News Life and Health21 Sep 2018

Asia:New business leads to 19% embedded value growth for life insurers

| 21 Sep 2018

There was a total growth of 19.2% in reported embedded value (EV) in 2017 , and similarly a 19.1% growth in value of new business (VNB), according to Milliman, a premier global consulting and actuarial firm.

These were some findings of Milliman's study on reported year-end 2017 EV / VNB results for 31 major insurance companies operating in Asia, excluding Japan.

Beyond EV results, the Milliman 2017 Embedded Value Results: Asia(excludin Japan) report analyses and discusses the EV methodologies and assumptions, the impact of regulations, as well as recent developments with IFRS 17 as it gains momentum in the region.

"China's clampdown on high guarantee universal life sales reduced premium volumes but had little effect on EV and VNB results due to profitability of this line of business typically being very low or even negative," said Milliman principal and consulting actuary Paul Sinnott. "Overall, those insurers that successfully reoriented their product strategies from savings to protection business seem to have performed best."

A few other key insights from the Asian report include:

  • EV growth across Asia ranged from 10% to 28%, with 2017's total reported Asian EV increasing by 19.2% on a comparable basis to $480bn, up from $403bn in 2016.
  • South Korea, citing profitable new business, efficiencies gains, and a change in investment assumptions, reported the highest comparable EV growth, at 22%, with Hong Kong and mainland China reporting the next highest total EV growth, at 21%.
  • Life insurance sales decreased slightly overall, with gross written premiums estimated to have reduced by 4%. This was largely due to China's$32m decrease in GWP, mainly as a result of the restrictions imposed on the sales of universal life business.
  • VIF increased for all markets. South Korea recorded the largest VIF growth of 103%, mainly as a result of increased investment return assumptions reflecting the yield curve rise last year; Hong Kong also posted strong VIF growth of 20%, largely driven by high volumes of new business from mainland Chinese visitors.

Founded in 1947, Milliman is among the world's largest providers of actuarial and related products and services. The firm has consulting practices in healthcare, property & casualty insurance, life insurance and financial services, and employee benefits.

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