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EC News Asia Edition (29th November 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 Swiss Re, AXA, Ping An and more.

Swiss Re appoints Bélot as head of South East Asia

Swiss Re Corporate Solutions has announced the appointment of Didier Bélot as head of South East Asia, effective 1st December 2017.

In his new role, based in Singapore, Bélot will be responsible for building on the firms strong market presence to lead commercial insurance programmes with local servicing capabilities and innovative solutions.

Bélot is replacing Jonathan Rake who received a promotion to Asia Pacific CEO in July this year.

Since joining Swiss Re in 2008, Bélot has held roles in the US, China and Europe. His most recent role was leading the innovative risk solutions team in Asia Pacific. This four-year tenure generated valuable client and structuring experience relevant to this region. 

Commenting on the appointing Rake said: "Didier's experience in the region and on executing tailored, multi-line solutions for domestic and international clients will be a great asset, particularly as the insurance market evolves through economic, technological and regulatory changes,"

"His appointment adds impetus to our efforts in delivering commercial insurance solutions and risk management services to a diverse local client base."

Bélot said: "This is an exciting time to lead our South East Asia team and I look forward to leveraging the strength of Swiss Re and delivering meaningful solutions to corporate clients. I am eager to work with our clients to help generate added value to their businesses and build resilience through our team of claims, risk engineering and underwriting specialists."

AXA names Watson as CEO of Asia

AXA has named Gordon Watson as CEO of Asia and a member of the management committee of the AXA group.

Watson will assume the role on 1 January 2018. He will report to CEO of AXA, Thomas Buberl.

Watson joins the company from AIA, where he served as the company’s regional chief executive of the groups operations from 2011 to 2017, in Hong Kong, Macau, Australia, the Philippines, Vietnam and New Zealand.

During this time, he also led the Group's Corporate Solutions, Healthcare, Partnership, and AIA Vitality businesses.

Prior to this, between 2008 and 2010 Watson was the regional president for AIG Life companies in Japan and Korea, and was also global executive vice-chairman for ALICO, responsible for the Japan business and overseeing 50 other countries for strategy, distribution, corporate solutions, product and marketing.

Watson gained the majority of his 30 years insurance industry experience from both AIG and AIA. During his time at both companies he served in several other key senior roles based out of London, New York, Nairobi, Dubai, Tokyo, Seoul and Hong Kong.

Regulator in Singapore to promote adoption of AI & data analytics among FIs

The Monetary Authority of Singapore (MAS) has announced a series of measures to bolster cyber security as well as to support the adoption of Artificial Intelligence (AI) and data analytics among financial institutions (FIs) through a SGD$27mn (USD$19.8mn) grant scheme.

MAS managing director, Ravi Menon recently said the MAS will make a concerted effort to promote AI and data analytics as part of its FinTech agenda.

The aim of the grant, which is part of a SGD$225mn financial sector technology & innovation scheme, is to encourage the integration of AI and data analytics in banks and insurance companies and assist industry professionals to up-skill and adapt to the use of these technologies.

Another area of priority is to strengthen cyber security in order to preserve consumer confidence and trust in technology.

To that end, the MAS announced the launch in Singapore of the Asia Pacific Regional Information & Analysis Centre (FS-IAC), in order to facilitate the sharing of cyber threat information in a timely manner, and enable a rapid and coordinated response to emerging threats.

The FS-IAC is a global intelligence gathering and sharing initiative for the financial sector, with over 7,000 members worldwide.

Additionally, the MAS in concert with the Association of Banks in Singapore (ABS) will co-develop cyber risk management guidance for the banking industry. It will include guidelines for “red-teaming” – a covert penetration test conducted on an FI’s ‘live’ environment to assess its ability to respond to infiltration attempts.

The MAS also announced plans to leverage technology to improve efficiency in compliance for the financial services sector.

To reach this goal, the MAS intends to transform the way it collects data from FIs for supervisory purposes. This will see manual submissions of data be replaced by machine readable templates, where requested data will flow seamlessly from an FI’s database to the dashboards of MAS officers.

The MAS will work with the industry on a reasonable timeline and implementation plan for the goals it has outlined.

Ping An outlines innovation investment plan

Major Chinese insurance group Ping An has stated in more detail its goals in investing in FinTech and HealthTech opportunities globally.

The company, which launched its USD$1bn Global Voyager Fund in May, said it would invest $10-30mn in first-stage companies with an enterprise value of $100-$600mn, and up to $100mn in more mature startups.

Each category makes up roughly 30 percent of the fund that is managed from Hong Kong, reported The Nikkei.

Chief Innovation Officer of the group and chairman and CEO of Ping An Global Voyager Fund, Jonathan Larsen recently said: "In general, for direct investments, our focus is on what I'd call the mid-stage startups."

Larsen was referring to companies that are typically three to seven years old and already have a product or platform, with a business model that is well-defined. That also means the companies should already have some clients and revenue.

Larsen said: "We'd like to be dealing with companies after they have done their two or three early pivots, after they have figured out whether their management can work together,"

"We need people that have the bandwidth to engage with us." Another 30 percent will be allocated for special situations.

Larsen added: "These are most likely structured and bespoke deals for Ping An,"

"They could be pre-IPO situations."

The fund, which aims to have 95 percent of its assets outside of China, will also reserve less than 10 percent of its portfolio for early-stage companies.

"We are intending to do that through partner funds in geographies [in which] we don't have representation," said Mr Larsen, citing Europe, Israel, the US, and some parts of Asia.

The fund made its first investment in September by participating in the GBP£34mn ($44.6mn) financing round of London-based 10x Future Technologies, a banking data management platform founded by the former CEO of Barclays, Antony Jenkins, in 2016.

Major insurers are going green

Manulife Financial has launched its first-ever green bond offering, a SGD$500mn (USD$369mn) borrowing that has a 12-year term and a coupon of 3 percent.

The carrier has announced this is the first green bond offering by any life insurance company.

In a statement, Manulife said that issuing a green bond “aligns our financing with our existing green investment activities,” all part of a plan to help facilitate “the transition to a more sustainable economy”.

Manulife’s green-bond offering follows the release of its green bond framework, a document detailing the issuers’ investment philosophy in support of sustainability, the use of proceeds, the eligibility criteria, the process for project evaluation, the management of the proceeds and the reporting.

The document stated: “Manulife believes that investments in renewable energy, energy-efficient buildings, sustainably-managed forestry and other long-duration assets provide a good economic fit for our long-dated insurance liabilities, some of which continue for over 20 years.”

The Singapore-dollar borrowing, which can be redeemed in seven years, is Manulife’s second borrowing in that market.

In May 2016, it priced a SGD$500mn 10-year offering of subordinated notes at 3.85 percent. This was part of Manulife’s goal to broaden its sources of finance by raising capital from a different investor base — knowing that about one-third of its earnings come from Asia.

Separately, several global (re)insurers have announced a USD$20bn divestment from coal, with a growing number refusing to underwrite any new projects, says the Unfriend Coal campaign.

In a new scorecard, which rated the 25 insurers on their action on coal and climate change, 15 insurers have already divested approximately USD$20bn worth of bonds and equities in a bid to reduce their investment exposure to the coal industry, which is said to be the biggest single source of CO2 emission.

AXA was the first global financial institution to reject investments in coal in 2015, and became the first to announce it would no longer underwrite coal projects this year.

SCOR, Swiss Re and Zurich are also making efforts to change coal underwriting, the report said.

Green investment activities are becoming more widespread at a time when insurers are increasingly looking to their investment portfolios as a large contributor to profitability.

HKFI announces official launch of new marine certificate

The Hong Kong Federation of Insurers (HKFI) has announced the official launch of their new executive certificate in marine insurance. 

This new curriculum is designed to promote and enhance marine insurance training.

Chairman of the marine insurance association at the HKFI, Patrick Wong said: “As IUMI’s Asia hub, we strive to promote marine insurance in the region and conduct quality training to uplift the professional standard across the industry.” 

The course consists of 45 hours of face-to-face learning and practical case studies, targeting current and future insurance professionals. The curriculum is designed and taught by delegates of HKFI’s marine insurance association and industry leaders with professional qualifications.

Once the participant has successfully completed the programme they will receive the executive certificate in marine insurance, awarded under the Hong Kong University system, with recognition from the Australian and New Zealand Institute of Insurance and Finance (ANZIIF).

Wong said: “It is important for us to upgrade our quality and professional skills in the insurance industry, in order for us to keep our place in the market, or we will all end up getting replaced by technology.”

The announcement was followed by the special address, given by Dieter Berg, president of the International Union of Marine Insurers (IUMI).

“From our perspective, digital technology destroys value in our current insurance value chain, but it creates complete new efficiencies. As insurers, we have to take on a new role, as clients expect more from us, they expect assistance and services instead of just financial compensation,” he said. “We have to deliver more to our clients; it’s about client support, personalised consultancy, risk management and loss prevention.”

He urged insurers to take on a stronger consultancy role, compensating for shrinking premium incomes with service components and charging for those components.

“Clearly this will be a change in our business model, but I am very optimistic that marine insurers can and will cope with digitalisation. We are very well-positioned to transition due to three core competencies: providing expertise in this specialised field, providing specialised quality service and products, and we have built strong relationships with our clients through loyalty and trust,” he said.

Insurers in Taiwan tipped to make USD$5bn in profits this year

On the back of strong investment income, the Taiwanese insurance industry is forecast to exceed NT$150bn (USD$5bn) in profits this year.

In the first 10 months 2017, the industry posted profits totalling NT$125.4bn, 16.65 percent higher than for the corresponding period last year.

The gains for January - October this year also exceeded that for the whole of last year, according to data from the Financial Supervisory Commission (FSC).

The life sector raked in profits of BT$112.1bn from January to October while the non-life market posted profits of CNY13.3bn.

Officials say that an analysis shows that the main source of this year's profits is dividends from investment and sales of shares and bonds.

In a bid to minimise foreign exchange losses from the rise of the Taiwanese currency, several insurers have taken advantage of the rising stock market to sell equities holdings.

The Taiwanese currency has appreciated by 7 percent against the dollar so far this year.

Separately, Mr Wellington Koo, FSC Chairman, told Reuters that the regulator was concerned about foreign exchange risks facing its insurers with the Taiwan dollar hovering near its strongest level against the US dollar in three years, as they have invested heavily in foreign exchange-instruments such as Formosa bonds.

To mitigate such risks, the FSC intends to raise the insurers' reserve requirement ratios in 2018 and also roll out new management rules, he said.

Prudential Singapore take market share as innovation improves productivity

The launch of Prudential Singapore’s Fintegrate Partnership, which looks to collaborate with fintech start-ups in Singapore and globally, and co-develop digital solutions for customers, is one of many steps the insurer is taking in order to stay relevant in the digital era.

The PRU Fintegrate Partnership provides a clear goal as selected starts ups may enter into a commercial engagement with Prudential. PRU Fintegrate is also a rapid-deployment programme offering start-ups the opportunity to build and validate prototypes.

Prudential Singapore CEO, Wilf Blackburn said: “Digital innovation is a key component in our overall growth strategy. It’s essential to our efforts in making insurance simpler and more accessible for our customers, and to help our financial consultants work more efficiently. Collaboration with fintechs will enable us to develop such new solutions at speed.”

Adding: “Our customers are leading digital lives. As part of our digital roadmap, we are building new digital capabilities to understand their needs better and to provide a seamless and convenient experience for them at all our touchpoints.”

One of the ways Prudential uses technology is to connect with customers and financial consultants via its You online community. This is a real time interaction allowing the insurer to respond to customer feedback more promptly, gain insight into new trends and design solutions from a customer’s perspective.

After feedback from PRU for You, Prudential redesigned its private hospitalisation insurance plan to a claims-based pricing that rewards customers who stay healthy and make smaller private hospital claims, with savings on their premiums.

Another tech-driven service is ask – PRU, a chatbox powered by AI that provides financial consultants with real-time information that is specific to their customers’ life insurance plans.

Prudential’s financial consultants are also equipped with PRUONE Express, a digital point-of-sale portal capable of generating a detailed quotation in 3 seconds. It uses the latest technologies, such as SmartData Capture and fingerprint Authentication, to facilitate a quicker and more effective consultation and sales process, and the submission of new policy requests.

Prudential have also partnered with genetics testing company Prenetics on the ‘my DNA programme’.

More recently, Prudential is experimenting with machine learning for faster claims assessment. This AI application is at the core of a new e-claims solution that makes claims assessment in seconds.

Blackburn says: “We’re using AI and machine learning for data-driven decision-making. This cuts down on manual processes and frees out people to focus on more meaningful customer engagement initiatives.”

Based on annual premium equivalent sales, Singapore is the second-largest market for Prudential in Asia.

APE sales increased 23 percent YOY to £195mn ($353mn) in 1H2017, contributing 10 percent of Asia’s overall APE sales.

Asia in turn contributed to 54 percent of APE sales and 65 percent of the insurance group’s new business premiums.

For 1HFY2017, Prudential announced that its Asia post tax operating profit based on longer-term investment rose 36 percent to £1,641mn and accounted for 55 percent of total long term business post tax operating profit of £2,991mn.

Prudential Singapore continues to take the market share from its competitors. Recently industry statistics from the Life Insurance Association points to Prudential Singapore’s widening gap between itself – as the No. 1 life insurer for new sales of regular premium products and the No. 2 insurer in 1H2017.

Second place is believed to be between Manulife and AIA.

Prudential also has one of the largest market shares for private hospitalisation plans.

Protection is where Blackburn sees Singapore as something of a growth market. The growth of the life insurance market trends to follow the growth of the middle classes as they have lifestyles to protect and the affordability to save for the future so they need medical protection, education and retirement plans.

Prudential Singapore has 900,000 customers, or one third of the market with total sum assured of $147.7bn.

Blackburn says: “We’re future-proofing ourselves. We’ve been relevant for 86 years in Singapore and we’re making sure we will be relevant for the next 86 years. You could say we’re building an environment for the 22nd century.”