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EC News Asia Edition (27th September 2017)

  • Publish Date: Posted over 6 years ago
  • Author:by Alan Jarque

Round-up of the latest news and developments from the Asian insurance market with stories from Manulife, Guy Carpenter, ZhongAn and more. 

Manulife Asia hires Wadhwani as new CEO

Manulife Asia has hired Anil Wadhwani as its new CEO as part of several important structural and leadership changes, the company announced. 

The changes within the company aim to drive better alignment with its strategic priorities, accelerate the company's growth, optimize legacy blocks of business in North America and leverage Manulife's talent across geographies.

Wadhwani joins from Citi where he served in numerous global financial services leader roles including his most recent as global head of operations for its consumer bank, based in New York.

He brings 25 years’ experience with him primarily in growth roles across consumer banking in Asia, with a focus on customer experience and digitization. He has extensive wealth management and insurance distribution experience.

He has lived and worked in Asia, Europe and the U.S, which combined with his various different roles, will be valuable as Manulife Asia embarks on its next stage of growth.

Guy Carpenter appoints Eisele as CEO for the Pacific region

Guy Carpenter has announced the appointment of Andre Eisele as CEO of the Pacific Region.

Mr Eisele joins the company from Swiss Re, where he most recently served as head of client markets property and casualty for Australia and New Zealand.

His new role will be based in Sydney and will report to Tony Gallagher, Asia Pacific CEO.

In addition, Mr Heinrich Eder will join the Guy Carpenter Advisory Board for the Pacific Region.

Eder's most recent position was managing director of Munich Holdings of Australasia. From 2005 to 2016 he was in charge of the companies life and non-life operations. 

ZhongAn expands to include life insurance

ZhongAn Online Property and Casualty Insurance, China’s first online-only insurer, is planning to add life insurance and other healthcare products to the range of policies it offers in order to drive growth, after going public in Hong Kong, reported Reuters.

The company also plans to offer its technology to insurers inside and outside of China.

ZhongAn was founded by Alibaba Executive Chairman Jack Ma, Tencent Chairman Pony Ma and Ping An Insurance Group Chairman Ma Mingzhe. Bloomberg citing sources have reported that the company aimed to begin taking investor orders this week.

As it pursues the city’s first major FinTech listing, the company's Hong Kong Initial Public Offering (IPO) could raise as much as USD$1.5bn, people with knowledge of the matter said.

Japan's SoftBank Vision Fund, a giant technology investor, has been discussing buying $400mn to $500mn of ZhongAn stock as a cornerstone investor in the IPO, the people said.

ZhongAn is offering 199.3 million new shares in an indicative range of HKD$53.70 (USD$6.87) to HKD$59.70 each. The issue is seen as expensive as the $11bn valuation for the insurer implies an adjusted price-to-book level of 4.3 times, more than triple the 1.3 times for the largest Chinese general insurer, PICC Property & Casualty, which had revenue of CNY301bn last year, according to data compiled by Bloomberg.

ZhongAn, on the other hand, reported net written premiums of CNY3.4bn (USD$519mn) last year, or 0.5 percent of China’s insurance industry.

Munich Re & JLT offer innovative storm protection solution for Philippines

Munich Re and JLT Philippines have together revealed the “One Storm Philippines” solution for business and government agencies in the Philippines.  

The “One Storm Philippines” solution covers costs incurred for preparations made against potential storm impact and pays out in response to pre-defined triggers such as high wind speeds, reported the Philippine Star.

This means that without incurring actual calamity losses, policyholders can get insurance coverage based on their proximity to a storm’s path, and the wind speed in their location.

Local governments in the Philippines can insure themselves for the costs of fortifying a number of utilities and properties such as water treatment facilities, community centres, public schools and hospitals to be storm-ready.

One Storm Philippines currently insures customers for a maximum of USD$5mn per location and a minimum sum of $500,000. The insurance cover is applicable to a range of property, industry, and occupancy arrangements, whether on or off-shore, operational or under construction.

Businesses and government agencies can also insure themselves against actual losses. In order to do this they will need to provide proof of costs incurred before, during and after the storm along with the steps they took to manage the storm damage. These can include wind and water protection measures, costs for clean-up after the storm, additional work hours which may be required from employees and other costs associated with back-to-normal activities.

Asia to be home to 60% of the worlds over 65’s by 2030

In Asia there is 365 million people aged over 65 and by 2027 this number is expected to increase to more than 520 million.

By the year 2042, there will be more people aged 65 and over in Asia than the populations of the Eurozone and North America combined.

According to Deloitte's "Voice of Asia" report, this will provide a target-rich environment of business opportunities, focused on a growth cluster targeting megatrends such as growing life expectancies, increasing relative health care costs, and tightening public sector budgets.

The report has identified three key accelerators that drive the industry opportunities in an ageing Asia, with each one building on the other. These are:

  • Asia is ageing fast, with a billion people in the region to be aged 65 and over by the middle of this century.
  • The money being spent by and on ageing populations will grow even faster than Asia ages, because the impact of new technologies and the on-going management of increasing chronic conditions means healthcare costs will rise faster than most other costs.
  • Private sector opportunities will grow even faster still, because stretched government budgets mean the share of health-related costs borne by taxpayers is likely to decrease in the decades ahead.

India is set to rise as an economic superpower, driven in part by demographic changes. Following the rise of Japan and then China in decades past, India will drive the third great wave of Asia's growth. Its potential workforce is set to rise from 885 million people today to 1.08 billion people in the next 20 years, and it will remain above a billion people for half a century.

Deloitte India Economist, Anis Chakravarty explained: "India will account for more than half of the increase in Asia's workforce in the coming decade, but this isn't just a story of more workers: these new workers will be much better trained and educated than the existing Indian workforce, and there will be rising economic potential coming alongside that, thanks to an increased share of women in the workforce, as well as an increased ability and interest in working for longer. The consequences for businesses are huge."

SBI Life’s IPO is subscribed 3.58 times

SBI Life, India’s largest private life insurer, initial public offering (IPO) has been subscribed 3.58 times when the exercise closed recently, with investors bidding for 315.4 million shares against the 88.2 million shares on offer.

The most enthusiasm for the shares was shown by institutional investors who bid for 266.3 million shares against their quota of 21.2 million shares.

High net worth individuals on the other hand bid for 11.1 million shares against the 15.9 million shares reserved for them, bidding 0.7 times. Retail investors bid for nearly 0.85 times or 31.4 million shares of the 37.1 million shares reserved. Employees, who had two million shares reserved for them, bid for 2.08 million shares. SBI shareholders, who had 12 million reserved shares, bid for 4.54 million shares.

SBI Life planned to raise around INR84bn (USD$1.3bn) from the IPO. The company set a price band of INR685-700 per share.

The insurer was established as a joint venture between the State Bank of India, the country's biggest bank, and BNP Paribas Cardif in 2001. The bank sold 80 million equity shares while its French partner sold 40 million. The offer constitutes 12 percent of the post-IPO equity share capital.

Three new life insurers set to begin operations

SBI Life, India’s largest private life insurer, initial public offering (IPO) has been subscribed 3.58 times when the exercise closed recently, with investors bidding for 315.4 million shares against the 88.2 million shares on offer.

The most enthusiasm for the shares was shown by institutional investors who bid for 266.3 million shares against their quota of 21.2 million shares.

High net worth individuals on the other hand bid for 11.1 million shares against the 15.9 million shares reserved for them, bidding 0.7 times. Retail investors bid for nearly 0.85 times or 31.4 million shares of the 37.1 million shares reserved. Employees, who had two million shares reserved for them, bid for 2.08 million shares. SBI shareholders, who had 12 million reserved shares, bid for 4.54 million shares.

SBI Life planned to raise around INR84bn (USD$1.3bn) from the IPO. The company set a price band of INR685-700 per share.

The insurer was established as a joint venture between the State Bank of India, the country's biggest bank, and BNP Paribas Cardif in 2001. The bank sold 80 million equity shares while its French partner sold 40 million. The offer constitutes 12 percent of the post-IPO equity share capital.

HK Insurance Authority, UK regulators sign fintech deal

Hong Kong Insurance Authority (IA) and the UK’s Financial Conduct Authority (FCA) recently signed a cooperation agreement which has evidently encouraged more fintech activities in the Asia territories.

The terms of the agreement provide the FCA and the IA to assist one another in the arena of information sharing, especially with innovation and referrals of innovative firms seeking to enter the market.

Christopher Woolard, executive director of strategy and competition at the FCA, said that regulators would be able to help support global innovation in fintech if they work together, adding that the FCA’s partnership with the IA is expected to promote innovation and improve synergy for both markets, eventually benefiting consumers and the financial industry in general.

John Leung, chief executive officer of the IA, said the cooperation will pave the way for more fintech development in the international arena by looking for more growth areas.

The rush of natural disasters sees reinsurers suffering

The number of recent earthquakes and hurricanes that have devastated countries around the world are beginning to impact the global reinsurers.

Due to the increasing claims from natural disasters, Hannover Re has announced they may not reach their 2017 profits, the first time a warning like this has come from the company since the 2008 global financial crisis.

In the wake of Hurricane Harvey and Irma, Munich Re has made a similar announcement, making them the first major reinsurer to issue a warning relating to its 2017 earnings. This is the first time the company have issued a profit warning since 2011 after incurring losses from an earthquake and the tsunami in Japan. 

China to heighten insurance scrutiny

The China Insurance Regulatory Commission (CIRC) has announced that investment and capital flows in and out of China’s insurance industry will be monitored more closely and it will encourage players to strengthen their risk-monitoring systems.

According to Guo Jing, vice head of CIRC’s finance and accounting department, the commission will aim to improve its scrutiny of the use of insurance funds, focusing on chaotic activities like irrational stock market fundraising and overseas acquisitions.

Guo said the main focus now is to ward off risks arising from excessive growth in overseas investments through window guidance from the government and enhanced information disclosure.

Meanwhile, the country’s central bank is coming up with a spate of reforms that will allow foreign investors greater access to China’s financial services sector.

The bank will summon an internal meeting to discuss proposals and receive feedback from Chinese institutions.

AIA pays A$3.8bn for CBA life unit

Commonwealth Bank of Australia (CBA) is selling its life insurance business, CommonInsure Life and New Zealand equivalent Sovereign to AIA for A$3.8bn (USD $3.03bn).

Furthermore, the bank is also looking at disposing its global asset management business.

The terms of the sale include a 20-year deal for CBA to distribute AIA life insurance products in Australia and New Zealand. However, it does not encompass general insurance.

As part of the deal, CBA will continue to use the CommInsure brand, earning income on the distribution of life and health insurance.

According to CBA chief executive Ian Narev, the lender remains devoted to offering high quality products. He said the bank will be willing to adopt other business models despite having distributed life insurance for some time.

Customers are expected to benefit from AIA’s leading insurance capability and scale as well as CBA’s broad distribution network.

nsurance capability and scale as well as CBA’s broad distribution network.