healthcare sector has built a strong reputation in the provision of medical tourism services; Thailand is joining India and Singapore as being prime destinations for foreign clients seeking affordable and high quality medical procedures.
The Bumrungrad Hospital has become one of the favored destinations for medical tourism in the Asian region, with the Bangkok-based hospital having facilities for inpatient and outpatient services covering a wide range of treatments.
BGH’s decision to invest in one of Asia’s leading private hospitals enhances its position in the provision of quality private hospital services with the ability to integrate activities with its existing operations to achieve cost savings and improve its competitiveness in the private healthcare sector. This comes at an opportune time with the potential for increased demand for medical tourism services arising from reforms taking place in major western hemisphere countries such as the UK and USA in addition to the growing affluence of Thailand’s indigenous population.
Thailand is one of the leading countries in the private healthcare market in the Asian-Pacific region, with the Bumrungrad being the largest hospital in the country having capacity to deal with over 2,500 outpatients daily. Bangkok Dusit is already the market leader in Thailand with a network of 19 private hospitals, which is set to increase to 27 hospitals after acquisition of the Health Network Group is finalized.
While the Bumrungrad hospital is located in Bangkok, it has an international reach with offices worldwide catering for international patients wishing to visit the Burmrungrad hospital. The Bangkok based hospital caters for over 1 million patients a year, with around 400,000 being international patients.
Companies mentioned:
Bangkok Dusit Medical Services
Bangkok Dusit Medical Services was founded in 1969 and the Bangkok hospital started its operation in 1972. Bangkok Dusit Medical Services operates a private hospital network in Bangkok, other Thai provinces and in Cambodia. The Group’s private healthcare facilities include Samitivej hospital and BNH hospital.
Bumrungrad International
The Group’s principal activities are owning and operating hospitals. Its flagship hospital, Bumrungrad International, is a renowned medical centre attracting over 1 million patients annually and named one of the world’s top ten international hospitals by Newsweek International. The Company also owns a businesses in real estate and anti-aging and functional medicine.
Feb
22
Sun Life Financial Expands in the Philippines
Filed Under Insurance Company, Life Insurance, Philippines | 4 Comments
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.
Feb
21
Ageas has announced plans to enter the growing Turkish non-life insurance market through a partnership with local conglomerate Hacı Ömer Sabancı Holding A.Ş. (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.
Feb
18
China Announces Plans To Improve Healthcare
Filed Under China, China insurance, Healthcare | 9 Comments
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.
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