Round-up of the latest news and developments from the Asian insurance market with stories from Swiss Re, Lloyd’s, Malaysia and more.
Swiss Re to establish reinsurance regional headquarters in Singapore in 2018
Swiss Re is extending its commitment to Asia by setting up a dedicated regional legal entity in Singapore for its reinsurance operations called Swiss Re Asia. Swiss Re will also make the entity its regional headquarters for its reinsurance operations in Asia. Swiss Re Asia will be owned by its Zurich-based parent, Swiss Re Ltd, and will share Swiss Re's group credit rating. Swiss Re expects the new headquarters to be fully set up in 2018 and the office network realigned to the new structure by 2020. The new structure of the reinsurance business will not affect Swiss Re Corporate Solutions in Asia. This move also aligns the company’s legal entity structure across its Asia, Europe and Americas regions. Swiss Re Asia will continue to serve its clients and partners across the region through its network of offices, mirroring its existing footprint in Australia, China, Hong Kong, India, Japan, Korea, Malaysia and Singapore. Jayne Plunkett, Swiss Re CEO Reinsurance Asia said, "This move demonstrates our commitment to Asia as we become even closer to the market. As one of Asia's largest reinsurers, we will continue to combine our global knowledge with even deeper insights into local and industry needs, to benefit our clients and partners."
Asia still behind on cyber risk management according to Lloyd’s
Asian organisations are behind when it comes to cyber risk management, with many not having the fundamentals in place, said Lloyd's CEO Inga Beale at the recent Lloyd's Asia cyber risk seminar held in Singapore. Risk managers in the region understand tangible risks but evaluating threats like business interruption and reputation impacts, which come with cyber breaches, is more difficult. At the same time, pressure on companies to deal with cyber threats is intensifying. Beale said, “One of the things that are holding companies back from purchasing cyber insurance isn’t not recognising that cyber is a risk for them, but not recognising what insurance can do.” However, it was noted that there is a growing amount of cyber insurance being purchased. Beale concluded by saying there were increasing signs that cyber incidents may have an impact on how ratings agencies assess one’s business and adjust credit ratings downwards based on knowledge of damaging cyber incidents such as data theft and loss. Lloyd’s launched 15 new cyber products last year and up to 77 of its syndicates planning to write cyber. Lloyd’s estimated that cyber premiums will amount to over US$1 billion for Lloyd’s, which is a 40% increase this year over last year.
Malaysia deciding on whether to enforce a cap on foreign insurer ownership
Malaysia is contemplating whether to enforce a limit on foreign ownership of insurers as it looks to strengthen local participation. The central bank is looking at a stricter variation on an existing policy that says foreign companies owning 100% of local insurance firms must pare their stakes to no more than 70%. Bank Negara Malaysia is thought to be taking a more forceful tone in the future and will require companies with large insurance stakes to show they have the country’s best interests at heart. Details are still being debated but some criteria could include hiring more Malaysian workers for highly skilled jobs and creating products that fulfil the needs of niche local market segments. Datuk Muhammad Ibrahim, the central bank governor, warned foreign insurers last year that they “need to contribute more to justify their presence in the Malaysian market.” There are concerns that some foreign owners focus on short-term profits that come at the expense of serving their customers. Malaysia’s life insurance penetration has been stationary over the past three years at 55%. AIA Group Ltd, Great Eastern Holdings Ltd and Tokio Marine Holdings Inc are among foreign companies that have wholly owned general insurance and life insurance operations in Malaysia, according to their latest annual reports.
Maybank looks to list its insurance arm
Malayan Banking (Maybank) is seeking to list its insurance arm, which will see the largest listed insurance business in terms of market capitalisation. Maybank’s insurance business is conducted by Etiqa International Holdings, which owns 69.05% of Maybank Ageas Holdings. The Etiqa provides life and general insurance in Malaysia, Singapore and the Philippines. While its ownership is relatively small within the Maybank group, Etiqa is the biggest insurance company in Malaysia but has little exposure away from the country. It has been reported that Etiqa is aiming to be a major regional player using Maybank’s extensive network of branches in Asean. Its Singapore business unit has been able to grow in the past three years. In Malaysia, there are also opportunities to grow further as insurance penetration is still low. For the financial year ended 31 December 2016, Maybank Ageas made a record pre-tax profit of MYR810.3 million, an increase of more than a third from the MYR604.4 million posted for 2015.
Willis Towers Watson and PARIMA launch risk lab series
Willis Towers Watson and PARIMA have jointly launched an educational lab to further the professional development of risk and insurance executives in APAC. The initiative called the Risk Lab series is a single day event which will be first held on 28 April 2017 in Manila. Covering strategic risk, operational risk, business continuity and human capital risk it will be followed by sessions in Shanghai, Taipei and Singapore. James Matti, head of the Philippines at Willis Towers Watson said, “We are a nation that is constantly exposed to a myriad of risks and Filipino firms have become more sophisticated in their risk mitigation efforts. As analytical brokers, we see the challenges from an increasingly interconnected and diverse risk landscape. Given these complexities within a nation already flagged by UNISDR as one of the top ten countries with the most number of people affected by disasters, the importance of a robust risk management discipline to enable sustainable business growth has never been more critical. As risk industry advocates, we are pleased to partner with PARIMA to provide a professional development pillar for the industry through our Risk Lab workshop.”
Asia's life market to grow more than 10% in real terms during 2017 and 2018
Life insurance growth in Asia will slow in the next couple of years following last year's extraordinary surge in premium volume in China, but it will still be significantly above 10% in real terms, according to global reinsurance giant Munich. In life insurance, global premium growth, which is driven by growth markets in Asia and Latin America, is expected to increase by over 4.5% on average, 3.0% in real terms, more than economic growth. Opportunities in mature countries continue to be clouded by persistently low interest rates. Premium growth is likely to fall short of economic growth. However, strong premium expansion in the emerging markets will almost fully compensate for the moderate development in the industrialised countries.
Willis Towers Watson and AIG collaborate on new product
Willis Towers Watson and AIG have revealed a new product designed to protect the airline industry from cyber exposure. The new product, called CyFly, is a collaboration between Willis and AIG and will be available worldwide. Willis Towers Watson discovered that failure of critical IT systems is the biggest risk facing the global aviation industry. The new product will offer an extension of business interruption to third parties, which is a key addition for the airline industry. The cover extends to both IT service providers and non-technology firms. It will also offer network business interruption cover at a pre-agreed minimum value. The changes mean that airlines will be covered for specific risks in their industry. With airlines relying on a number of different third parties, an off-the-shelf cyber policy would not provide the cover needed. John Rooley, CEO, Willis Towers Watson global aerospace said, “The launch of CyFly is a defining moment for the aviation industry in terms of the approach to cyber risk within an enterprise risk management framework and we are extremely excited to play our part in that.”
FWD begins talks to acquire Thai bank’s insurance arm
FWD Group, the Hong Kong based insurer, has begun exclusive negotiations to buy Siam Commercial Bank’s (SCB) life insurance business. The deal is valued at nearly US$3 billion and could become the biggest insurance M&A deal in the region. It has been reported that a decision about the deal could be made by late May. Southeast Asia is top of many insurers’ expansion plans due to its low insurance penetration, younger population and emerging economies. If FWD succeeds in acquiring SCB Life Assurance it will greatly expand its existing operation in Thailand, which was worth US$2.2 billion at the end of 2015. AIA Group, Manulife Financial Corp and Prudential Plc were all thought to be in the process to buy SCB Life Assurance, but it has been reported that these negotiations fell through.
Colin Fordham appointed as senior marine liability underwriter by Markel International
Colin Fordham has been appointed senior marine underwriter by Markel International joining from Munich Re syndicate where he held the same position. Fordham brings over 20 years marine insurance experience in underwriting, claims and broking. Before this, he was the general manager for Seasia P&I Services where he supervised a team of claims handlers and master mariners, along with a correspondent network in more than 20 countries. He will report to Matthew Cannock, principal officer and managing director of Markel International Singapore, Fordham will have responsibility for boosting Markel’s marine liability business in Asia. Commenting on the appointment, Cannock said, “We are delighted with Colin’s appointment. He will make a valuable addition to the marine underwriting team here in Asia. With Colin’s wealth of experience and expertise, we can definitely look towards growing Markel’s marine liability book of business in the region. The timing of this appointment could not be better following so closely to our acquisition of the Galleon Underwriting Agency last year and this means that we will be able to offer their innovative products to our partners across Asia Pacific.”
Willis Towers Watson appoints James Leung
James Leung has been hired by Willis Towers Watson as regional director, business development and proposition, health and benefits, Asia and Australasia. Leung joins with over 20 years’ experience in the health and benefits sector in which he specialises in health risk management, corporate wellness and employee benefits insurance placement.