News Digest 20100223-20100301

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News Digest 20100106-20100113

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News Digest 20091116-20100106

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Manulife yet to decide on partner

Manulife has yet to finalise its partner in the application for the new takaful licence. To justify its investment in the new licence, Manulife would need to attract 500,000 customers in 5 years.

To target the mass market, Manulife will engage multiple distribution partners such as banks, telecommunication companies, hypermarkets etc.

Source: Business Times

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

Manulife unit trust sets targets

Manulife's new unit trust arm has set the following targets:

• RM1.7 bil sales by end 2010
• 20 funds by end 2010
• 5 funds in 2009:
• 2 local funds in Oct 2009
• Equities
• Bonds
• 3 foreign funds in Dec 2009
• Global resources
• China value
• Indian equities

Source: Business Times

UOB Life to be sold

United Overseas Bank plans to sell UOB Life and Prudential and Manulife are interested. The sale could raise US$500 mil.

Source: The Star, 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

Axa Affin Life to have a new CEO

Loke Kah Meng (pic) is tipped to be the next CEO of Axa Affin Life Insurance in Malaysia. He is due to report to work in early August.

It is learned that Loke's physical last day with Great Eastern was yesterday.

Loke was the EVP of Customer Management and Chief Marketing Officer at Great Eastern. He was heavily involved in the Centennial Campaign at Great Eastern when Great Eastern celebrated its 100th year anniversary last year.

A Fellow of Society of Actuaries, Loke worked in AIA as appointed actuary and Manulife as CFO and appointed actuary prior to joining Great Eastern.

Source: TAS Blogger

Insurance outlook

Summary of views of various industry players on insurance outlook in 2H 2009:

Great Eastern

• The worst is over, export industry picking up, companies started recruiting
• 2H to be better than 1H
• Expect double-digit growth for whole year
• Distribution channel and products are key growth drivers

LPI Capital

• Export and construction sectors will provide growth
• Marine and fire insurance will benefit
• Need to be prudent in underwriting and have strong claims management in view of rising motor insurance claims (bodily injury and motor theft)

Manulife

• Regardless of economic cycles, insurance performs well
• Stimulus plans are positive
• External factors may affect growth pace
• Equity markets have not stabilised

Source: The Star

Progress in Transformation of Agents

The following is a summary of the various initiatives taken by insurers and their progress in transforming their agents to financial planners:

Prudential

• 1,800 out of 9,000 agents have been converted to wealth planners
• Target another 1,800 to 2,000 this year
• 40 - 50% agents to be wealth planners in next 5 years
• Average productivity of agency force: RM69,000 in 2008
• Wealth planners need to bring in RM200,000 NB annually

Great Eastern

• Target to have 3,000 Life Planning Advisors (LPAs) by 2010
• 600 LPAs at end of 2008

Manulife

• Expect 300 wealth planners by end of 2009
• Target 50% of agents (total agents: 1,500) to be wealth planners by end of 2010

Source: The Star

Manulife wants takaful licence

Manulife will apply for a new takaful licence by end of October. Malaysia recently announced that 2 new takaful licences would be granted this year.

Takaful penetration rate is currently at 7%, lower than the 40% in the conventional side.

Manulife currently has a takaful operations in Indonesia and intends to expand to the Philippines, Thailand and China.

Manulife has not decided whether it will increase its stake in the operations in Malaysia following the liberalisation.

Manulife's targets in 2009:

• New business premiums: 5% more than RM63 mil achieved in 2008
• 2 protection-related products in 2009

Source: The Star

Manulife targets positive growth

Manulife targets a positive growth in 2009 despite gloomy economic outlook.

Some statistics on Manulife:

• 1,500 agents, target to increase by 600 to 800
• Agency contributed 73% of group's revenue in 2008
• > 270,000 policyholders
• Suffered in ILP and fund management in the last 6-8 months
• Had more demand for protection products

Source: Business Times

Insurers to cut bonuses

Policyholders in Singapore can expect their bonuses on endowment and whole life policies to be cut following a dismal investment performance in 2008.

Company that have decided to cut: Great Eastern
Company yet to decide: AIA
Companies declined to comment: Prudential, NTUC Income, Manulife
Company not cutting: TM Asia

Source: Asiaone

ManuCare100

Manulife today launched ManuCare100, a medical plan that covers until age 100.

ManuCare100 is expected to contribute 20% of NB premiums in 2009. In 2008, medical plans contributed 10% of NB premiums for Manulife.

Source: The Star

AIA to be split from AIG

AIA will be separated from AIG and put into a specially created separate legal entity, subject to regulatory approvals.

In a move to convince policyholders, AIA announced that it had a solvency ratio on a pro forma basis of >200% of regulatory requirements as of 30/11/2008 and with A+ rating from S&P.

Other statistics on AIA across 13 Asian markets:

• >US$60 bil assets under management
• >250,000 agents, >52,000 agents recruited in 2008
• 20,000 employees
• 20 mil customers

Meanwhile, 2 bidders (Prudential and Manulife) for AIA bidded well below AIG's target of US$20 bil. AIG will consider an IPO.

Source: The Star

Bid for AIA closes on Friday

The 1st round of bidding for AIG's business in Asia closes this Friday. Apparently there are 3 parties that are interested: Temasek, Manulife and Prudential. Bank of China and HSBC have apparently dropped out. It was reported that Prudential may not be able to meet the Friday deadline.

AIG has also changed their mind and would now consider selling more than 49% of its stake in AIA, effectively surrendering the control to the successful bidder.

The whole stake of AIA is valued at US$20-30 bil.

Source: CNN Money, Reuters, The Star

Insurance and the crisis

Views expressed by various industry players during an interview with the Star:

Manulife

Outlook is positive. Consumers will be more prudent and long-term insurance products will be the preferred choice.

Allianz

Company can weather the crisis due to access to numerous best global practices.

Great Eastern's Insurance Agent

Harder to sell, consumers are more conservative and defer purchase. None has cancelled policy though.

Source: The Star

Manulife names new CEO

Manulife Insurance Bhd has promoted Kevin McWhinney as its new CEO. Prior to his promotion, Kevin was the EVP of Distribution since January 2006.

Source: Business Times

Secure Income Plus - the Main Product for Manulife

Secure Income Plus seems to be doing well for Manulife. Since the launch of the product in July 2008, Manulife has collected more than RM50 mil in premiums. The target for this year is RM100 mil and in 2009 RM200 mil.

Secure Income Plus will contribute >50% of the total NB premiums of Manulife this year.

To sign up for the Plan, one needs at least US$30,000 although Manulife recommends customers to put in at least US$100,000.

Source: The Star

Insurance Companies Strategies in Facing Crisis

How are insurance companies in Malaysia handling the current financial crisis?

Allianz Malaysia Bhd

• Tapping on group's worldwide best practices: underwriting, claims, investment, IT etc
• Streamlining both general and life businesses
• Prudent investment strategy backed by well defined investment mandates, guidelines and limits

Manulife

• Have good risk management system and practices in product design, investment management and asset liability management
• Strict criteria in evaluating both fixed income and equities investment

Hong Leong Assurance

• Well diversified investments
• Minimum exposure to equity market, mainly in sound dividend-yielding stocks
• No exposure to collateralised debt obligations
• Investments mainly in local market

Source: The Star

Manulife's CEO Resigns

Peter Robertson, the CEO of Manulife Insurance (Malaysia) Berhad, has resigned and he would leave the company on 11 November 2008.

Peter joined Manulife in 2006. He is an actuary (Fellow of the Faculty of Actuaries) by training.

Source: Bursa

Weak Investment Returns for Insurers

The Star is predicting weak investment returns for insurance companies due to the poor performance of the financial markets following the crisis in the US.

However, investment returns will remain positive over the longer period.

The solvency ratio was 120.6% at end of 2007, well above the regulatory minimum.

Manulife meanwhile believes that insurance is counter-cyclical and people tend to save more and cut back discretionary spending during current market conditions.

Source: The Star

Citibank to Distribute Secure Income Plus

Citibank Bhd has been appointed by Manulife to distribute its investment-linked retirement income plan - Secure Income Plus.

"Citibank has strong network customers who fit the profile of the Secure Income Plus target market", according to Manulife.

Source: The Star

Secure Income Plus

Manulife has launched an investment-linked product for retirees with Guaranteed Withdrawal Benefit (GWB).

Product Features:

• GWB: either regular stream of income for at least 20 years (apparently at 5% of account value) or lifetime income from age 66.
• Loyalty bonus is granted (apparently 25% of GWB if no withdrawal in first 5 policy years and 5% for each year from years 6 to 10 reaching a maximum of 50%)
• Step-up mechanism: (apparently on every 5th policy anniversary if the market value of the account is higher than the GWB, the GWB is stepped up to the market value)
• Switching is allowed
• 3 Secure Income Plus lifestyle portfolios are available
• Distributed through HSBC

Source: Business Times & TAS Research

Financial Planning key to improve Penetration Rate

The current insurance penetration rate of 40.1% can be further improved if the industry focuses on financial planning. Manulife's CEO opines that the distribution of products should be more on needs-based approach rather than product-pushing approach.

LIAM's President concurs and thinks that the industry needs to create branding and educational campaigns to show the value of life insurance and financial planning.

Source: The Star

Regional Support Centre

Manulife has embarked on Regional Support Centre (RSC) model. It opened an RSC in Sibu recently.

The RSC is an integral component of the company's multi-distribution channel strategy where it will support agency, bancassurance and financial advisors with facilities of training, marketing and customer service.

Source: Business Times

Foreign Shareholders may not Get Dividends

As at 30 June 2008, Manulife Insurance (Malaysia) Berhad was 53.28% owned by foreign shareholders. According to the 3 August 2005 resolution, those new foreign shareholders who were registered after 8/8/2005 are in a queue and will not receive the payment of dividends until based on the queue, their shareholdings rank within the first 49%.

Source: Bursa Malaysia

Manulife's HR Vision

Manulife wants to be the employer of choice. The following are considered important to reach this vision:

• Communicate with a high degree of integrity the availability of job opportunities to its staff.
• Implement Performance Management System (PMS)

PMS comprises the following:

• Performance appraisal
• Talent identification
• Compensation and benefits
• Career advancement opportunities

Source: The Star

Inflation Impact

What impact would inflation have on insurance industry? LIAM, ACE Synergy and Manulife provided their opinions on this.

The general consensus seems to be the impact would not be significant in most aspects.

Read the article yourself to find out more.

Source: The Star

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

Manulife Interested in Takaful

Manulife has expressed interest in acquiring company with a takaful license but is not currently in talks with potential sellers. Manulife is more interested in family takaful than general takaful.

The following are also in Manulife's plans:

• Set up or acquire an asset management company
• Launch a retirement income product middle of 2008

Source: The Star & Business Times

Manulife's Strategies

Manulife has embarked on a three-pronged strategy for 2008:

1. Reorganise internal structure: setting up holding company and asset management company.


2. Enhance education and retirement planning products, including launching a lifetime annuity product targeting higher income group.


3. Raise the professionalism of the agency force: improve productivity, provide quality advice and CPD.

Manulife's statistics:

• Sales (AP) RM50 mil (2006) RM71 mil (2007) Growth of 40%


• Growth over 2006 Agency (24%) Bancassurance (81%)


• Pre-tax profit RM71 mil (2006) RM114 mil (2007)


• Market share 12th (2006) 10th (2007)


• Active agents 1,286 (2006) 1,305 (2007) 10% growth target for 2008


• Productivity of agents improved over 20% in 2007

http://biz.thestar.com.my/news/story.asp?file=/2008/4/1/business/20803738&sec=business