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EC News Asia Edition (27th June 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 IAG, Tokio Marine, Generali and more.

IAG disposes of three southeast Asian businesses

IAG has agreed to sell its Thai and Indonesian businesses to Tokio Marine, whilst its Vietnamese operation is being acquired by an unknown buyer.

Under the terms of the deal, Japanese carrier Tokio Marine will pay A$525mn ($390mn) for IAG’s 98.6 percent stake of Safety Insurance in Thailand and 80 percent interest in PT Asuransi Parolamas in Indonesia.

Commenting on the deal with Tokio Marine, IAG managing director and CEO Peter Harmer said: “We are pleased to accept the offer for our businesses in Thailand and Indonesia from Tokio Marine.”

“We believe Tokio Marine is an ideal owner given its experience in the region, and that this is a good outcome for the associated employees, customers and other stakeholders.”

In addition, IAG also announced that separate to the transactions with Tokio Marine, it had reached an agreement to sell its 73.07 percent interest in AAA Assurance Corporation, based in Vietnam, although it did not reveal the buyer.

It added that the disposal of these three southeast Asian units are expected to have a negligible impact on gross written premium growth and an approximate 50 basis point enhancement to reported insurance margin, owing to their lower earnings profile compared to the rest of the IAG business.

As a result of the combined transactions, IAG said that it expects to make an after-tax profit of at least A$200mn, net of related costs and foreign currency translation reserve effects.

“The sale proceeds from Thailand, Indonesia and Vietnam will be a contributory factor in determining future capital management initiatives. IAG will provide more detail on its capital management intent at its next results announcement in August 2018,” the Australian carrier said in the statement.

Both deals are expected to close in the financial year ended 30 June 2019, subject to regulatory approvals.

Tokio Marine seeks Asian deals with $9bn M&A warchest: report

Tokio Marine has set aside a $9bn warchest for overseas M&A and is eyeing deals in Asia as European and US plays are becoming more expensive, according to a report.

Tokio Marine chief executive Tsuyoshi Nagano told Reuters that the Japanese insurance giant was now looking to double Asia’s contribution to its overseas profits as it looks to build “a stable business by diversifying geographically and operationally.”

Just last week, Tokio Marine struck a deal to acquire IAG’s Thai and Indonesian businesses for $390mn, with Nagano stating that the carrier was on the hunt for more M&A opportunities in Asia.

“As overseas business profits are nearing 200bn yen, we would like to raise the proportion of Asia (outside Japan) to 20 percent or more from less than 10 percent now,”Nagano said.

“We are always considering strategic options in countries like India, Indonesia, Thailand, Malaysia and the Philippines,” he added.

Although Nagono did not name any targets in particular, he said: “There are companies we have in mind, but it’s not easy, it will take time.”

Southeast Asian countries are becoming increasingly attractive to overseas carriers, where strong economic growth, growing middle-class and low insurance penetration in the region are providing solid growth opportunities.

Whilst Nagano said that the company will also continue to look for deals in the United States and Europe, he cautioned that acquisitions were growing too dear.

“We have to be careful not to overpay,” he told the publication.

Tokio Marine has made a number of notable acquisitions in the US and Europe over the past decade, including its $7.5bn acquisition of US speciality insurer HCC in 2015, its $2.7bn purchase of Delphi Financial Group in 2012 and its £442mn deal to buy Lloyd’s carrier Kiln in 2008.

Overseas earnings will likely contribute 45 percent of the company’s total profits in the year to March 2019, the company said.

Generali increases stake in Indian insurance joint ventures

Generali has inked a deal with Future Group to nearly double its stake in its insurance ventures in India as it looks to expand its footprint in the country.

Under the terms of the deal, Generali’s shareholding in Future Generali insurance ventures will increase from 25.5 percent to 49 percent.

Through this transaction, Generali has committed up to around EUR120mn to the partnership which will accelerate the leverage of the far-reaching distribution network of Future Group, a unique platform and customer ecosystem to offer insurance protection solutions within India with a focus on digital.

Generali’s long-standing partnership with Future Group currently generates gross written premiums of EUR375mn, which it notes have been growing steadily year-on-year.

The Italian carrier’s presence in India currently takes the form of two joint ventures called Future Generali India Life Insurance Company Limited and Future Generali India Insurance Company Limited (non-life insurance).

Commenting on the deal, Generali global business lines and international CEO Frédéric de Courtois said: “We see large potential for growth in India as part of our strategic expansion plan in Asia, and we could not have a more experienced partner that knows and understands the local landscape. 

“Generali’s proven expertise in insurance combined with Future Group’s unrivalled distribution in India is a truly winning combination. We could not be happier to strengthen our ties with them.”

Kishore Biyani, Future Group managing director and CEO added:“Future Group has one of India’s biggest pool of consumption-oriented customers, and its network connects with customers for a large wallet share and at consistently high frequencies. 

“With Generali, we have an unparalleled product and global insurance expertise that has the potential to significantly increase the throughput of our retail network and scale at Future Generali. Generali has been a partner of huge trust for us, and we are delighted to strengthen our partnership with them.”

The transaction is expected to close in the second half of this year, subject to regulatory approvals.

MS Amlin and GIC reinsurers for New India P&I cover: reports

MS Amlin and GIC Re are the reinsurers for New India Assurance's recently launched protection and indemnity (P&I) coverage for Indian-registered ships that ply on local routes, according to reports.

Last month, The Hindu Business Line reported that the fixed premium P&I cover is the country’s first by a domestic insurance company and has a limit of $5mn per vessel, adding that New India Assurance has offered the maiden cover to two river sea vessels run by Mumbai-based SVS Marine after the P&I product was approved by the Indian regulator.

The publication has now reported that MS Amlin and India’s GIC Re are reinsurance partners for the new cover, adding that MS Amlin will underwrite the risk on a “case-to-case” basis, ranging from 40 percent to 60 percent, citing a person briefed on the arrangement.

Furthermore, the source indicated that New India Assurance could look to partner with other global reinsurers going forward.

China nationalises Anbang Insurance Group

The Chinese government has taken nearly full ownership of beleaguered carrier Anbang Insurance Group.

According to the The Wall Street Journal, the China Banking and Insurance Regulatory Commission (CBIRC) approved the transfer of a 98.23 percent stake to the China Insurance Security Fund, which deploys funds raised to compensate policyholders in case insurers go bankrupt, on 22 June.

This comes after the fund, which raises capital from mandatory contributions from insurers, injected RMB61bn ($9.7bn) into Anbang in April. The equity injection was “based on the needs of risk disposal” and would be temporary, Anbang said at the time.

In February 2018, the China Insurance Regulatory Commission (CIRC) has announced that the Chinese government has seized control of Anbang Insurance Group.

In an announcement regarding the seizure, the CIRC said Anbang had violated laws and regulations which “may seriously endanger the solvency of the company”, adding that it had seized the company in a bid to “maintain the normal operation of Anbang Group and protect the legitimate rights and interests of consumers”.

Anbang gained international prominence with its $2bn purchase of the Waldorf Astoria and a $5.5bn hotels deal with Blackstone Group. Last year it was among several acquisitive private conglomerates — including Fosun, Dalian Wanda and HNA — to be probed by regulators, amid concern that risky financing was being used to fund takeovers and a broad crackdown on capital flight.

SRA re-elects Haushofer as chairman

The Singapore Reinsurers’ Association (SRA) has re-elected Validus Re’s Marc Haushofer as chairman of the industry body for the Singapore reinsurance market.

Haushofer, who serves as CEO of Asia Pacific and executive vice president at Validus Re, will now begin his third term as SRA chairman for the 2018/19 year.

Haushofer commented: “I thank my colleagues on the EXCO for their strong endorsement to continue to lead the Association for another term. With their support and commitment, I believe we will be able to further build on the work of the SRA and its prime event – the Singapore International Reinsurance Conference (SIRC). 

“We shall also look to further expand our global connections with other associations and industry leaders for the benefit of our member companies and this marketplace.”

The association has also reappointed Allianz Re Asia Pacific executive Kenrick Law as deputy chairman.

Additionally, Theresa Wee, chief general manager at Singapore Reinsurance Corporation, has been elected as honorary secretary, while Desmond Tan, senior underwriter at Asia Capital Re, has been elected as honorary treasurer.

Members of the SRA also include James Beedle of PartnerRe Asia, Till Boehmer of Munich Re’s Singapore Branch, Ann Chua of XL Bermuda, Philip Hough of Aspen Re, Angela Kelly of Lloyd’s of London (Asia), and Christoph Spichtig of Scor Reinsurance Asia-Pacific.

Munich Re and PICC provide cover in China solar deal

Munich Re and the People's Insurance Company of China (PICC) have signed an agreement with China’s leading solar module producer and service provider, Chint Solar/Astronergy, to provide cover for registered PV modules produced in 2018.

Under the agreement, PICC P&C will provide insurance to back-up 10-12 years product warranty and 25 years performance warranty for Astronergy modules delivered to registered international projects in 2018, whilst Munich Re will provide reinsurance to PICC P&C. 

By assigning dedicated financial capacity for these registered clients, the insurance cover provides a credible third-party guarantee for investors and financing institutions that choose to install Astronergy modules.

The 2018 insurance scheme provides independent project insurance for each owner that is registered with Munich Re, which transfers the risk successfully and satisfies the demand for financing from overseas customers.

Commenting on the near-decade long working relationship with Astronergy, head of special enterprise risks at Munich Re, Claudia Hasse, said,“We highly appreciate our continuous relationship to Astronergy and their commitment to quality and excellence in a rapidly changing PV-industry.”

“The new contract highlights Astronergy’s focus on providing their customers with the best solutions in technology as well as financial and insurance back-up.”

Astronergy CEO Dr. Lu Chuan added, “Munich Re is an international leading reinsurance company, which implements the most stringent factory inspection standards in this industry.

“It has inspected 170 factories in the world and only approved the best ones including Astronergy. The underwriting of well-known insurance companies will bring more additional value to our customers globally.”