News Digest 20100201-20100205

Insurance News RHB Cap wants to increase its stake in RHB Insurance by buying from the other shareholders.

http://bit.ly/d5klaz
RHB Cap talks to buy bigger stake in RHB Insurance
PETALING JAYA: RHB Capital Bhd announced that Bank Negara has no objection in principle for the company to begin negotiations with the remaining shareholders of RHB Insurance Bhd to acquire the remaining equity interest in RHB Insurance not already owned by RHB Capital.

Insurance News Prudential opens its new training academy in Ukay Perdana, KL. Prudential has 11,000 agents, out of which 3,000 are bumi agents. The corresponding figures a year ago were 9,000 and 1,500. Islamic products contributed 15-20% of its revenue.

http://bit.ly/c60nTn http://bit.ly/aG9NT4
Prudential eyes increase in number of agents
PRUDENTIAL Assurance Malaysia Bhd expects to increase the number of agents this year following the opening of its new training academy.Its chief executive officer Charlie Oropeza said in line with the ...

Insurance News EON Bank achieved bancassurance sales of RM105 mil in 2009 and is now targeting RM200 mil for 2010. EON Bank partners Uni.Asia in their bancassurance venture.

http://bit.ly/aFBdGx
EON Bank sets RM200m bancassurance sales target
EON Bank Group, the seventh biggest bank by assets, aims to double bancassurance sales to RM200 million this year on more new products. This is compared to RM105 million sales booked last year, chief executive officer Michael Lor said. ...

Insurance News OCBC given extension until 17/10/2010 to resolve holding 2 GI licences in OACM and Pacific Insurance.

http://bit.ly/9rAqRK
OCBC unit given extension to comply with conditions
PETALING JAYA: Oversea-Chinese Banking Corp Ltd (OCBC) wholly owned unit, OCBC Capital (M) Sdn Bhd, has been granted a one-year extension to Oct 17 by Bank Negara to comply with the two conditions imposed by the central bank for the takeover of PacificMas Bhd, which was completed in April 2008.

Insurance News Great Eastern targets 25% growth this year, to hit RM1 bil NB premium. Emphasis will be on agency, bancassurance and younger population.
1. Agency: recruit more graduates/professionals, Agency Transformation Programme, Go4More - help agents to break their own glass ceiling
2. Bancassurance: tie-up with OCBC
3. Low cos...t products for young population

http://bit.ly/be1DuT
Great Eastern eyes RM1bil in new premiums
PETALING JAYA: Great Eastern Life Assurance (M) Bhd, the country’s largest and oldest insurer, is targeting RM1bil in new business premiums this year.

Insurance News The growth of takaful industry in Malaysia in 2009 is estimated to be 15% on total contribution basis. Main challenge identified by MTA is attracting quality talents.

http://bit.ly/dbqGZk
Takaful industry to see steady growth
THE takaful industry will continue its steady growth momentum this year in line with the expansion of the industry globally which has seen an annual growth rate of 25 per cent the past few years.The industry ...

Strategies of Prudential and Great Eastern

With liberalisation announced last year, the top 2 life insurance players are strategising for 2010 and beyond:

Prudential

• Expand bumiputera agency force, capitalising on its takaful licence
• Agents to become wealth planners, provide advice based on needs and risk profile of clients
• Expand bancassurance with the right partners
• Grow investment-linked business

Great Eastern

• Improve professionalism, leadership and selling skills of agents
• Grow bancassurance following tie-up with OCBC post liberalisation
• Target younger population and new entrants to job market

Source: The Star

Industry outlook by LIAM

LIAM expects new business to grow at 17% and 12.5% for year 2009 and 2010 respectively. 2010 should see introduction of micro insurance and annuity products to take advantage of tax relieves announced in the Budget.

With the completion of FSMP in 2010, further liberalisation would be seen in areas such as:

• allowing insurers to distribute other personal financial service products
• removal of caps on operating expenses
• granting of new licences for innovative players

The liberalisation measures announced in 2009 are expected to result in:

• more bancassurance partnership
• opening of more branches
• higher foreign equity holding
• application of the 2 new takaful licences

Source: Business Times 1 & 2

Uni.Asia's distribution strategy

Uni.Asia says it is on multiple distribution strategy and is stronger in alternative distribution than in tied-agency system.

Uni.Asia currently has 4 bank partners and is looking for more bancassurance tie-ups. Products are claimed to be tailor-made after analysing profile of banks' customer base. The market share of the company in regular premium bancassurance products is claimed to be 36%, ranking number 1 in the industry.

The company has also expanded its other sales channels such as telemarketing, direct marketing and worksite marketing.

Source: Business Times

Great Eastern's growth factors

Great Eastern is counting on the following factors to further grow its business:

• Agents are better equipped with knowledge and training
• Current low insurance penetration rate, especially the younger workforce
  
• Introduction of affordable and well-rounded protection plans
• Advertising campaign to create awareness of the benefits of being insured
• Increase efficiency via IT, e.g. E-submission
• Capitalise on liberalisation thru bancassurance and establishment of new branches

Source: The Sun

Manulife's response to liberalisation

Manulife wants to add 5 new branches by 2011, location including Kuching and Penang. Currently Manulife has 6 centres nationwide.

For bancassurance, it intends to form more partnerships, focusing on local banks. Manulife's current bank partners are:

• OCBC Bank
• Alliance Bank
• Citibank
• HSBC Bank

Bancassurance currently contributes 10% of the business and the aim is to increase this to 33%.

Source: Business Times

Star's article on RBC and liberalisation

I am puzzled with some of the statements in the article:

"The risk-based capital (RBC) framework, which came into force beginning this year, would also spur the insurers’ future earnings growth as it would allow them to be better capitalised"

How would better capitalised spur the insurers' future earnings growth? If an insurer was under-capitalised pre-RBC and now the capital is adequate, there should not be any impact on future earnings growth, or should it? I guess if an insurer has excess capital under RBC and they put it into better use by writing more businesses then there might be a positive impact on future earnings.

"For locally incorporated foreign insurers like Manulife Holdings Bhd and Allianz Malaysia Bhd, an analyst with an investment bank said the recent financial sector liberalisation measures was a boon to their business as it had allowed them to tie up with more than one bank to distribute products."

I thought prior to liberalisation, foreign banks could not tie up with foreign insurers in bancassurance. There was no limit on the number of bancassurance partners though. For example, foreign insurers could tie up with more than 1 local bank. This restriction is of course removed following liberalisation.

I stand to be corrected on the above.

Source: The Star

Charlie's interview with press

Prudential's CEO Charlie E. Oropeza was interviewed by The Star. Some of the points mentioned in the interview:

• Liberalisation: widen penetration, greater competition, encourage innovation
• Bancassurance: complementary rather than competing
• Consumer awareness on importance of insurance still has room to improve
• Prudential's strategy on agency force: solutions providers, not product pushers

Source: The Star

EON bank considers acquisition of insurer

EON Bank is in active talks to either acquire a stake in or form a joint venture partnership with insurer to strengthen its bancassurance business.

EON Bank's preferred partner is a composite insurer, the bank is strong in hire purchase and housing loans and a composite insurer will fit in the picture well.

Target: Bancassurance and other non-interest income to contribute 25 - 30% of its revenue.
Current: 20%
Timeframe: 3 years

Previous related posts:

1. EON Bank interested in MCIS Zurich
2. Acquisition of MCIS to be completed by Sept 2009
3. EON Bank will not acquire MCIS
4. PacificMas ceases talks with Aureos and EON
   
   Source: The Star, Business Times

Articles on insurance/takaful over the weekend

Some of the articles appearing in StarBizWeek Special on 8 August that may be worth reading:

Keeping abreast with changes: Various insurance chieftains touch on issues like financial planning, bancassurance, professionalism, sustainability of business and future challenges and growth drivers.

Innovation key to growth for takaful: Leaders of takaful industry talk on sustainability of takaful industry, liberalisation, bancatakaful, human capital and retakaful.

Linking markets with Islamic finance: Towards the end of the article, BNM governor mentions that the insurance industry has a long way to go and develop products for retirement, pension schemes, annuities and medical coverage. Professionalism and capitalisation need to be increased. There should be more mergers in the domestic sector and the need for setting up enabling infrastructure.

Source: The Star

Uni.Asia partners UOB

Following the financial liberalisation, Uni.Asia and UOB are the 2nd group to announce bancassurance venture. Great Eastern and OCBC made similar announcement last week.

Some details:

• New business premium target: RM350 mil over 2 years, from Gain Assure II
• Uni.Asia ranked 2nd in bancassurance NB regular premium in 2008, aims to be No. 1 in 1H 2009

Interestingly, Great Eastern sets RM18 mil bancassurance NB premium target for 2009 with OCBC.

Information on Gain Assure II:

• 10-year SP Par endowment
• Minimum income bonus of 3.5% p.a.
• Premium: RM5,000 to RM500,000
• Entry age:14 days to 60 years

Source: Business Times, The Star

Great Eastern partners OCBC in bancassurance

Great Eastern has tied up with OCBC in bancassurance. Such tie-up of foreign-owned bank and foreign-owned insurer was not permitted before the liberalisation of the market.

2 new bancassurance products were launched: MaxMoney Plus and MaxMoney Back.

Targets set:

• MaxMoney Plus: RM12 mil by end 2009
• MaxMoney Back: RM6 mil by end 2009
• OCBC to have 10-15% market share in bancassurance in the long term

Source: The Star, Business Times

PB-ING Asian Jewels

ING launched a new product distributed through Public Bank named PB-ING Asian Jewels.

Product features:

• 5-year SP ILP
• Fixed annual coupon at end of years 1 to 4
• Maturity: refund of premium in AUD
• Invest in 5 Asian markets: China, Hong Kong, South Korea, India and Taiwan
• Sale period: 22 days ending on 3 August
• Entry age of life assured: 30 days to 70 years
• Minimum premium: RM30,000

Source: Business Times

Prudential Korea sings different tune

It is interesting to read that in Korea, Prudential seems to sing a totally different tune than their counterparts in this region. Some of the points mentioned by the CEO in the interview are:

• Concentrating on whole life insurance, shying away from variable life
• Sticking to direct agency force, shying away from bancassurance, TM
• "Insurance is for protection. For savings, one should go to the bank, and for investment one should go to a securities company. I don't think insurance companies can do these better than them"
• Bancassurance is not good for customers
• "When added up for lifetime, insurance premium is more expensive than a Mercedes"
• Doubtful about banks would conduct regular financial analysis for customers

Is the market in Korea so much different from here?

Source: The Korea Times

STMB wants to overtake Etiqa Takaful

STMB has set itself a target to overtake Etiqa Takaful as the largest takaful player in Malaysia by asset size within 2 years. STMB in the launch of one-stop Takaful myDesk with Lembaga Tabung Haji (LTH) also sets the following goals:

• Sign up 10% more contributors within 1 year
• Achieve RM1 mil contributions within 1 year

Takaful myDesk is along the concept of bancatakaful but instead of using a bank, in this case LTH is used as the distribution and service channel.

Source: Business Times, The Star

Maybank's bancassurance target

Maybank targets to grow its commission from bancassurance by >15% in the next 5 years.

Maybank's bancassurance business made up about RM350 mil of the life insurance premiums.

Source: Business Times

PruBSN to get more aggressive in bancatakaful

Prudential BSN is going more aggressively in bancatakaful, launching a drive to recruit 150 takaful financial executives (TFEs). The TFEs will be placed at BSN branches nationwide and will get a basic salary as well as incentives for every new and renewal business that they successfully close.

Source: Business Times

AIA and RHB in bancassurance tie-up

AIA and RHB Bank have executed a term sheet to enter into a 10-year mutually exclusive bancassurance relationship in Malaysia. The products involved are individual and group conventional life insurance. The products could be sold through RHB branches, telemarketing, direct marketing and worksite marketing.

Under the eventual agreement, AIA will pay RHB bank RM50 mil upfront. Takaful products may also be included in the product range, subject to a review by 15/12/2009. In the event that AIA is not able to add takaful products to the bancassurance product range, AIA will pay RM50 mil to RHB bank to enable the latter to source takaful products from another insurer or takaful operator.

Source: Bursa Malaysia

Some bancassurance results

Standard Chartered: 31% growth in 2008 compared to 2007, target 60% growth in 2009.

Citibank: Bancassurance contributed 30% of bank's retail revenue.

Alliance: Sales of regular premium products grew by 17% in 2008.

Source: The Star

STMB Consolidates

Syarikat Takaful Malaysia Bhd (STMB) will finalise the consolidation of its branches with those of Bank Islam by year end.

The number of branches of STMB will reduce to 70 from the current 100. The benefits of consolidation are cost savings and more effective bancatakaful.

Other initiatives of STMB are:

• Expand alternative distribution channels: corporate agency, tied agents and financial advisers.


• Implement electronic imaging.


• Roll out 1st structured investment product by end of April.

STMB also expects the talk with strategic partners would bear fruits within the next 2 months. Currently 2 potential partners are involved: Abu Dhabi-Kuwait-Malaysia Strategic Investment Corp and Islamic Arab Insurance Co PJSC.

Source: The Star

AXA Affin to Launch Bancassurance with Affin Bank

The Star reported that AXA Affin would launch bancassurance with Affin Bank by August 2008. Affin Bank has 82 branches in Malaysia. AXA Affin is also in negotiation with other banks for bancassurance venture.

http://biz.thestar.com.my/news/story.asp?file=/2008/3/14/business/20640782&sec=business

AXA Affin would also retain and strengthen its agency force.

AXA Affin currently has offices in Kuala Lumpur and Johor Bahru and 4 new branches will be opened soon in Penang, Petaling Jaya, Sibu and Kuching.