Jerneh's Regional Expansion

Jerneh's Indonesia life insurance business will start in Q1 2009. Currently, Jerneh is already in the Philippines and Thailand's life and general insurance markets through partnership with Generali (40% stake in Generali Asia NV). Both operations are expected to break-even in 2009.

The Philippines' operations were affected by higher group medical and motor claims in 2008.

Jerneh's Hong Kong business was sold to HSBC Insurance (Asia) Ltd last year.

Source: Business Times

Centennial Max Plan

Great Eastern Life Assurance (M) Bhd launched a capital protected plan called Centennial Max Plan yesterday. There are at least 2 more plans lined up for this year: an annuity plan and a medical plan.

Information on Centennial Max Plan:

• Single premium capital protected
• 5-year term
• 125% SP payable on death/TPD
• Sales target: RM100 mil
• Minimum investment: RM20,000
• Offer period: 1 month

Source: The Star

34% Profit Growth

Progressive Insurance Bhd has posted a 34% increase in profit in 2007 amounting to RM15.7 mil. The Sabah state government, being the majority shareholder, received the bulk of the dividend, amounting to RM4.8 mil.

In the past 2 years, Progressive has launched several new products including the foreign workers scheme, family PA and E-Marine.

Source: Business Times

Stronger Q1 for Allianz

Allianz Malaysia Berhad has delivered a very strong Q1 results with RM17.7 mil vs RM3.0 mil in 2007 Q1. Revenue has also grown from RM277 mil to RM399 mil.

The strong performance was attributed to the acquisition of 100% of Commerce Assurance Bhd in August 2007, higher general insurance underwriting profit and better investment income.

Source: Bursa Malaysia

Pacmas Q1 Profit Down

Pacificmas Bhd's net profit for Q1 2008 fell 75% from RM10.9 mil to RM2.7 mil.

The main reasons were poorer underwriting results, lower net realised gains and higher provision for diminution in investments.

Currently OCBC holds 99.7% stake in Pacmas and has until 25 June to meet the 25% shareholding spread.

Source: The Edge Daily

Jerneh's 2008 Targets

Jerneh Insurance Bhd targets double-digit growth in gross premiums for FY2008.

It achieved RM311 mil gross premium income in FY2007, a growth of 12% compared with industry growth of 4%.

Other information:

• Areas growth will come from: corporate sector, small businesses, broking and agency channels.
• To tie up with organisations to distribute products.
• To launch new personal accident and motor products.
• Jerneh commands 40% market share in fire insurance.
• Well prepared for RBC implementation.

Source: The Star

PT Anugrah Life Purchase Approved

The Indonesian Finance Ministry has approved the take over of PT Anugrah Life by Mayban Fortis Holdings Bhd.

Source: Business Times

Etiqa Teams Up with Touch 'n Go

Etiqa Takaful has teamed up with Touch 'n Go in selling motor takaful.

Touch 'n Go card holders with Etiqa co-branded cards are given free PA of RM10,000 and hospital reimbursement plan worth RM2,000 when they register their Touch 'n' Go cards. Those with the co-branded SmartTAG will also receive theft coverage on their SmartTAG.

In the registration, part of the information asked is the vehicle registration details. If the registrants also purchase motor takaful from Etiqa, they get free reload on their Touch 'n Go cards.

Source: The Star & TAS Research

MCIS Outsourced IT

MCIS Zurich signed a 5-year managed services and IT hardware contract with CSA. CSA will provide IT services and HP desktop and mobility hardware to MCIS.

MCIS will benefit from a reduced total cost of ownership in IT infrastructure.

Source: The Edge Daily

AmBeautiful & AmBeauty

AmAssurance launched 2 new products on the Saturday of the long weekend.

AmBeautiful is an insurance policy which rewards the policyholder in good and bad times throughout different life stages. There are 4 plans to choose from, and the product will be available through AmAssurance's 4,000-strong agency force. Expected sales volume: RM7.7 mil.

AmBeauty is an insurance product that focuses on effectively protecting women who are carrying out their daily routine tasks. There are 8 plans available and these will be sold through the DM/TM channel. Expected sales volume: RM1.5 mil.

Source: Bernama

Tokio Marine Interested in Tahan

Tokio Marine Asia Pte Ltd has expressed its interest in acquiring the general insurance business of Tahan. BNM has given approval for Tokio Marine to enter into negotiations with Tahan.

Source: Bursa Malaysia

Axa Affin Calls off MAA's Acquisition

LATEST

Axa Affin has called off its talk to acquire MAA. MAA share closed 1 sen down at RM1.29 with low trading volume.

Source: Bursa Malaysia

Greenberg: "AIG in Crisis"

I was trying to search the net for the full letter from Maurice Greenberg to AIG but without success. Instead I thought I would compile and post below whatever selected quotes that have been published elsewhere for the benefits of our readers:

"Several top shareholders of AIG have called me expressing deep concern about the persistent and seemingly endless destruction of value at AIG"

"AIG is in crisis"

"The company's shareholders need to absorb the significance of the company's first-quarter losses"

"They (investors) also need time to consider the board's response to the crisis and the issues raised by this letter. "

"For this reason and others, a postponement of this week's annual meeting should be considered, so that all shareholders can give careful thought to how best to move AIG forward"

"AIG hasn't explained properly why it's raising $12.5 billion in new capital, while also increasing its dividend 10%"

"These events have led to a complete loss of credibility with the investment community"

Source: AOL Money, Fox Business, TheStreet.com

PA Policies in 10 Minutes

MAA has invested RM3 mil in Electronic Personal Lines System (ePEL), an online web-based policy issuance system. ePEL will allow agents to issue non-motor policies in 10 minutes.

Currently ePEL can handle 4 types of personal accident policies. The plan is to expand to houseowner and householder fire classses in September and miscellaneous classes by year-end.

Source: The Star

AmAsia Star

A closed-end 3-year capital guaranteed investment-linked fund was launched by the AmBank Group lately. Some details of the product are:

• 100% capital guarantee at maturity


• Exposure in 4 different Asian indices:
• Asia Financials Index Performance minus Cash DAXGFSRU Index
• Morgan Stanley Asia Property minus Cash MORAPRI LX Equity
• S&P GSCI Industrial Metals Excess Return SPGCIN Index
• S&P GSCI Precious Metals Excess Return SPGCPMP Index
• Performance based on best 3 out of 4 of the baskets above
• Minimum investment: RM5,000
• Maximum investment: RM1,500,000
• Offer period: 45 days
• Insurance = 125% of Single Premium (aged 1 - 60)
• Insurance = 105% of Single Premium (aged 61 - 70)
• Target fund size: RM200 mil
• Target return: 8% p.a.
• Previous launch: AmAsia Link, Sept 2007, fund size: RM100 mil

Ohter products in the pipe line:

• AmPreferred Medicare (June 2008)
• An investment-linked education product (June 2008)
• Critical illness product (July 2008)
• 3rd series of AmAsia funds (November 2008)

Source: The Star & AmAssurance

Citi to Help in RBC

Citigroup said it would help insurers:

• Cope with RBC reporting
• Increase insurance penetration rate

Citi quoted its experience in Singapore in providing securities and fund services. It introduced a format to assist insurers there for easy submission of financial reporting to the regulators.

Source: The Star

LifeSelect Single

HSBC Amanah Takaful launched its new product LifeSelect Single yesterday. Product features:

• Investment-linked plan that covers 36 critical illnesses
• Single premium (?)
• Target sales: RM100 mil
• 2 funds available: Fixed income and Equity

Other corporate news:

• Target new business sales: RM350 mil (2008), compared with RM185 mil (2007)
• 4 new products in the pipeline

Source: The Star & The Edge Daily

CIMB Aviva Targets 40% Growth

CIMB Aviva is targeting 40% annual growth in Malaysia until 2010. This is twice the target sales growth for Aviva Group in Asia Pacific of 20%.

Asia Pacific currently contributes 9% of new business sales of the whole Aviva group. This is projected to increase to 15% by 2010.

Strong local knowledge is important to Aviva, hence its partnership with CIMB is 1 of its key strategies. Aviva will look into expanding into other distribution channels in future.

Source: Business Times & The Edge Daily

ILP with CI from HSBC Amanah Takaful

HSBC Amanah Takaful is to launch an investment-linked product that covers 36 critical illnesses on 12 May 2008.

Source: The Edge Daily

US$7.8 bil Q1 Net Loss for AIG

Q1 2008 has been tough for AIG as well, they reported a net loss of US$7.81 bil vs net income of US$4.13 bil for Q1 2007. The poor result is attributed to subprime mortgage crisis.

To strengthen its balance sheet, AIG will raise US$12.5 bil capital.

Source: The Star

Great Eastern's Profit Drops 67%

Great Eastern's Q1 2008 net profit decreases by 67% from S$134.5 mil to S$45.0 mil.
Some detailed breakdown of Q1 2008 net profit:

• Life and general insurance operations: S$14.4 mil
• Non-par Fund: -S$29.7 mil
• Shareholders' Fund investment profit: $61.8 mil (mainly due to gain in disposal of Straits Trading)
• Fee and Other Income: S$22.3

The huge loss in the non-par fund is due to:

• Marked-to-market loss due to volatility of debt and equity market
• Increase in liability due to lower discount rate used

Tell me if I am wrong, but it seems to me that the non-par fund's assets and liabilities are not well matched, hence resulted in the loss when market moves against you. Something for Malaysia insurers to watch out for when RBC and FRS139 are introduced here.

Source: Great Eastern

ACR - World's Largest Retakaful Group

ACR Retakaful Holdings Ltd is now the world's largest retakaful group, with a capital base of US$300 mil and 2 operating companies in Kuala Lumpur and the Middle East.

The shareholding structure of ACR Retakaful:

• Khazanah - 40%
• Dubai Banking Group - 40%
• ACR - 20%

However, because Khazanah also owns 32% of ACR, effectively Khazanah is the largest shareholder of ACR Retakaful with effective stake of 46.4%.

Source: The Star

Maybank to Establish International Takaful Holding Company

Maybank has signed an MoU with the Islamic Corporation for the Development of the Private Sector (ICD) to jointly explore the feasibility of establishing an international takaful holding company. ICD is the commercial arm of the Islamic Development Bank.

The new holding company targets to commence operations by end of 2008.

Source: Bursa Malaysia

CIMB's 3-in-1 Education Package

CIMB Wealth Advisors' newly launched 3-in-i education package is a combination of life insurance/family takaful, unit trust and trust nomination service:

• Life insurance: Non-par, limited payment, regular premium decreasing term assurance covering the payor. Other optional riders can be added. Term: 10, 15 or 20 years.
• Unit trust: Lifecycle Funds (2017, 2022 or 2027). The number represents the maturity year. The funds will switch to lower risk assets automatically as they approach the maturity year.
• Trust nomination service: expedite payments to beneficiaries in the event of death of investor.

The package is similar to a regular premium investment-linked education plan with payor premium waiver rider, except there is no insurance cover on the child. The money paid to the package presumably is not entitled to claim the tax relief of RM3,000 per year?

Source: CIMB Wealth Advisors

Strong Q1 Performance by Singapore Life Insurance

Singapore life insurance industry posted a very strong growth of 52% in Q1 2008.

• SP NB sales: $2.755 bil (Q1 2008) vs $1.790 bil (Q1 2007), Growth: 54%
• AP NB sales: $238 mil (Q1 2008) vs $160 mil (Q1 2007), Growth: 48%

Contributions by distribution channel:

• Tied agency: 66%
• Bancassurance: 26%
• Licensed financial advisers: 5%
• Others: 3%

It was not mentioned in LIA's press release what contributed to the strong growth. If you can shed some light, please post your comments below.

Source: LIA

MAA Adjusts FYE 2007 Results

MAA Holdings Berhad adjusted the earlier released unaudited FYE 2007 results from a consolidated net loss of RM55.39 mil to RM73.27 mil.

The main items of adjustment are:

• An additional allowance for diminution in value of unquoted corporate debt security of RM13.87 mil
• Additional share of loss from associated company of RM8.06 mil

As at the point of writing, MAA share dropped 2 sen in light trading this morning.

Source: Bursa Malaysia

MAA to Launch New CG Fund

MAA will launch a new capital guaranteed fund next month, presumably Series 5 of its Maaster Capital Guaranteed Plan (MCGP5).

The target premium is RM50 mil, a modest target for this type of plan, but in line with the RM165 mil achieved in the 4 earlier series.

Some features:

• 90% invested in bonds and 10% in equities
• Minimum premium: RM10,000
• 100% capital guarantee at maturity

Source: Business Times

Takaful Annual Statistics 2007

The takaful industry saw a 3-fold increase in the agency force from 15,194 in 2006 to 43,843 in 2007. However, net contributions income only improved by 49%.

It is believed that the increase in the number of agents was caused by the new licensees such as Prudential BSN, HLTMT and MAA. Although the new licenses were granted in 2006, most of the new licensees only started business in 2007. Another new licensee HSBC Amanah Takaful does not have agency force but distributes mainly through HSBC bank.

It is interesting to note that the number of employees for the takaful industry only increased by 200-300 from year 2005, despite the entry of the 4 new players. This is because the new players mainly adopt shared resources model (sharing with their traditional insurance business) and this helped to improve efficiency as the management expense ratio for general takaful has decreased from 34.3% to 29.7%.

The per capita contributions on family and general takaful were still low at RM73.2 and RM20.8 respectively compared with the traditional counterparts of RM695 and RM369.

Is the Malaysia Takaful market growing too slowly? Our earlier article has highlighted the threat that MIFC may not achive its targets as GCC has already claimed to be the largest takaful market in the world.

By class of business, we saw investment-linked and motor takaful increase in share in new business in 2007. This may be a result of the new licensees' strategies. It is worth noting that the claims ratio for general takaful has deteriorated from 59.2% to 71.5%, mainly due to the poor performance of motor business.

Source: BNM

Asset Management Business to Boost Profit

Manulife is targeting a 10-20% contribution to the group's profitability from the asset management business in five years time.

The group hopes to get its asset management licence by 30/9/2008. Earlier, Manulife walked away from the deal to buy Asia Unit Trusts Bhd as "taking a 70% stake and not 100% is awkward for Manulife".

For FY2007, the net profit of Manulife jumped 68% to RM85 mil and revenue improved by 48% to RM80.7 mil (industry growth: 9%). Sales in 1Q2008 also grew strongly at 32%.

Although the takaful market is attractive, Manulife is in no hurry to acquire an existing takaful business but would rather wait for the right opportunity and at the right price.

Source: The Edge Malaysia May 5, 2008

Foreign Partners to Help STMB Going Abroad

Syarikat Takaful Malaysia Berhad (STMB) is counting on it new partners to assist the Company to expand outside Malaysia. STMB is currently in talk with Abu Dhabi-Kuwait-Malaysia Strategic Investment Corp and Islamic Arab Insurance Co PJSC for the new partners to take up a 49% stake in STMB.

Some of the benefits the new partners can bring in for STMB include:

• To distribute STMB's products in the Gulf through collaboration with Middle Eastern banks. Applying for a licence in the Gulf is ruled out as the industry there is already competitive.
• With the new fund from the new partners, to channel 1/3 into Indonesia to invest in IT infrastructure and distribution network.
• To explore new markets in China and the UK.

Source: The Edge Malaysia May 5, 2008

2007 Annual Statistics for Insurance & Takaful

BNM recently released annual statistics for insurance and takaful industries for 2007. This is the 2nd year BNM publishes only the statistics as opposed to full annual reports as per year 2005 and earlier.

We make the following initial observations on the insurance industry (more may be posted in future as we have time to digest the statistics):

• Number of Financial Adviser licensees is still low at 7, an increase of 5 over the year. Number of financial advisers is 43 (6 in 2006), meanwhile the number of life agents increased by 3,247 to 78,587.
• There was a decrease in 1 direct general insurer and an increase of 1 general reinsurer.
• Premium as a % of Gross National Income dropped from 4.5% to 4.3%, total insurance fund assets (life & general) also dropped from 5.0% to 4.9% of total assets of the financial system.
• In absolute terms, the per capita insurance premium expenditure on life and general insurance increased from RM644 to RM695 and from RM362 to RM369 respectively
• The claims ratio for general insurance industry worsened from 60.6% to 65.7%. The main deterioration occured in Contractors' all risk & engineering and Motor Act.

Source: BNM

UK's First Takaful Operator

Principle Insurance has become the 1st takaful operator in United Kingdom. It received the authorisation by the Financial Services Authority (FSA) recently.

Principle Insurance will provide motor and home general takaful later this year. The motor takaful will be available over the phone. Principle will adopt the wakalah model. UK has a Muslim population of 2 mil.

Principle Insurance was previously known as British Islamic Insurance Holdings (BIIH). Previously, we reported that MNRB is interested in 9.99% share of BIIH. Click here for our earlier report.

Source: Asian News