China sells € 1.78 billion of insurance products in
the first two months of 2006
Reuters
reports that China's largest bank, ICBC [ICBC.UL], said on Wednesday March 22,
it sold 17.2 billion yuan (Euro 1.78 billion) of insurance products in the first
two months of 2006, a 88.4 percent jump from a year earlier. Industrial &
Commercial Bank of China handled 85.3 billion yuan of insurance products last
year, bringing in income of 864 million yuan. Income from insurance products
rose 16 percent in 2005, making up 7.7 percent of ICBC's non fee-based income
last year. Chinese banks have been relying less on net interest income in recent
years and moving into more lucrative areas such as Insurance services that carry
wider profit margins.
German Pension provisions
Investment and Pensions Europe (IPE) reports that the German
government is confident about corporate pension provision in Germany in the wake
of the Riester reforms of 2001. These reforms included a raft of concessions
designed to boost uptake of corporate pensions.
The government minister for
social affairs, Heinrich Tiemann, indicated that this had been achieved: "The
exemptions were always intended to, initially, boost demand for corporate
pensions in Germany. This has now been accomplished...now, if the exemptions are
removed from 2009, the government is still confident that corporate pensions in
Germany face a bright future," the minister said in comments cited by IPE's
online edition. Uptake of corporate pensions among employees in Germany has
grown from 38% in 2002 to roughly 60% now, the report says.
Two Months of Competition in Dutch
Healthcare
Paul
Belien writing for the Brussels Journal notes that the liberalization of
healthcare in the Netherlands appears to be successful. In an attempt to reduce
the cost of healthcare the Dutch government has allowed the existing sickness
funds to compete as of 1 January. Within two months one quarter of Dutch
families had switched to different health insurers. There is no sign of the
chaos which was predicted. Prime Minister Jan-Peter Balkenende’s centre-right
government made the liberalization of healthcare a priority from the start. They
identified healthcare as one of the last "Stalinist strongholds" in the Dutch
welfare system. It was run by the government, which set down detailed targets
for hospitals, including how many operations they were allowed to perform.
Patients who needed hip operations were on waiting lists for months. In
spite of rationing and restrictions, however, the cost of medical care in the
Netherlands continued to rise inordinately. Though Balkenende’s government
cracked down on pharmaceutical companies by promoting generic medicines at the
expense of innovative drugs, elsewhere the government hoped to check the rising
costs by introducing market principles, obliging sickness funds to compete for
their clients by reducing their monthly premiums. This would also force them to
purchase medical care at more competitive rates from hospitals, general
practitioners and dispensing chemists.
One of the victims of the two months
of competitive health insurance is AGIS, a Dutch insurance company that lost
half a million policies to cheaper funds, with an ensuing loss of several
hundred jobs. AGIS is accusing the other funds of cheating at the game by
dumping their prices for the start of the liberalization program, in order to
attract new clients, but with the intention of raising prices significantly next
year.
Italian insurer Ras increases '05 net profit by
28%
Allianz's
Italian insurer Ras has increased its net profit by over a quarter in fiscal
2005, thanks to strong growth in life insurance business at home in Italy. The
company said it experienced very strong growth in new life insurance business in
Italy, with a significant increase in recurring premiums (24.4%). Across the
company life gross premiums written, inclusive of investment contracts, climbed
1.1% to €8.9 billion. 2005 consolidated net profit was €905 million, up 27.9%
from €708 million in 2004, while consolidated premiums were €16.4 billion, an
improvement of 1.6% from €16.1 billion in 2004. Return on equity rose from 12.4%
to 14.6%; return on risk-adjusted capital reached 24.4%, from 20.7% in 2004.
Property and casualty gross premiums written were € 0.5 billion, a 2.3% increase
on 2004. Meanwhile Ras enjoyed a marked improvement in the combined ratio of its
domestic operations (from 98.3% to 97.3%), giving an overall combined ratio of
97.3%.
French AGF's profits growth stimulates record share
price
French insurer
AGF, 60% owned by German insurance titan Allianz, boosted profits by 18% in
2005. The improvements were down to the introduction of better efficiencies and
sound asset management. The next challenge will be to achieve significant
business growth, AGF said.Net profit totaled a very healthy E1.6 billion, up
18%. Excluding the effect of converting to IFRS in Belgium, it rose 32%. AGF
said the increase in net profit was due to improvements in underwriting results
and from high-quality asset management, which included, in particular, the sale
of the group's stake in Gecina. In other highlights, AGF's consolidated combined
ratio declined by 2 points to 93.4%; and new business value surged by 73% to
E144 million. Following the positive financial returns AGF said it will increase
its dividend to €3.6 per share, a rise of 38%. According to Reuters, AGF shares
increased by over 3% on the news to break the €80 mark and set a new record
high.
Third Middle East Insurance Forum in
Bahrain
Third Middle East
Insurance Forum, organized by the Economic and Business Group in cooperation
with Bahrain Monetary Agency(BMA) and Bahrain Insurance Society concluded its
activities in Manama on March 21. The event was attended by a large number of
representatives of Insurance companies and supervisory bodies and insurance
experts. The speakers mainly underlined the need for the Arab Insurance sector
to benefit from accelerating economic growth in the region, especially in the
light of the governments' implementation of economic reforms, gearing towards
free trade and investment boom.
The sessions also tackled the relentless
changes faced by the Insurance market, notably the requirements of the General
Agreement on Tariffs and Trade (GATT), the regional blocs and the impact of the
technological developments on the insurance industry as well as close ties
between banks and insurance companies in addition to the new reinsurance trends.
Concerning the impact of the international insurance markets' openness, the
speakers pinpointed the importance of coping with the ever-growing tendency
towards regional blocs and called for the exploitation of the ongoing
technological developments to open up new horizons for insurance industry. Some
conferees came to the conclusion that the growing reliance of insurance industry
on informatics will broaden foreign insurance markets, making of the Arab and
regional cooperation an urgent need in order to keep the largest amount of
shares possible within the Arab area.
As for the public insurance markets,
apart from life insurance, the conferees affirmed that the possibility to
augment their volume by 30 % and double that of life insurance, hinges on the
existence of a powerful sector in which companies play an effective role, under
modern legislation and surveillance of experienced vigilant monitoring bodies.
Storm season fails to prevent record profits for
Munich Re reinsurance
German reinsurance
titan Munich Re has become the latest global risk insurer to reveal record
profits despite the severe impact of last year's US hurricane season as
investments and divestments offset high exposure Munich Re delivered record
profit of over E2.7 billion for 2005 compared to €1.9 billion in 2004, despite
experiencing an alarming combined ratio of 110.5% in reinsurance due to its
natural catastrophe exposure during the year.
Even though it was a record
hurricane year, the group posted a profit of €1.4 billion in reinsurance, thanks
to its very solid basic business and excellent investment results, the company
said in a statement. Gross premiums written in the reinsurance segment remained
virtually stable at €22.3 billion. In life and health, premium rose to €7.8
billion, whereas in property-casualty reinsurance it decreased by 2.1% to €14.5
billion.
With a profit of €1.2 billion, the primary insurance segment
exceeded original expectations, Munich Re reported. Low claims burdens and
consistent cost reduction enabled the primary insurers to record another
excellent combined ratio of 93.1%. Gross premiums written in primary insurance
grew by a further 0.3% to €17.6 billion.
The Association of the Insurance and Re-Insurance
Companies of Turkey provides seminars to update members on EU-requirements in
the insurance sector.
The Association
continued to organize seminars concerning the "Primary Problems of the Turkish
Insurance Sector during Turkey’s EU Membership Process", in which specialists on
a variety of topics related to the Insurance industry inform local insurance
sector representatives on the latest insurance industry developments in the EU.
The topic of the fourth meeting of the series held in the premises of the
Association on 8 February 2006 was about "Mortgage Insurance Products". Ms.
Michelle Gabay and Mr. David Nolan from Genworth Financial (one of the leading
companies in Britain on mortgage related insurance products) participated in the
seminar as guest speakers. During the seminar, several presentations were also
made by a variety of experts and sector representatives on mortgage related
insurance products. The seminar drew a large participation from the Turkish
insurance sector.
Celent Survey Finds US Insurance Agents want 24 hr.
Online Access to Carriers
More than
90 percent of US insurance agents want 24 hr., Web-based access to the
information technology (IT) systems of U.S. insurance carriers, according to a
new survey of independent producers conducted by research firm Celent.
Technology tools that improve efficiency, communication and customer service
also are highly desired by insurance producers, said the majority of the 215
producers surveyed by Celent for MajescoMastek, a software solutions provider to
the insurance industry.
"Independent insurance agents highly ranked tools
that enhance communications and that help them work more efficiently," said
Craig Weber, Senior Analyst with Celent. "This survey found that 91 percent of
the agents want their carriers to provide 24 hr, Web-based access to tools like
compensation and new business systems. They also expressed a strong preference
for using e-mail to communicate with their carriers, particularly for routine
service or underwriting questions."
Nigerian finance minister tasks insurers on
affordable services
Dr. Ngozi
Okonjo-Iweala, the Nigerian minister of finance, who will be in charge of
organizing the 2006 International Insurance Summit in Lagos said the industry
has a responsibility to promote trust and confidence in the insuring public. She
said the industry could achieve that by ensuring prompt payment of claims
whenever the need arises which emphasises the need for insurance firms to be
viable and have strong assets base. The finance minister said the vision of the
Federal Government of Nigeria is to make Nigeria the financial services centre
of Africa and for Nigeria to become ultimately, a global player in the financial
services industry, challenging operators to share in the dream.
Dr
Okonjo-Iweala added that insurers would also be able to enter regional and
foreign markets, use new distribution channels, accept higher and more complex
risks and expand their product portfolio. This, she said, would enable
underwriters to increase their scope of operations and serve their clients
better.
Insurance industry feels the heat of global
warming
The Boston Globe reports that neither Tim Wagner nor Mike Kreidler
imagined how climate change would intrude into state insurance regulation.
Wagner, the director of the Nebraska Department of Insurance, said the reality
is literally pelting him. Kreidler, a former Democratic congressman, and Wagner,
a registered Republican, formed a task force for the National Association of
Insurance Commissioners to assess the impact of climate change on the American
insurance industry. They hope to join a discussion that has been going on for
years in Europe, where insurers Swiss Re and Munich Re have warned of massive
financial losses from storm patterns aggravated by global warming.
Munich Re
calculated that last year was the most expensive on record for natural
catastrophes, with losses of over $210 billion. Windstorm destruction in just
the United States, the Caribbean, and Mexico cost $83 billion, most of it, of
course, coming from Hurricane Katrina. Swiss re-Insurance, in a joint report
done with Harvard Medical School's Center for Health and the Global Environment
and the United Nations Development Program, said, ''Many in the business
community have begun to understand the risks that lie ahead.
Insurers and
reinsurers find themselves on the front lines of this challenge since the very
viability of their industry rests on the proper appreciation of risk." The
insurance giant AIG, estimates that both Florida and New York have nearly $2
trillion each of insured coastal property exposure. Massachusetts is in fourth
place in AIG's estimates at $662 billion. AIG said last October that six of the
10 most expensive hurricanes in US history occurred in just the prior 13 months.
Citigroup board chooses CEO Prince to replace
retiring chairman
Citigroup Inc.'s board on Tuesday, March 21 announced that it has selected Chief
Executive Officer Charles Prince to succeed Sanford I. Weill as chairman, when
he retires on April 18 at the annual meeting of the nation's largest financial
institution. Prince will also retain the CEO title. Prince, 53, had already
succeeded Weill as CEO at the end of 2003. Weill, who turned 73 last week, has
made it known for months that he will retire from the bank's board this year.
The board said in its announcement that Weill will be given the honorary
title "chairman emeritus." Weill has been at the helm of the company since 1998,
when he merged his insurance company Travelers Group with Citicorp, as the bank
then was known. Citigroup spun off Travelers Property Casualty Corp. in 2002.
International Insurance Society names Walter
Kielholz to Insurance Hall of Fame as Global Leader
Last
year Walter Kielholz, Executive Vice Chairman of Swiss Re, was named to the
prestigious Insurance Hall of Fame by the International Insurance Society, Inc.
(IIS). He was honoured at the annual IIS seminar in Hong Kong on 11 July 2005.
The IIS honoured Walter Kielholz in particular for his contributions in the
creation of Swiss Re as a global enterprise with a strong focus on reinsurance.
He successfully merged and integrated a number of corporations into the
Swiss Re fold and in doing so aligned insurance and other financial products
together in one enterprise for the benefit of customers. Swiss Re plays a
leading role globally in offering new and innovative financial solutions in
structured financial products and has garnered a world-wide reputation for
expert know-how and skills.
The Insurance Hall of Fame is sponsored by the
IIS, a non-profit educational enterprise of insurance executives with some 1,000
members representing 90 nations.
Aetna ex-CEO Rowe's pay nearly doubles to Euro 6.5
million
Aetna
Inc. paid its former top executive total compensation of $7.9 (Euro 6.5) million
last year, almost double his 2004 total compensation of $4 million, according to
a regulatory filing on Tuesday March 21. Both figures exclude the grant of stock
options. John W. Rowe, who was the Hartford, Conn-based health insurer's
chairman and chief executive in 2005, became executive chairman Feb. 14. Ronald
Williams, who was Aetna's president in 2005, succeeded Rowe as chief executive.
Rowe's 2005 compensation is for his work as chairman and chief executive. Rowe
realized $27.4 million from the exercise of stock options to purchase 900,000
shares, Aetna said.
Aviva's bid creates industry talk as Europe
Insurance Industry looks back on a profitable 2005
The recent
bid for Britain's second-largest life insurance company has sparked speculation
that consolidation would once again sweep the industry, sending stock prices up
in Europe. Aviva, the largest life insurance company in Britain, confirmed
Monday that it had made an offer March 16 for Prudential valued at £17 billion,
or Euro 25 billion. The offer represented a 10 percent premium to Prudential's
market capitalization before the proposal. Aviva said that it was not
considering improving its offer and that it was interested only in a friendly
deal. Prudential, which is unrelated to the U.S. insurer Prudential Financial,
is a particularly attractive asset because of its Prudential Corporation Asia
unit, which in 2004 made a profit of Euro 317.5 million selling insurance in 12
Asian countries, including Taiwan and South Korea. Nearly a third of the
company's 18 million customers are in Asia. Prudential also owns Jackson
National Life in the United States and the British fund manager M&G
Investments. "Despite the large losses related to hurricanes Katrina, Rita and
Wilma, Standard & Poor's said in a January report that 2005 was a good year
for the insurance sector in Europe, Axa of France is the largest European
insurer, with Euro 48.66 billion in premiums in 2004, followed by Allianz of
Germany and ING of the Netherlands.
Dutch De Eendragt pension fund foundation becomes
a life insurer
'Pensioen fonds
De Eendragt' has changed to a life insurance company called De Eendragt Pensioen
NV with a portfolio of more than Euro 950 million in total assets. The sole
shareholder is the 'Stichting De Eendragt Pensioen foundation', the successor to
the former holding company for 'De Eendragt Pensioen NV'. The new company -
headed by chief executive officer Philip Menco and managing director Tom
Nieuwenhuizen provides collective pension schemes on a non-profit basis. Menco,
former principal at consultant Fortunis, joined De Eendragt in 2004.
According to a release by De Eendragt, a change in legal status, i.e. the
move from a foundation to a public company, was essential. De Eendragt manages
the pension funds of roughly 18 different companies, which have no financial or
fiscal connection. The new Dutch Pensions Act prohibits such relationships.
According to De Eendragt Menco: "The way in which the new company was born is
unique in the Netherlands."
Brazil's Bradesco agrees to buy American Express
unit, including their insurance and travel business
Bradesco,
Brazil's largest private-sector bank, will buy the Brazilian credit-card
operations of American Express for $490 million (€ 408.33), the companies said
Monday. Banco Bradesco said the deal represents an important strategic move to
boost its share of the thriving and competitive Brazilian credit-card market.
Bradesco will also get American Express' Brazilian insurance and travel agency
businesses, but the company's Travelers Cheques operation is not included, the
companies said in a statement. As part of the deal, Bradesco promised to comply
with American Express rules on credit-card security, services and
confidentiality.
Developments in the Russian Insurance
Market
In a report by
Harald Nebelung it is noted that 1999 and 2000 demonstrated the capabilities of
Russian insurance companies and their ability not only to develop the Russian
market under unfavorable economic conditions, but also to overcome the economic
and financial consequences of the August 1998 crisis. As of January 1, 2000,
1532 insurance companies were registered in Russia. In 1998 and 1999 the total
number of insurance companies decreased by more than 800. This was due to
stricter controls by the Russian insurance supervisory bodies responsible for
compliance with insurance legislation.
It was also a result of the cessation
of insurance activities by small and mid-sized insurance companies; increased
competition between insurers; and low demand from individual and corporate
clients for insurance services. Clear changes can be seen in the capitalization
of Russian insurers. In 1997, the aggregate capital of insurance companies
amounted to RUR 9.5 billion. Insurers with capital of less than RUR 600,000 made
up approximately 70% of all insurance companies. As a result of energetic
efforts to increase capitalization in 1998-1999 following amendments to the
Russian Federation law "On the Organization of Insurance Business in the Russian
Federation", the number of such insurance companies decreased to 30% of the
total. By January 1, 2000, the paid-up capital of previously registered
companies should have been increased to the new amounts required by the law.
The amount of capital for companies dealing in non-life insurance became the
equivalent of 25,000 times the minimum official salary (MOS) (RUR 2.1 million
according to the latest estimates). For insurance companies dealing in life
insurance the amount required was 35,000 MOS (RUR 2.9 million), and for
re-insurers the amount of capital became equivalent to 50,000 MOS (RUR 4.2
million). Many Russian insurers are licensed to write both life and non-life
insurance, so that the minimum amount of capital in these cases should be no
less than RUR 2.9 million. This level remains now, as before, much lower than
the minimum capital requirements of insurers in the European Union (the minimum
amount of the guarantee fund established for non-life insurance is between EUR
200,000 and EUR 400,000 for different lines of business). However, the capital
of approximately 600 insurance companies registered in Russia does not meet the
requirements of Russian insurance legislation. This appears to confirm earlier
forecasts of a decrease in the total number of Russian insurers in the near
future by almost 40%.
India to introduce insurance plan for repatriated
workers
Indian federal
minister for overseas Indians affairs Vayalar Ravi has said the United
Progressive Alliance government led by Congress is committed to safeguarding the
interests of Indians employed in foreign countries, especially in the Middle
East Gulf states. The minister was speaking at a public reception held in his
honor at the Industrial Area Cinema in Doha, Qatar. Ravi said the UPA government
led by Manmohan Singh had initiated steps to introduce an insurance scheme,
which would ensure up to Rs 500,000 for workers who are repatriated. A number of
workers used the opportunity to highlight problems they face at the workplace
and issues that come up while seeking consular services at the embassy in Qatar.
The Cayman Health Services Authority pursuing
partnership with Panama Hospital to reduce hospital and insurance costs
The Cayman Islands
Health Services Authority (HSA) delegation will continue to explore a
partnership with the new state-of-the-art hospital in Panama for cost effective
medical care following its Panama Trade Mission last week. One of the driving
factors for exploring overseas medical care beside the US is the care escalating
costs according to industry experts. Panama is part of a growing number of
developing countries such as India and Thailand that are establishing
affiliations such as John Hopkins and capturing some of the overseas medical
referrals. Insurance companies can also benefit because they obtain the same
health care service at a fraction of the cost.
Irish Insurance Industry demands more investment
in road safety
The Irish
Insurance Federation has described the Government's road safety strategy as a
failure and is demanding that more money be spent in order to address the
problem. The three-year strategy, which expires at the end of this year, aims to
reduce the death toll on Ireland's roads to 300 per year. However, almost 400
people lost their lives in road accidents last year. The IIF says the high
number of fatalities can be traced at least partly to a lack of investment in
safety. Spokesman Niall Doyle said an extra EURO 37m-a-year would be available
if the Government agreed to use the 2% stamp duty on motor insurance premiums to
fund safety initiatives.
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