Round-up of the latest news and developments from the Asian insurance market with stories from Trust Re, Munich Re, AXA and more.
Trust Re appoints Kevin Quek as Labuan branch General Manager
Trust Re has appointed Mr Kevin Quek to General Manager for its Labuan Licensed Branch Office. Beginning his career in underwriting with Munich Re in 1992, Mr Quek brings with him 25 years of experience in the field of insurance and reinsurance. He will lead and manage all activities for the expanding and experienced team in the branch, ensuring a consistent delivery of services across all of Trust Re’s Regional Centres, in line with its strategic direction and in compliance with regulatory and company standards.
Mr Quek is a Singaporean national and holds a bachelor’s degree in Economics. Prior to joining Trust Re, he was Head of Asia Pacific Specialty at Endurance for 8 years, preceded by a similar length term at XL Catlin in the capacity of Senior Underwriter.
Munich Re Specialty Group appoints Celine Ang as new regional head
Munich Re Specialty Group has appointed Ms Celine Ang to Head of Asia, starting 1st August. Based in Singapore, Ms Celine Ang will be responsible for Munich Re syndicate offices across the region.
Ms Ang began her career 30 years ago as an underwriter at Allianz in Singapore and spent many years with Allianz Global Corporate & Specialty in Canada, culminating in her role as CEO & Country Manager. She then moved to Munich where she had a successful tenure as Allianz’s Global Account Manager for Aon, before progressing to become the Head of Global Broker Management based in London. Ms Ang then switched to Allianz-owned Euler Hermes where she was Group Head of Distribution, based in Paris, before taking on her most current role as CEO in 2014.
AXA announces major leadership changes in Asia
AXA has announced that the CEO of Axa Asia and a member of the group management committee, Jean-Louis Laurent Josi, will be stepping down from his executive responsibilities. Mr Laurent Josi will remain with the Group as Senior Advisor, reporting to the Group CEO Thomas Buberl, to ensure an effective leadership transition in Asia until the end of 2017. His successor will be announced before the end of the third quarter.
AXA Hong Kong has announced that CEO, Mr Stuart Harrison will retire from his position and become Director & Senior Advisor to continue to lend his experience and expertise to AXA Hong Kong, effective August 31st. In his eight years as CEO, Mr Harrison built a strong agency channel with manpower increasing over 70%. Of those, close to 1,000 are members of the Million Dollar Round Table, reflecting the high quality of AXA’s agents. He was also named CEO of the Year (Insurance) by the Asia Pacific Customer Service Consortium in June.
AXA Asia Life CEO Mr Etienne Bouas-Laurent will succeed Mr Harrison as CEO of AXA Hong Kong from September 1, subject to regulatory approvals. Mr Bouas-Laurent is currently focused on expanding the life and health business in the region. Prior to joining AXA Asia in 2016, he was CFO at AXA Germany and has also led the Wealth Management business in France.
Allianz Global Corporate & Specialty SE opens new Seoul Branch, names Noh Chang Tae as CEO
Following the announcement of a new AGCS branch in Seoul, Mr Noh Chang Tae will assume the role of CEO of AGCS South Korea.
With almost 25 years’ experience in the insurance market, Korean national, Mr Noh, was previously in the regional market management team in AGCS Singapore.
AGCS is the first foreign non-life insurer in almost a decade to receive regulatory approval from South Korea’s Financial Services Commission (FSC) to open a branch in Seoul.
Asia region's economy to remain robust through 2018
In a recent media roundtable in Singapore, Allianz’s Chief Economist, Dr Heise predicted that over the next 18 months, the growth in Asia will remain resilient, supported by the economic momentum in China. Following a 3 year slump starting from 2014, Dr Heise said that both global and Asia trade has recovered, with Allianz forecasting Asia (ex-Japan) growth of 6% and 5.7% in 2017 and 2018 respectively.
However, a caveat lies in the huge build-up of private debt in Asia owing to the low interest rate environment.
He expects central banks and regulators in the region to move in concert to reduce rising private debt, and thus predicts no further easing of rates for the remainder of 2017.
“I believe financial stability would be the goal of Asian central banks this year,” he said.
The downside risks to the region include a ramping up of protectionist measures from the US and increased geopolitical tensions, possibly arising from a conflict in the Korean peninsula or territorial disputes amongst various actors in Asia.
On the uncertainty regarding economic policies that will be pursued by the US administration, Mr Heise does not expect a shift towards outright protectionist measures as that would have repercussions for the American economy as well.
However, he noted that political and economic sentiments globally have turned more inward-looking and thus the pace of globalisation will slow down in the years ahead.
“Global trade will likely not grow faster than global GDP as a result,” said Mr Heise.
World Trade Organisation (WTO) figures for 2016 showed world trade had grown more slowly than GDP for the first time in 15 years.
Guy Carpenter opens Asia-Pacific retrocession unit
Guy Carpenter & Co. L.L.C. announced that they are launching GC Asia Pacific Retro to provide dedicated retrocession services for clients in the Asia-Pacific region. Heading up the new unit will be Simon Hughes, managing director, and Ben Dunnett, senior vice president. The new unit will provide retrocession property solutions to complement Guy Carpenter’s existing marine and aviation units in the region in addition to focusing on retrocessional solutions, raising capital and product and development, the company said in a statement. Mr Hughes, who will also retain his role as Guy Carpenter’s senior broker for Australasian business, will be based in London.
Mr. Dunnett has worked in Guy Carpenter’s non-marine specialty team for 10 years as senior vice president and is based in Singapore. Both will report to James Boyce, head of non-marine specialty, and James Nash, president of Guy Carpenter’s international division.
“GC Asia Pacific Retro provides us with the perfect platform to deliver our specialist retrocession expertise direct to our clients in the region,” Kevin Fisher, CEO of global specialties, said in the statement.
Local reinsurer in Nepal expands international business
In the first 11 months of the fiscal year ending on 15th July 2017, Nepal Reinsurance, the only reinsurer in Nepal has collected NPR100 million (US$970,000) in premiums from abroad due to expanding the business internationally. Nepal Re’s customers are spread over a total of 15 countries, including SAARC member states except India. The company has clients in the UAE, Bahrain, Papua New Guinea and a number of African countries including Kenya, reported Kathmandu Post. “We have aimed to increase premium collection to NPR150 million by the end of this fiscal year,” said Nepal Re's CEO Mr Chirayu Bhandari.
Four of its foreign clients are reinsurance companies based in Kenya and Bhutan.
In the last fiscal year, the reinsurer collected premiums totalling NPR3.5 billion from its domestic and foreign clients. The company says that they provide all types of insurance except aviation and life.
The government established Nepal Re in November 2014 in a bid to stem massive capital outflows of funds from reinsurance business. NepaL Re was converted then from a terrorism insurance pool set up in 2003. Its first deal with a foreign insurer was signed in October 2015.
The reinsurer has a paid-up capital of NPR5 billion. The government owns 43.5% of its shares while 17 nonlife insurers hold 39.4% and life insurers hold the remaining 18.1%.
“We are planning to make it mandatory for life and non-life insurers to buy stock in Nepal Re in coordination with the government,” said Mr Bhandari.
“By involving life insurance companies as stakeholders, we can make them buy reinsurance from the domestic company.”
In the Budget Speech delivered in May, the government mentioned that they will be encouraging Nepali insurers to buy reinsurance domestically for the fiscal year ending 15th July 2018.
“Since Nepali insurance companies have been sending large amounts of money to foreign reinsurance companies to buy reinsurance coverage, a mandatory arrangement will be made for Nepali life and nonlife insurance companies to buy most of their reinsurance coverage from Nepal Reinsurance Company,” the Budget statement said.
According to Nepal Re, it has been conducting retrocession transactions with Sava Reinsurance of Slovenia, GIC Re India and Hannover Re of Germany.
Foreign owned insurers told to raise local ownership in Malaysia
Under an initiative to lift domestic participation in the industry, Malaysia central bank has asked foreign insurers to raise the proportion of local shareholdings in their companies to at least 30%, reported Reuters.
In 2009, the foreign ownership of Malaysian insurers was set at 70%, or more if the buyer could help consolidate and rationalist the industry. Some foreign insurers operating in the country are still wholly owned by their overseas parent.
Bank Negara Malaysia sent letters last week to such wholly owned insurers, including the Malaysian units of Japan's Tokio Marine Holdings and Hong Kong's AIA Group, requesting their foreign parents to reduce their stakes in line with regulations for domestically incorporated insurers, Reuters reported, citing two people, who declined to be identified as they were not authorised to speak publicly regarding the matter.
The deadline to comply with the shareholding requirement is June 2018, said one of the people, without elaborating on the consequences of non-compliance.
Bank Negara Malaysia and the local units of AIA and Tokio Marine did not respond to requests for comment.
The expected stake sales are a concern considering the size and timing, one of the people said. Malaysia has only a small number of large local funds and so insurers may have to compete for the same pool of institutional investors, the person said.
"These companies are very large," the person said. "How many Malaysian shareholders are there that will have the appetite and wallet to pick up this sort of stake, and invest this sort of money in that time frame?"
Moreover, regulation restricts firms to buying into no more than one insurer.
"Most of this 100% shareholding is a result of legacy ownership, rather than the foreign shareholders getting special leeway from the central bank," said Mr Brian Chia, Wong & Partners head of corporate, commercial and securities practice group.
RAM Rating Services said there were 11 Malaysia-incorporated insurers wholly owned by foreign firms. It said it was too early to deduce whether enforcing the foreign ownership cap would enhance or impede the industry.
"Local ownership is good in that wealth creation from premiums is retained within the country," the credit rating firm said. "But foreign players can bring innovation and expertise to the local industry."
Singaporean firm to build platform for Malaysia’s life insurers
A unit of Singapore-based tech firm Silverlake Axis has won a contract to develop a digital platform for life insurance and takaful providers in Malaysia. According to a Singapore Exchange filing, Silverlake Axis said its subsidiary Cyber Village (CBV) has been given the green light by Malaysia’s insurance trade association and is expected to contribute positively to the company’s results for the financial year 2018.
CBV has been tasked with delivering an industry-wide platform to include features such as a self-assessment financial planning tool in the hope that it will create a more competitive market for life insurance products in Malaysia, which is dominated by international names such as Prudential and Zurich. "This digital platform will set the foundation for the association to subsequently deliver a full service life insurance and takaful aggregator portal which enables consumers to compare life insurance and takaful products online and buy directly," the company said.
Last December, RL360° opened a new branch office in Kuala Lumpur, Malaysia, after it was granted a license by the Labuan Financial Services Authority (LFSA).
Life business to push insurance growth in next 10 years in Thailand
Over the next decade, global insurer Allianz, is expecting its life business to remain a major growth influencer in the Thai insurance sector averaging around 9.3%. Life insurance makes up 70% of total premium income in Thailand. This is in line with the results of a World Bank survey, in which 65% of adult respondents said they saved for old age, reported The Nation.
Against the background of an ageing population, in 2050, Thailand’s old-age dependency ration is set to leap from 15.2% to 52.5%
The major shareholder of Allianz Ayudhya Assurance and Chief Economist of Allianz SE Germany, Dr Heise said that since 2012, the insurance market has been losing some of its momentum.
For the fourth year in a row, premium income growth slowed in 2016, to 3.9%. According to preliminary figures, property and casual insurance shrank by 2.1% for the first time since 1999, while life insurance growth picked up slightly to 6.6%.
Premium income reached 4.9% of GDP in 2016, putting Thailand on par with Germany with respect to insurance market penetration.
According to Allianz Economic Research’s latest analysis, Thailand’s economic growth will remain resilient, at above 3% in both 2017 and 2018.
Dr Heiss said strong competitive advantages such as competitive prices and strategic location as well as rising foreign demand would support a rise in Thai exports and tourism-related revenues.
With public debt at 43% of GDP, the existing fiscal space will be used to support growth in the form of public investment. But lifting private confidence will be essential. At the moment private expenditures are the main Achilles’ heel of the economy with limited growth of private credit, weak corporate confidence and low inflows of foreign direct investment.
Manulife continues Asian expansion
Manulife is expanding its footprint in the Asia Pacific region with the latest move seeing it pursue the growing middle class wealth in the Philippines.
In a press release, Manulife said that its Asset Management and Trust Corporation (MAM) have received the approval to engage in trust and other fiduciary business in the Philippines from the Bangko Sentral ng Philipinas (BSP), becoming the first corporation backed by the resources of a multinational financial services group in Philippines, following the recent liberalization measures initiated by the BSP.
Aira Gaspar, chief investment officer at Manulife Philippines, has been appointed CEO of the new MAM, following her success in growing the company’s asset management.
MAM will aim to leverage its global investment capabilities to offer solutions to clients in the Philippines.
Head of Wealth and Asset Management, Asia, for Manulife, Michael Dommermuth said, "The Philippines is a promising market for the asset management industry given the rapid growth of the middle class population.”
Sony Life setting up shop in Singapore's insurance market
Following an Australian investment last year, Sony Life Insurance plans to open dozens of locations in Singapore where people can shop for policies from multiple insurers, making a new move to expand its overseas business.
Over the next 10 years, the Sony Financial Holdings unit aims to open nearly 50 agencies here, starting as soon as next summer.
The insurer will partner with Tokyo- based Starts Securities next month on a joint venture to oversee the new business. Sony Life will own 74% of the venture whilst Starts Securities, which has a track record in insurance sales in Japan, will hold the remaining 26%.
The agencies will sell mainly life insurance policies, which are relatively rare here for a mature economy like Singapore's. Savings-oriented policies account for a big share of the local market, which has few agencies where customers can choose policies that suit them from various insurers.
Sony Life will take the same consultation-based approach to sales it does in Japan. The agencies will sell other insurers' policies at first, but Sony Life aims to eventually offer its own products as well.
Sony Life’s intentions are to make the new business profitable in five years’ time and to recoup accumulated losses by the ninth year. The plan is to open several locations each year including shopping centres.
The Japanese insurer entered the Philippines in the 1990s, only to pull out in 2012 after disappointing earnings. With this in mind, it is focusing its new overseas push on developed markets.
China Cosco energy unit gets cover from group captive insurer
The energy shipping unit of China Cosco Shipping Corporation, Cosco Shipping Energy Transporation (CSET) announced it has entered into an insurance service agreement with the group's captive insurer, Cosco Shipping Captive Insurance. Cosco Shipping Insurance is the first shipping captive insurance company in China which was established in February this year. The establishment of Cosco Shipping’s captive insurer was approved by the CIRC in December 2016.
Under the agreement, the insurer will provide vessel-related insurance services for CSET from 1 July 2017 to 31 December 2018 with an option to extend the coverage for an additional three months.
The insurance coverage includes hull, machinery, war, kidnap & ransom risk.
