Taiwan: Insurers can form alliances for quicker entry to Mainland mart
Advertisement
Smaller insurance companies in Taiwan can now gain fast-track entry to the mainland Chinese market if they form alliances, even though they might not individually meet China's 5-30-2 entry rules, reports the Taiwan Economic News.
Under Mainland regulations, a foreign insurer will be allowed to start operations in China if it has gross assets exceeding US$5 billion and at least 30 years of corporate history. The foreign insurer must also have operated a representative office in China for at least two years. These rules have also been applied to insurers from Taiwan.
The mainland Chinese authorities, though, are easing these regulations for Taiwanese insurers that are not part of any financial holding group. They can start operations on the mainland if they apply for approval in a tie-up. This relaxation is part of the Economic Cooperation Framework Agreement, a trade pact, signed last month between China and Taiwan to expand and deepen economic ties across the Taiwan Strait.
Taiwan's Financial Supervisory Commission (FSC), which oversees the financial services sector, says that the lower threshold allows insurance subsidiaries and insurers not affiliated to financial holding groups to consolidate to tap the China market.
India: Govt formalises legislation regarding supervision of unit-linked plans
The Indian government has introduced a Bill in Parliament to allow insurers to sell unit-linked insurance plans (Ulips) without seeking the approval of the capital market regulator, the Securities and Exchange Board of India (SEBI). The Securities and Insurance Laws (Amendment and Validation) Bill 2010 stipulates that any insurance product, including Ulips, should be regulated by the Insurance Regulatory and Development Authority (IRDA). The Bill replaces an ordinance that was issued last month to the same effect.
The Bill also provides for a joint committee to be headed by the Finance Minister and consisting of representatives from the country's four financial regulatory bodies. The committee is to mediate and rule in disputes among the regulators. The four regulators are the IRDA, SEBI, the Reserve Bank of India (RBI) and Pension Fund Regulatory & Development Authority (PFRDA).
The government was forced to step in with the new legislation following a row between IRDA and SEBI after the latter banned 14 life insurers from selling Ulips unless the products were registered with the stock market regulator. SEBI's argument was that Ulips were like mutual funds that invested mostly in the capital market with the insurance element being a minor portion of the product. IRDA contended that SEBI had no jurisdiction over Ulips and that regulating any product related to insurance was solely its domain.
To appease the RBI which opposes the Bill it fears might affect its autonomy, a major change is made in the Bill from the ordinance. The Bill upgrades the status of the RBI governor in the joint committee to vice-chairman from a mere member which would put the central bank at par with the other regulators. Prior to this, RBI headed a High Level Coordination Committee on Financial Markets in which all regulators were members. The joint committee idea was mooted when the HLCC failed to resolve the IRDA/SEBI dispute.
The Bill has to be introduced to formalise the ordinance, which was promulgated on 18 June and which will lapse after six months. The legislative move will end uncertainty over Ulips which account for 50% to 80% of life insurance sales.
QBE Insurance Group, Australia's largest insurance company, has issued a profit warning saying that its 1H profit is expected to be lower by 40% from the same period last year because of a dent in net investment income.
The insurer expects its insurance profit margin for 1H, to 30 June, to be 15.7%, which would be below its 16%-18% forecast range. Equity losses more than doubled to US$228 million while there were one-off gains of about $US220 million for the first six months of last year.
In a statement, QBE Chief Executive, Mr Frank O'Halloran, said: "The continued excellent underwriting results have been more than offset by significantly lower investment income from reduced interest yields, the fall in equity markets and one off gains in the first half of 2009."
The statement, issued on Monday, says that QBE remains on target to achieve operating cash flow of more than US$2 billion for the full year. Mr O'Halloran also says that he still expects to end the year in the target range. He added: "We will continue with our successful strategy of growth through carefully selected acquisitions which add to QBE's already significant geographic spread and product diversification."
Separately, Insurance Australia Group this week also issued a profit warning. The group's net profit is expected to be A$91 million (US$82 million) for the full year to 30 June, a decline of 50% compared to the previous financial year. Reasons cited for the less glowing performance include a huge write-down on its UK motor business and claims from heavy storms in Melbourne and Perth earlier this year.
Vietnam: Insurers announce investment gains for 1H
Several insurers in Vietnam have announced their financial results for 1H that reveal that they made most of their profit from investments instead of underwriting operations, according to VietNamNet Bridge.
Among them, BIDV Insurance Company stated that investment gains accounted for 74.5% of total profits. The company posted pre-tax profits of VND36.3 billion (US$1.89 million) for the first six months of the year, of which financial investments brought in VND27.05 billion. The investment profits were made mainly on bonds and stocks. The insurer's total revenue for 1H 2010 was VND346.15 billion, an increase of 62% over the same period of 2009. Premium revenue stood at VND238.5 billion, rising by 69%.
The picture was similar for other insurance companies. Bao Minh Insurance made VND150 billion in investment profits, up 11.8% compared to the same period last year. Vietnam Reinsurance Corporation (Vinare) says that its insurance profits amounted to VND2.7 billion for 1H but financial investment gains totalled VND126.8 billion.
Industry sources say that one reason for the lower insurance profits reported by insurance companies in general is that the insurers are accepting high-risk deals in order to have more cash for investments.
Japan: Japanese women extend life expectancy to more than 86 years
Japanese women are expected to live for almost 86.5 years, topping the world longevity ratings for the 25th straight year, reports the Associated Press citing data for 2009 published by the Japanese Ministry of Health, Labour and Welfare. Average life spans rose by almost five months for women and nearly four months for men compared to the previous year.
The statistics showed that Japanese women and men extended their average life expectancy to new records of 86.44 years for women and 79.59 years for men. Japanese men, though, were ranked fifth in the world in terms of longevity.
The increase in Japan's longevity largely reflects good medical treatment that reduces mortality from common causes of death like cancer, cardiac disorders, strokes and pneumonia, a ministry official says. The relatively healthy diet and high living standards of the Japanese also contribute to growing longevity.
A longer life span brings mixed blessings for the insurance sector. While it heralds good prospects for the annuity market, there are other implications for the life and healthcare insurance segments particularly as the population ages and declines.
In the world's longevity rankings, women in Hong Kong came in second at 86.1 years. Qatar men enjoyed the longest life span at 81 years, followed by those in Hong Kong at 79.8 years.
