In the face of the most severe financial crisis, Munich Re recorded a clear profit for financial year 2008. Dr Ludger Arnoldussen, Member of the Board, Munich Re, explains why their strategy is vindicated and that criticism of them being too conservative and for not taking on enough risk, is now hollow. He also talks about Munich Re’s commitment to developing innovative products, as well as, in Asia and the MENA region.
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Sompo Japan first came into the Singapore market with a fronting business through the now defunct Asia Insurance in 1973. In 1981, it set up a branch that was managed by Asia Insurance and 20 years ago, Sompo Japan Insurance (Singapore) was incorporated. Here, in an exclusive interview with Mr Satoshi Hanzawa, its Managing Director, we find out how the insurer plans to commemorate the 20 years and its bold plans going forward. By Ms Shakun Ashoka Raj
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The 2nd India Rendezvous, jointly organised by Asia Insurance Review and GIC Re, and held in Mumbai in mid January, showcased India’s resilient insurance industry to the global market. Attended by 240 delegates from 20 countries around the world, the two-day Rendezvous with the theme, “Reinsuring a dynamic growth market amidst the global financial crisis,” looked at the core issues and challenges in the Indian insurance and reinsurance market in the current worldwide economic scenario. By Mr Jimmy John
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The theme for the 1st Seoul Rendezvous “Strategic Risk Management and Reinsurance Priorities in Korea” organised by Asia Insurance Review was certainly timely with the heightened focus on risk issues. Speakers shared the importance of managing risks and hedging strategies, while taking a closer look at what’s abuzz in Asia’s second-largest insurance market. By Ms Min Yong
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The Australian insurance industry is stable amidst the global financial turmoil and APRA has been duly credited for this. However, insurers concurred that while they are insulated for the time being, they will not be immune to it. In this Country Profile on insurance Down Under, we see general insurers buffeted by severe weather events as the country saw its worst bushfires for more than a century. Life insurers are offering differing prognosis with some registering lower profits and others still predicting profits and growth. One life reinsurer urges the need for innovation in the distribution channels, while the health insurance industry sees hefty premium increases and expects the sector to consolidate.
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The Australian insurance regulator sees the local insurance landscape as being stable amidst the global financial turmoil. Mr John Trowbridge, Executive Member of the APRA, does not see a need to make any radical changes to the regulatory regime and believes that they have sufficient powers to help the industry ride out the current crisis.
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What was regarded a year ago as a problem restricted to the US sub-prime home-mortgage sector has since snowballed into a worldwide financial crisis that key Australian executives in a roundtable discussion say has long-term ramifications for the Australian insurance industry. Twelve industry experts debated on rising rates, fraud concerns, emerging markets as well as climate change, floods, under-insurance, regulations and brokers’ advocacy.
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The balance sheets of Australia’s general insurers continue to be pummelled by severe weather events, while the impact of the crisis on global capital markets has been minimised by traditionally conservative investment policies.
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Australia’s general insurers are lifting premium rates in their efforts to rebuild profitability in the face of the worldwide economic downturn and the ongoing impact of weather-related claims.
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While some life insurers are registering lower profits or ratings’ rankings, some are still predicting profits and growth for the Australian life sector despite the global financial crisis.
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The requirements of changing demographics in Australia are a challenge for life insurance distribution. Will innovation be the key to success? Mr Grant Albiston, Marketing Manager Life at Munich Re Australia, argues that innovation will be critical going forward as life insurers are challenged by the market environment and other product providers outside the insurance industry. He looks at the opportunities and challenges.
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Australia’s private health insurance industry faces more consolidation and insurers are seeking hefty premium increases.
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The Bermuda reinsurance market grew out of opportunity. No surprise then that they have turned their gaze towards Asia. Four companies and a consultant talk about the thrust into the region, the challenges they face and how with the market slowdown, this may put a brake on further expansion, at least in the short-term, from other Bermuda companies. By Ms Helen Yates, Freelance Contributor
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The Asian aviation market is certainly the next big thing in the aviation insurance industry, so say many in the industry. While the current financial mayhem may put a damper on this, four practitioners featured in this month’s Cover Story are optimistic that this market will take off. We also hear from an aviation broker and relive the tumultuous days following one of the world’s most horrific man-made disaster – 9/11.
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While it is not accurate to say that there is an established Asian aviation market, there is certainly a market for the general aviation business in the region. Mr Hans Sandström, Asia Capital Reinsurance’s (ACR) Head of Underwriting, Aviation, keeps a bullish view of Asia and believes it is aviation’s next big thing.
By Ms Manuelita Contreras
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Since the Wright Brothers took that first flight more than 100 years ago, the London insurance market has been the centre for the underwriting of aviation business. This is, however, changing. Mr Toby Palham, Senior Manager - Aviation, Allianz Global Corporate & Speciality Division, Allianz SE Reinsurance Branch Asia Pacific, reveals that the Asian aviation market portfolio will shift its focus from Europe to Asia within the next 10-20 years. This, despite the current slowdown in today’s uncertain climate.
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The 21st century has seen the establishment of an Asia Pacific aviation insurance market centred in Singapore. This marketplace is still young and not yet comparable either in size or scope to the international aviation insurance market in London. However it is growing rapidly. Mr Peter Buckley, Aviation Class Underwriter, Catlin Asia Pacific, Singapore Office, examines the marketplace, noting that while there are issues that threaten to cloud the horizon, the future is good as the market should further evolve and flourish.
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Historically, the aviation insurance industry has been centred in two geographical locations – the US – predominantly for the US client base – and Europe with London being the main centre of excellence. Mr James Coventry, Executive Director and Senior Client Advocate, Willis Singapore Pte Limited, talks about the emergence of the Singapore aviation insurance market and examines if “early birds” to this market will soar faster than those who wait.
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In Asia, growing the life sector depends greatly on reaching the customers as most of the region is still under-penetrated. Four life insurers and one consultant talk about the all-important distribution channel strategies, how innovation in distribution is crucial in enabling insurers to have that competitive edge, as well as how to develop products and provide a better service to policyholders.
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With the marketplace changing daily and customer needs growing in sophistication as well, AXA is committed to reach its customers through its diverse distribution channels and products. Mr Keith Perkins, Regional Chief Operating Officer, AXA Asia Pacific Holdings Ltd (AXA Asia Life) tells us how the global insurer is positioning itself as a trusted company with the help of its multi-channel distribution networks.
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Competition in China is forcing insurers to intensify their efforts to differentiate themselves. Mr Patrick Poon, Chairman of Operation Committee and Director, China Pacific Life Insurance Co Ltd, tells us how innovative distribution is one of the ways CPIC Life uses to get that competitive edge.
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With the strong fundamentals of the Indian economy and a high savings rate, India is one of the best places to be to ride out the current turmoil. Insurance is also a good business to be in as the penetration rate is low here. Ms Shikha Sharma, Managing Director & CEO, ICICI Prudential Life Insurance, winner of the 12th Asia Insurance Industry Awards for Life Insurance Company of the Year, talks about reaching out to customers, saying that strengthening and developing the distribution framework is the best way to do so and that companies need to focus on this.
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The current economic environment is undeniably challenging, but the changes it will encourage in the Asian insurance industry will help set the foundation for a more mature industry. Looking to the future, Mr Stephan Rajotte, President Sun Life Financial Asia, says there is good reason to believe that the resulting changes to sales and distribution will ultimately strengthen Asian insurance, providing a better service to stakeholders.
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Are the demands and needs of life distribution channels prodding companies to innovate and bring out new products and services? Mr Stephen Cotham, Director - Distribution Consulting Practice, Watson Wyatt Worldwide, examines this question and explains how insurers can develop products and offer services that will meet customers’ needs better.
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As we begin 2009, the insurance industry, not unlike the global financial services sectors and in fact the general populous worldwide, is lurching forward with trepidation as issues and obstacles are assessed, and with a modicum of optimism, the opportunities that lay ahead. Mr Patrick W Kenny, President and CEO, International Insurance Society, explores micro and macro issues to understand the specifics and to help find a plan for recovery.
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In the current financial crisis, the issue of asset and liability valuation has been of particular concern for the insurance industry, on both the asset and liability sides of the balance sheet. The fluctuations in the markets have demonstrated that no accounting solution to date has been able to offer a satisfactory solution in terms of properly assessing the valuation of an insurer. In this article which first appeared in the Geneva Association Newsletter on Insurance and Finance, February 2009, Mr Philippe Trainar, Chief Economist, SCOR and
Mr Beat Werder, Chief Communications Officer, SCOR, explain why policymakers need to implement the right accounting and prudential standards for the industry to thrive which, in turn, will benefit countries economically.
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Today’s business strategies are great for minimising costs and increasing profitability. They can also snarl your supply chain beyond recognition. Mr Peter Madeley, Vice President, Asia Operations, FM Global, offers three basic steps to help companies iron out the kinks.
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Companies are merging as they get together to make themselves stronger in the current difficult climate. Mr Nehemiah Neo, Managing Director, vrs Insight, Pan Asia Loss Adjusters, believes that this trend will continue and that there will be fewer but larger companies dominating the underwriting scene in the years to come. As such, these companies will also wish to work with loss adjusters which are big and have global connections and global standards of service.
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The global financial services industry has undergone immense upheaval over a very short period of time, causing companies to completely reassess their priorities. Ms Joan Fitzpatrick, CEO of ANZIIF, reminds us that we must not lose sight of business imperatives that always remain the cornerstone of a successful business. The management of talent is one of these and she stresses that fostering the development of staff to ensure that businesses grow and continue to innovate will always be an essential element of continued success.
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Regulators around the world are converging in their assessment of insurer creditworthiness. Even with the impact of the global credit crunch likely to increase the rigour of quantitative rules-based tests, the trend is for a wider qualitative approach, embodied in Enterprise Risk Management. Mr Vikas Newatia, Managing Director of EMB India, explores why.
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Asia Pacific CEOs remain more upbeat than their global counterparts about short term growth prospects, amidst a looming world economic slowdown. According to the PricewaterhouseCoopers (PwC) 12th Annual Global CEO Survey, nearly a third (31%) of Asia Pacific CEOs are very confident of growing revenues in the next 12 months compared to the global average of 21% in 2008.
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Insight, the Singapore based loss adjuster, has boosted its links to vrs Adjusters, the global loss adjusting network, ahead of a major vrs re-branding move.
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The RSA Asia & Middle East region announced a strong set of year-end results for 2008, reporting a profitable growth of 43% (30% on constant exchange) in premiums compared to 2007.
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Cranmore Adjusters Ltd, with offices located in London, New York, Florida, Bermuda and Sydney and Belcher & Associates (Far East) Ltd, whose liaison office is based in Thailand, have formed a new joint venture that will trade under the name of Cranmore B & A.
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Aviva plc recorded a net loss of £885 million (US$1.2 billion) for 2008, compared to a profit of £1.5 billion in 2007, because of a drop in the value of its assets amid the financial turmoil. Long-term savings sales climbed 1% to £40.3 billion, within which core life and pension sales rose 11%, while investment sales plunged 43%.
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Sadharan Bima Corp, Bangladesh (SBC), the national reinsurer of Bangladesh, has joined Asian Re as an Associate member. SBC was the nominated national institution on behalf of the government of Bangladesh to invest in Asian Re when the Corp was formed in 1979. Asian Re is a regional reinsurer, formed by ten governments of Asia under the auspices of the UN-ESCAP.
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China’s three largest life insurers received premium revenues totalling more than 100 billion yuan (US$14.6 billion) in the first two months of 2009, representing a y-o-y rise of 10%.
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With the mission of cultivating corporate citizenship for a caring community and promoting strategic partnership between business and social service sectors, the Hong Kong Council of Social Service (HKCSS) launched the “Caring Company” Scheme in 2002/03. Stepping into the seventh year, the Scheme has achieved a record high as 1,765 companies and organisations were awarded Caring Company Logos and Caring Organisation Logos, an 18% increase compared to last year.
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With the mission of cultivating corporate citizenship for a caring community and promoting strategic partnership between business and social service sectors, the Hong Kong Council of Social Service (HKCSS) launched the “Caring Company” Scheme in 2002/03. Stepping into the seventh year, the Scheme has achieved a record high as 1,765 companies and organisations were awarded Caring Company Logos and Caring Organisation Logos, an 18% increase compared to last year.
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AM Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of General Insurance Corporation of India (GIC). The outlook for both ratings is stable. The agency says that the ratings reflect GIC’s adequate risk-adjusted capitalisation, improved underwriting performance and strong market presence.
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Allianz Indonesia has seen another great year as a microinsurer since it started the business two years ago. In 2008, the company has surpassed the milestone of Rp1 billion (US$83,400) premium income from its microinsurance business, an increase by more than 350% y-o-y. The number of total microinsurance policies quadrupled to more than 178,000 policies compared to 2007.
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Sompo Japan Insurance and Nipponkoa Insurance have agreed to establish a Joint Holding Company and through joint stock transfers become wholly-owned subsidiaries of the joint holding company. This is subject to the approval of shareholders as well as regulatory approvals. This business integration is aimed to be completed in April 2010.
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The bancassurance sector in South Korea maintained its share of contributions to the insurance industry last year, with insurers receiving 9.6% of the country’s total 110 trillion won (US$71.3 billion) in premium income from the channel, compared to 9.3% in 2007.
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Takaful Ikhlas Sdn Bhd has been chosen as the Best Takaful/Retakaful Provider 2008 by readers of Islamic Finance News (IFN) in a draw held in conjunction with Islamic Finance News Awards 2008.
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Non-life insurance premiums in the Vietnamese market rose to about 10.9 trillion dong (US$642 million) last year, an increase of 30% over 2007, according to the local media.
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Singapore’s general insurance industry gross premium income rose by a healthy 16% in 2008 to S$2.88 billion (US$1.88 billion) against S$2.48 billion in 2007. However, the overall result was overshadowed by record losses on the motor account amounting to some S$214.1 million, the largest motor loss ever recorded, according to figures released by the General Insurance Association of Singapore (GIA).
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AXA Life Insurance Singapore has launched a ground-breaking Unemployment Benefit Programme which offers clients two options for their regular premium insurance plans, should they be retrenched. Clients can either choose the first in the market 100% Premium Refund Guarantee or enjoy an extended grace period up to 365 days, compared to the industry norm of 30 days.
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Appropriate regulation of credit rating agencies will play an important role in building confidence in the marketplace, especially if the purpose of this regulation is to ensure that rating agencies comply with policies and procedures designed to promote independence and objectivity, according to a white paper published by Standard & Poor’s Ratings Services (S&P).
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Directors’ and officers’ (D&O) liability insurance costs for the S&P Financials Sector increased 50% in 4Q, 2008 compared to that of 2007, according to the Quarterly D&O Pricing Index released in early March by Aon Corp’s Financial Services Group.
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US corporate insurance buyers have ranked FM Global, the commercial property insurer, as number one in each of the five areas seen to be the most important drivers of insurance carrier value, found a Greenwich Associates study, a leading international research firm in institutional financial services.
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Very large Muslim majorities continue to renounce the use of attacks on civilians as a means of pursuing political goals and yet agree with Al Qaeda’s goal of pushing the US to remove its military forces from all Muslim countries, revealed a study of public opinion in predominantly Muslim countries. In some cases, majorities approve of attacks on US troops in Muslim countries.
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Three insufficient rescue loans by the US government amounting to US$150 billion and a fourth quarter net loss of $61.7 billion in 2008 – the biggest ever by a company in a single quarter – now AIG gets another $30 billion of lifeline and places two of its crown jewels into trusts. We look at the latest turn of events in the AIG crisis saga.
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