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EC News Asia Edition (26th May 2017)

  • Publish Date: Posted almost 7 years ago
  • Author:by Alan Jarque

Round-up of the latest news and developments from the Asian insurance market with stories from Lloyd's, Swiss Re, Singapore and more.

AIG names Claudia Salem as Singapore CEO and Head of Country Operations, SEA

AIG have appointed Ms Claudia Salem, CEO Singapore and Head of Country Operations, Southeast Asia, which includes Malaysia, Thailand, Indonesia, Vietnam, the Philippines and Guam. Claudia will report to Mr Gaurav D. Garg, President and CEO, Personal Insurance.

Claudia joined AIG in 2003 and has successfully served in numerous leadership roles and has a strong understanding of the Southeast Asian region.  Most recently Ms Salem was Global Head of Shared Services, based in Kuala Lumpur, Malaysia leading strategic and organisational transformation, working closely with the consumer and commercial businesses to optimise services delivered to internal and end customers. She holds an MBA from New York University’s Stern School of Business and a Bachelor’s degree in Computer Engineering from the American University of Beirut.

Ms Salem succeeds Mr Matt Harris, who is leaving AIG to pursue other opportunities.

Munich Re unveils management changes to strengthen presence in Asia Pacific

Mr Hermann Pohlchristoph has been appointed to the Board of Management of Munich Re with effect from 27 April 2017, responsible for Asia Pacific, Germany, Africa, and Procurement and Services. Mr Pohlchristoph has been with Munich Re since 2002, most recently as CFO for the Reinsurance division.

With effect from January 2017 Mr Roland Eckl is Chief Executive Asia Pacific, with responsibility for Japan, Korea, India and South East Asia. From September onwards he will be based in Singapore heading Munich Re’s new Regional Centre. He has been with the reinsurer since 1990, spending several years in Korea. Most recently Mr Eckl was responsible for Munich Re’s business in Australasia/New Zealand, Japan, India and the Indian Subcontinent.

Dr Tobias Farny, Chief Executive Asia Pacific, is now responsible for Greater China and Australia/New Zealand. He previously looked after Greater China, Korea, and South East Asia. Two years ago Dr Farny spent a year in Silicon Valley, exploring opportunities for the future of insurance.

Swiss Re bundles Asian hub

Swiss Re is establishing an underwriting hub for its property and casualty insurance business in Asia. The move will result in two key leadership changes.

The Zurich-based reinsurer said on Tuesday that it will set up a combined P&C business underwriting hub in Singapore. Sharon Ooi, who is head of property and casualty underwriting for Asia, Australia and New Zealand, will run the unit from Singapore, where she is Chief Executive of Swiss Re.

Swiss Re said it is setting up the hub to better serve clients and to grow profitably in Asia. The Swiss firm said Victor Kuk will take over from Ooi’s as head of property and casualty lines for Southeast Asia, India, Korea, Hong Kong and Taiwan. Both his and Ooi's appointments are effective from July. Asian insurance now accounts for nearly one-third of global premiums, from 20 percent in 2007.

Swiss Re are expecting its premiums from life insurance and non-life products to continue to grow by 6% and 5%, respectively, with emerging Asia insurance markets posting even headier growth.

The new hub combines our global knowledge with even deeper insights into local markets and industry needs to benefit our clients as they continue to grow their businesses across Asia Pacific,” Swiss Re Asia CEO Jayne Plunkett said. 

The reinsurer, which has been in Asia for 104 years, has 1,900 staff in the region.

Prudential Asia CEO to exit

After more than ten years' with Prudential Corporation Asia, Tony Wilkey is stepping down in July. Prior to becoming CEO of Prudential Corporation Asia in 2015, Tony Wilkey was chief executive of Prudential Corporation Asia's life insurance operations. Tony joined Prudential in 2006 after previously serving as chief operating officer of American International Assurance (AIA), based in Hong Kong, overseeing AIA’s life companies in South-east Asia.

Replacing Tony will be Prudential’s group Chief Financial Officer Nic Nicandrou, who will subsequently be replaced by Deloitte U.K.’s Mark FitzPatrick.

Nicandrou joined Prudential in 2009 as chief financial officer. Prior to this he worked at Aviva, where he held a number of senior roles. Since 2015, he has been the executive director responsible for Prudential’s African insurance operations. He is also a director of The Prudential Assurance Company. Nic began his career at PricewaterhouseCoopers.

FitzPatrick is currently a managing partner of Deloitte U.K. and a member of its executive committee. Mark has 26 years’ global industry experience and his roles at Deloitte have included leading the chief financial officer training programme and the insurance and investment management audit practice. FitzPatrick will join the Board of Prudential in the summer. Tony Wilkey will remain with the business to support an orderly transition; the appointment has received regulatory approval.

Ai Hoon Kwek appointed as new senior cargo underwriter in Singapore

Reporting to Mr Paul Hackett, Head of Marine, Singapore, Ai Hoon Kwek will assist in managing and developing Aspen Insurance’s Asia Pacific and Middle East Cargo portfolio.

Ms Kwek was previously Cargo Underwriter with XL Catlin in Singapore. Prior to this she was Deputy Manager, Marine, with the American Home Assurance Company.

Mr Hackett said: “We are delighted to welcome Ai Hoon to the Aspen Insurance team. Her proven experience and strong track-record will assist us in developing further our business in the region.

Willis Towers Watson bolsters insurance strategy presence in Asia

Willis Towers Watson has named Matt Houghton as senior consultant of strategy in its insurance consulting and software business in Asia Pacific.

Following the recent appointment of Kevin Angelini as head of strategy, the firm said that Houghton’s addition to the team further boosts capabilities to offer broader consulting services relating to strategic initiatives facing the insurance sector including strategy setting, corporate development and M&A.

Houghton’s focus is to provide consulting to the insurance industry regarding strategic development, distribution and M&A. 

Before joining Willis Towers Watson, Matt was head of strategic transformation at AmMetLife Insurance, a joint venture in Malaysia between MetLife and AmBank Group that was established after MetLife acquired 50% of AMBank Group’s insurance company.

Lloyd's insurers launch political risk consortium in Asia

Beazley, Chaucer and Talbot have joined forces to form a political risk consortium in Asia offering increased capacity for a wide range of political and contract frustration risks.

The three leading insurers in the Lloyd’s market will work collectively, providing large scale capacity of up to US$130 million for individual risks, with a policy period of up to seven years, through the new Lloyd’s consortium based in its Singapore hub (the largest Lloyds market hub outside of the UK with gross written premiums of $680 million in 2015).

Lloyd’s is the world’s leading market offering insurance cover for political risks – the risk that political acts or upheavals will result in a loss when investing in a specific country. Key risks covered by these policies include government intervention, confiscation and physical damage due to war, currency inconvertibility and contract frustration related to defaults, and non-payment by sovereign entities.

Mr Michael Lum, political risks and trade credit underwriter at Beazley in Singapore, said: “The new political risk consortium at Lloyd’s Asia allows local companies to protect themselves against risks related to larger investments in potentially unstable geographies, backed by the collective expertise of three leading Lloyd’s syndicates. Beazley’s Singapore office has been steadily growing along with Lloyd’s overall business in the region and the increased capacity of the consortium will increase the ability of Asia Pacific companies to cover these risks locally.

Ms Margaret To, CEO of Chaucer Singapore, said: “Our brokers and clients told us they needed help solving the problems associated with transacting business in emerging markets. We took this on board, and have responded to the challenge by establishing the new political risk consortium. With greater dedicated capacity, more access to expertise and local representation for the Asia-Pacific region, the new consortium and Chaucer Singapore provides brokers and clients with direct access to market-leading political risks solutions.

Mr Jaime Taylor, political risks and trade credit underwriter at Talbot Risk Services in Singapore, said: “We expanded our global footprint into Singapore in 2007 and have since worked diligently to meet the needs of our clients here. Together, we will offer the Asia market the ability to assemble and deliver large scale capacity quickly and efficiently, delivering quotes for covers locally that meet our clients’ deadlines.

Beazley is the parent company of specialist insurance businesses with operations in Europe, the US, Canada, Latin America, Asia, the Middle East and Australia. Beazley manages six Lloyd’s syndicates and, in 2016, underwrote gross premiums worldwide of $2,195.6 million.

Chaucer is a specialty insurance group providing clients with proven smart risk solutions for underwriting and claims. With its headquarters based in London and international hubs for Europe, Latin America and Asia, Chaucer protects clients in over 200 countries and territories worldwide.

Talbot Underwriting operates within the Lloyd’s insurance market through Syndicate 1183 which focuses on underwriting a number of specialty risks including marine, aviation, transport, energy, terrorism, political risk, accident and health, construction, contingency, financial institutions, property and treaty reinsurance. Talbot is a wholly owned subsidiary of Validus Holdings, a holding company for reinsurance and insurance operating companies and investment advisors.

Singapore's DBS Group seeking non-life bancassurance partners

In a 15-year deal that could potentially be worth up to US $350 million, Singapore’s DBS Group are planning to invite bids from insurers keen to sell general insurance products across key marketing of Southeast Asia’s  biggest lender, reporter Reuters citing sources familiar with the matter said.

DBS are planning to seek bids from the insurers as soon as next month, three sources, who declined to be identified, informed Reuters.

Two of the sources said that the potential value of the deal could change depending on the deal’s structure and sales assumptions made by the bidders.

It is expected that DBS, who have partnerships in subsidiaries with Japanese Group MS&AD’s, will select one of two insurance partners for the deal which could cover all of its key markets of Singapore, Hong Kong, Indonesia, India, China and Taiwan.

MS&AD's units are expected to participate in the bidding process, which is also likely to draw interest from France's AXA, Italy's Generali and Australia's QBE Insurance Group, the sources said.

The move underscores the under-penetrated region's growing attraction to insurers who see a big opportunity to boost business as rising incomes generate demand for property, motor and travel insurance products.

In the last few years, banks such as Standard Chartered and CIMB Group have formed partnerships with insurers as the latter were willing to pay hefty fees for access to lenders' branch networks and digital platforms.

FWD Group completes AIG Fuji life insurance acquisition

Last Wednesday, MANILA - FWD Group said they have completed its acquisition of AIG Fuji Life Insurance from American International Group. This will help FWD Group become a leading pan-Asian insurer, said CEO Huynh Thanh Phong.

FWD Group, which has 1.2 million customers in the Philippines, Hong Kong, Macau, Thailand, Indonesia, Singapore, and Vietnam, did not disclose details of the transaction. A company statement said that all existing polices of AFLI will be honoured by FWD Group.

Labuan aims for bigger captive insurance market

The Labuan International Business and Financial Centre (Labuan IBFC) hopes to maintain the growth of its earned premiums for captive insurance business at 18.8% this year, supported by the premiums contributed by the local giant companies.

Last year Labuan IBFC CEO, Mr Danial Mah Abdullah, said that due to higher retention for all sectors, including fire, marine, engineering and motor, the financial centre’s earned premiums for captive insurance business rose 18.8% to US$252 million.

Currently, local giant companies such as Petronas, Sime Darby, AirAsia and Genting have set up their captives in Labuan, reported the Bernama News Agency citing Mr Danial.

He said that thus far, Labuan IBFC has registered 41 captives, of which 39 recorded combined gross written premiums of US$348.6 million by the end of last year.

Of the 39 captives, 46.3% are local companies, about 10 from Japan, and several others from countries such as Singapore, Bermuda and Sri Lanka,” he said.

He revealed that the Labuan IBFC financial centre is approaching several companies, including those from Thailand, the Philippines and Australia to establish their captives in Labuan.

The Asian market for captive is relatively unexplored and the potential for growth is immense, with the penetration level of only 2.3% out of the total number of 6,939 captives established worldwide in 2016,” he said.

Insurance market abuzz with M&A

The Vietnamese insurance market is expected to witness several large brand name changes as the trend among foreign insurance companies to acquire 100% stakes in insurance companies progresses at a steady pace.

Citing an industry expert, The Vietnam Economic Times reported that “Mergers and acquisitions in the insurance industry, life and non-life alike, are not limited to foreign markets and will spread to Vietnam as well,” At the same time, M&A is seen as important steps as insurance companies are seeking different ways to grow.

A common trend among insurers, mainly in the life insurance segment, was to enter the Vietnamese insurance market by forming partnerships with local enterprises, especially banks and conglomerates. On the other hand, Vietnam’s current rising insurance market is also opening new investment paths for foreign financial and insurance corporations.

A new trend has been identified where foreign corporations are making an initial capital contribution and then to buy up all of the local enterprises’ shares after a few years to turn the company into 100% foreign-owned entity. This has been identified recently within the insurance market with cases such as Sun Life Vietnam. Experts forecast that this trend will continue.

Most companies in Asia lack cyber insurance before WannaCry attack

Following the recent WannaCry computer system attack, it has been reported by Reuters citing insurers that many companies outside the United States may lack the cover needed, potentially leaving them with millions of dollars of losses because there has been relatively little take-up of cyber insurance.

The massive ransomware worm, called WannaCry, caused damage across the globe and locked up more than 200,000 computers in more than 150 countries. The damage was seen across car factories, hospitals, shops and schools. Cybersecurity experts said the spread of the virus had slowed, but the respite might only be brief.

The overall cost of getting businesses going again could run into the billions of dollars, with companies in Europe, including Russia, and Asia particularly vulnerable.

According to Mr Kevin Kalinich, global head of Aon's cyber risk practice, almost nine out ten cyber insurance policies in the world are in the US. The annual premium market stands at US$2.5-$3 billion.

The biggest reason for the larger penetration in the US, said Mr Bob Parisi, US cyber product leader for insurance broker Marsh, "is that the US has been living with state breach notification laws for the past 10 years."

The greater transparency created an incentive for US companies to get insurance to compensate for damage from incidents they were required to report.

Companies that were not prepared for WannaCry can expect to rack up business interruption costs that far exceed a ransomware payment, said Mr Kalinich. Organisations hit by the attacks, which lock up computer systems until the victims pay a ransom, included Britain's National Health Service, French car manufacturer Renault, and Spain's Telefonica.

West Coast cyber risk modeling firm Cyence estimated the average individual ransom cost from Friday's attacks at US$300, and the total economic costs from interruption to business at US$4 billion.

The US Cyber Consequences Unit, a non-profit research institute that advises governments and businesses on the costs of cyber-attacks, estimated more modest total losses. They were likely to range in the hundreds of millions of dollars, and unlikely to exceed US$1 billion, the group forecast.

Demand in Europe was expected to rise even before the cyber-attacks, after an EU directive is implemented in mid-2018 requiring companies to notify authorities of a data breach.

But insurers are likely to more carefully scrutinise risks they take on as well as how they word policies and exclusions, Mr Kalinich said.

"They will want to pick the companies that are most prepared," he said. Other firms might be eligible for coverage, but more exclusions may apply, he said.

Dai-ichi Life records almost 30% jump in net profit

Fuelled by excellent performance in its overseas operations including US insurer Protective Life which was acquired in 2014, Dai-ichi Life Holdings, a Japan-based financial group, saw its net profit rise by 29.6% in the 2016-2017 fiscal year ending March 31.

The insurer posted a bottom line of ¥231.2 billion (US$2.03 billion), marking a sixth consecutive year of record profits and exceeding the initial forecast of ¥197 billion.

Stockholding gains from the integration of its asset management business with Mizuho Financial Group also gave it a significant boost. As such, Dai-ichi Life foresees net profit dropping off by about 20% to ¥179 billion in the current fiscal year ending in March 2018.

While net profit was up, premium and other income decreased, with Dai-ichi Life’s income sliding by around 20% to ¥4.40 trillion. This was due to the ultralow interest rates in the Japanese market forcing insurers to scale back on the sale of single-premium policies. A similar trend has been seen with two other Japanese insurers. T&D Holdings suffered a 4% drop to ¥1.5 trillion and Sony Life Insurance sliding 7% to ¥956.7 billion.

On the other hand, all three insurers experienced increased core earnings due to an improved market environment, allowing them to reduce reserves for insurance pay outs. Dai-ichi Life’s profit rose 3% to ¥558.4 billion, while T&D registered an increase of 5% to ¥159.9 billion. Meanwhile, Sony Life’s profit almost doubled to ¥83.8 billion.

Insurance mart grows fastest in Singapore but remains small relative to rival hubs

Between 2013 and 2015, Singapore posted an increase of 4% p.a. in insurance business with gross written premiums reaching US$8 billion, recording the fastest growth rate compared to three other global insurance centres.

According to the “London Matter 2017” report on the competitive position of the London insurance market, Switzerland showed an increase of 0.6% p.a. in GWP during the same period to $31 billion, slower than Bermuda's 1% rise to $39 billion.

The report, launched by The London Market Group (LMG) and The Boston Consulting Group (BCG) on Tuesday, states that between 2013 and 2015, Core London Market premiums decreased marginally from $67.1 billion to $66.7 billion, representing a decline of 0.3% p.a. This was the net result of a $1 billion increase in commercial insurance premiums (+1.0% p.a.) being offset by $1.3 billion decline in reinsurance premiums (-3 0% p.a.).

Overall, the London Market was worth an estimated $91.3 billion in GWP, of which $24.6 billion was ‘managed business’ marketed through, but not written in, London.

Mr Nicolas Aubert, Chairman of the LMG, commented: “Despite the Market’s continued strengths, many of the key challenges identified in the first London Matters report in 2014 remain, and this should give us all cause for concern. The 2015 data is too recent to reflect the tremendous effort that has been committed in the last 18 months to grow and modernise the market. However, this latest intelligence confirms that things are not improving and we cannot afford to be complacent.

Now is the time to maintain our focus and, indeed review and revisit our plans, so that we can build momentum in our work to protect and enhance the pre-eminence of the London Market in an increasingly global and competitive market.”

The 2017 findings revealed that London’s global reinsurance premiums declined, from 13.4% of the world's market in 2013 to 12.3% in 2015, continuing the trend reported in the 2014 London Matters report which estimated a 15% share in 2010.

A decline was identified from $10.5 billion in 2013 to $9.3 billion in London premiums from emerging markets in 2015. Asia remains the highest growth market globally; however was also the region in which London lost most ground between 2013 and 2015.

London’s share of commercial insurance premiums remains steady at 5.8% of the $800 billion global total, and the Market has grown in established markets such as North America and the UK, along with gaining share in its traditional specialist risk classes. It has also demonstrated its ability to innovate with an estimated 74% p.a. growth in cyber premiums from 2013 to 2015. Overall the Market remains the largest global centre for commercial and specialty risk and continues to be a significant contributor to the UK and London GDP. The Market’s direct contribution to the UK economy is estimated at 0.9% of GDP in 2015 and accounts for 26% of the contribution of ‘the City’.

London's share of insurance markets in Africa, Asia and Latin America was 3.3%, 2.7% and 8.1% respectively, all lower than in 2013 even though the markets themselves have grown.

Britain's vote to leave the European Union has provided a further headache for insurers, with Lloyd's of London planning a subsidiary in Brussels to compensate for a potential loss of access to the bloc.

An insurance industry lobby group known as London Market Group said it is working to make the London market an easier place to do business, with a more diverse workforce.