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EC News Asia Edition (30th May 2018)

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

Round-up of the latest news and developments from the Asian insurance market with stories from AIG, Willis Towers Watson, Mitsui Sumitomo and more.

Willis Towers Watson and JLT secure full Chinese licenses

Brokers Willis Towers Watson and JLT have had their licences to trade as a foreign broker in China extended to cover all insurance business.

The move follows Chinese President Xi Jinping’s recent decision to further open up the country’s market to foreign operators.

As such, China’s Banking Insurance Regulatory Commission (CBIRC) has now granted Willis Insurance Brokers and JLT Insurance Brokers Co. Ltd permission to operate as fully licensed foreign brokers in the country, the same as that permitted for a domestic insurance brokerage company in China.

Commenting on the announcement, Willis Towers Watson’s head of Asia Scott Burnett said: “Willis Towers Watson was one of the first foreign insurance brokers to enter the Chinese market, with a presence dating back to 1994.

“This latest announcement speaks to the long-term commitment of our company to China and the recognition of our reputation and relationships not only in China but across the globe. The expanded license represents a significant vote of confidence by the CBIRC in Willis Towers Watson, our capabilities and our expertise.”

Meanwhile, Dominic Samengo-Turner, JLT Asia’s chief executive, said: “The Chinese Government’s One Belt One Road initiative is generating unprecedented opportunities for JLT, and we are very excited by the opportunities that this licencing extension presents.

“Our Speciality business in China has been growing from strength to strength - particularly in the areas of Construction and Energy – and this success is based firmly on strong collaboration between JLT China and JLT Specialty’s regional and global experts.”

AIG names Sun as China CEO

AIG has appointed Lisa Sun as CEO of AIG Insurance Company China, succeeding Eric Zheng who is leaving the company to pursue other opportunities.

Sun rejoins AIG from Mercer, where she was most recently CEO of the firm’s Hong Kong and South and East Asia Zone. Prior to joining Mercer in 2013, she served five years at Zurich, before which she was deputy chief actuary and vice president for worldwide accident and health at AIG Life Companies.

Based in Shanghai, she will report to AIG international general insurance CEO, Chris Townsend, with her appointment subject to regulatory approval by the China Banking and Insurance Regulatory Commission.

Commenting on the hire, Townsend said: “China is a core growth market for AIG. I am pleased to welcome Lisa back to AIG to take on the important role of leading our China business. I look forward to working closely with Lisa and the team in this dynamic region.”

He added: “We thank Eric for his hard work with AIG China over the last 14 years and we wish him well in his next endeavour.”

Mitsui Sumitomo acquires stake in Chinese life insurer

Mitsui Sumitomo has struck a deal with the Commonwealth Bank of Australia (CBA) to acquire its 37.5 percent stake in Chinese life insurer BoCommLife.

The Japanese carrier said it will pay RMB4.3bn (c.$680mn) for the shareholding once BoCommLife has completed its scheduled RMB3bn capital increase to existing shareholders, with the deal financed by cash on hand.

The transaction marks Mitsui’s entrance into the Chinese life market, which it cited as the third largest life insurance market in the world after the US and Japan, with the firm anticipating further growth in the future.

The carrier said the move aims to enhance its growth potential and profitability as well as to achieve further risk diversification of its group-wide business portfolio.

Furthermore, securing BoCommLife as a joint venture partner will enable Mitsui to develop a secure business base in the country’s life insurance sector.

Meanwhile, CBA said the said the sale of its stake in the Chinese life insurer will result in an after-tax gain of around A$450mn ($340.7mn).

CBA CEO Matt Comyn said: “This transaction represents a further step in simplifying and focusing our portfolio and follows the announcement of the proposed sale of the Group’s life insurance businesses in Australia and New Zealand to AIA Group, and the strategic review of the Group’s life insurance business in Indonesia.”

The sale of BoComm Life satisfies a condition of CBA’s $3bn sale of its Australian and New Zealand life insurance businesses to AIA Group, which was announced in September.

BoCommLife was established in 2000 and largely sells insurance solutions through banks, leveraging the bancassurance channel with its parent to grow its market share.

Closing of the transaction remains subject to approval from the China Banking and Insurance Regulatory Commission, Chinese merger clearance and completion of the BoComm Life capital increase.

China picks CICC, UBS to advise on Anbang divestments: reports

Chinese regulators have selected China International Capital Corp (CICC) and UBS to advise on potential disposals of assets owned by troubled Anbang Insurance Group, according to reports.

Citing people with knowledge of the matter, Bloomberg said on 28 May that government regulators have asked CICC and UBS to help with preparations for divestments by Anbang, adding that work is still at the planning stages and no formal auction process has begun.

In a statement on 28 March, the government team that took over Anbang said that the company has no plans to dispose of its overseas assets and its operations are stable. Third parties are offering consultancy services, the statement said, and some media reports have read too much into the matter.

Anbang, which shot to fame after snapping up assets around the world, was temporarily seized by the government in February amid President Xi Jinping’s campaign to curb risks in the financial system. The insurer’s former chairman, Wu Xiaohui, was sentenced earlier this month to 18 years in prison after being convicted of fundraising fraud and embezzlement.

The firm, which has received a bailout loan of $10bn, said earlier this month that an interim working group has been meeting investment banks as it reviews all of the company’s overseas assets.

The Chinese government has also said it is seeking strategic investors for Anbang and aims to introduce private capital into the insurer as soon as possible.

Toa Re to launch European platform

Toa Re is preparing to launch a European operation in Zurich, under the leadership of former Amlin Re Europe CEO Philippe Regazzoni.

The Japanese reinsurer will use the new Swiss-based underwriting platform to write European reinsurance business, in a bid to expand its European portfolio currently written from Tokyo.

Regazzoni was CEO of Amlin Re Europe for five years, before leaving the carrier in 2015 to work as an advisor to new businesses in the reinsurance industry. Prior to that, he was a managing director at Swiss Re.

The company said that it is currently in the process of hiring a team for the operation and obtaining credit rating and fulfilling regulatory requirements.

Toa Re already has a wholly licensed reinsurance subsidiary in Switzerland, The Toa 21st Century Reinsurance Company Ltd. (TTFC), which was established in 2002 to assume reinsurance from its parent.

It will repurpose this entity under the trading name “Toa Re Europe” to write third-party business, in addition to existing business from its parent.

The Japanese reinsurer has recently been making inroads internationally as it looks to grow and diversify its portfolio outside of Japan. In October, Toa Re received “in principle” approval from Lloyd’s to establish Special Purpose Arrangement (SPA) 6132 in partnership with Barbican.

Former PICC president sentenced to 11 years in prison

Wang Yincheng, former president of the People's Insurance Company (Group) of China (PICC), has been sentenced to 11 years in prison for accepting bribes of over CNY8.7mn ($1.36mn).

Wang's illegal gains will be confiscated and turned in to the national treasury. He was also fined CNY1mn, reports the Xinhua News Agency citing a statement by the Intermediate People's Court of Fuzhou in Fujian Province.

The court found that between 2006 and 2016, Wang took advantage of his positions at PICC and its subsidiary to seek illegal benefits by helping others obtain contracts, secure promotions, or seek jobs.

Wang accepted gifts and money worth over CNY8.7mn, either directly or through relatives, the statement said.

The court handed down the sentence while considering the fact that Wang confessed to his crimes, showed repentance, and was cooperative in giving up all his illegal gains.

Wang pleaded guilty in court and said he would not appeal against the conviction.

He was placed under investigation for "suspected serious disciplinary violation" by the Central Commission for Discipline Inspection of the Communist Party of China in February 2017.

Wang is the latest senior financial executive to be caught in Chinese President Xi Jinping's fight against corruption. Earlier this month, Anbang Insurance Group's ex-chairman Wu Xiaohui was jailed for 18 years for fraud and embezzlement involving more than $10bn.

Thai actuary shortage expected to worsen

A shortage of actuaries in Thailand's insurance industry could be aggravated after a new accounting standard and an insurance law take effect.

According to a report in The Bangkok Post, Suthiphon Thaveechaiyagarn, secretary-general of the Office of the Insurance Commission (OIC) said the preparation of the International Financial Report Standards 17 (IFRS 17) accounting standard, which is expected to be adopted in Thailand tentatively in 2022, will require professional work from actuaries both in designing and assessing insurance business models along with related infrastructure.

He added that actuaries are increasingly required to assess enterprise risk management, solvency surveillance, product pricing, and liability valuation.

Suthiphon said: "The actuarial profession is a key function in the insurance business. However, human resources within this profession in Thailand are quite limited."

Meanwhile, Society of Actuaries of Thailand (SOAT) president Pichet Jiaramaneetaweesin said the Non-Life Insurance Act, which is being amended, will require non-life products to be certified by actuaries. Currently, only life insurance products require certification.

There are 127 certified actuaries in the domestic insurance industry, with 75 fellowship members from the Society of Actuaries. Out of 127 actuaries, 76 are employed in 23 life insurance companies, while 51 are employed in 60 non-life insurance companies, said the OIC.

The OIC is promoting the role of the SOAT to support educational and professional arrangements to enhance the standards in the profession in Thailand.

Philippines microinsurance market poised for significant growth

Microinsurance coverage in the Philippines is expected to rise to 73.3 million individuals or 16.3 million households by 2020, a study by the the International Cooperative and Mutual Insurance Federation (ICMIF) and Microinsurance MBA Association of the Philippines (RIMANSI) has revealed.

It shows that there are two types of mutual microinsurance organisations in the Philippines: cooperative insurance societies (CIS) which primarily have an institutional membership; and microinsurance mutual benefit associations (Mi-MBAs) which are not-for-profit organisations with low-income individuals as members. Of the 77 percent, microinsurance market share covered by mutual microinsurance Mi-MBAs comprise around 51 percent and CISs comprise around 26 percent.

The report, entitled Mutual and Cooperative Microinsurance in the Philippines: A Landscape Study, highlights the substantial growth witnessed since the local insurance commission introduced new regulations in 2006 for Mi-MBAs, stating that that microinsurance coverage expanded from 3.1 million before 2008 to 31.1 million by the end of 2014.

The study underlines the potential role that mutual microinsurance can play in closing the protection gap in the Philippines.

Conducted as part of the ICMIF 5-5-5 Mutual Microinsurance Strategy – an initiative which aims to provide mutual microinsurance solutions to 5 million low – income households, in five emerging markets including Colombia, India, Kenya and Sri Lanka over the next five years- the findings of the report demonstrate a number of features unique to mutual and cooperative microinsurers.

Mi-MBA policyholders were shown to have an important role in the governance and management of the organisation (60 percent of the responses state that the members are involved in the claims approval and settlement process).

Additionally, there was also a high prevalence amongst Mi-MBA’s and CIS’s of offering value-added services, for example 60 percent of Mi-MBA’s and 100 percent of CIS’s offered financial literacy training to potential and existing policyholders. Furthermore, 90 percent of member policyholders of Mi-MBA’s were women according to data compiled by RIMANSI. Findings also showed Mi-MBA’s settling an impressive 88 percent of claims within 10 days.

RIMANSI executive director Jun Jay Perez said: “We are delighted to be able to publish the findings of this report, which highlight the positive outlook for the mutual microinsurance sector in the Philippines.

“In response, we are pleased to work with the ICMIF Foundation to develop the capacity of the MBA sector. We have already successfully reached out to over 4 million individuals who were previously unprotected with microinsurance as a result of our partnership through the 5-5-5 Strategy.”