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BESTWEEK
Asia/Pacific
i F
de Pad or a
vi s cc
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s d ss
se m o
e ob n
pa il
ge e
3
Weekly Insurance Newsletter
12 June, 2012 • Issue 24
•
EUROPE (AMBEUR)
▼
1.15
4.06
•
ASIA/PACIFIC (AMBAP)
▼
▼
BEST’S REGIONAL COMPOSITE INDEXES WEEK/WEEK: U.S. (AMBUS)
2.79
Japan’s Top Insurers’ Profits Rebound
posted a 118% rise in ordinary profit to ¥487.8 billion
Japan’s major insurers have had varied results in a (US$6.2 billion) in the 2012 fiscal year ended March 31.
tough business environment over the past year as shown Publicly listed Dai-ichi Life, the country’s second-largest,
in their recently reported 2011 fiscal year results. Life saw ordinary profit jump 178% to ¥225.9 billion.
insurers were able to show improved profits while nonSteady sales of individual insurance contributed to
life insurers were hit by
an 8% rise in consolidated
heavy catastrophe losses.
ordinary revenue for DaiImproved results for life
ichi Life, said President
“Leading life companies do have
insurers represent a genKoichiro Watanabe. Ordia large book of in-force business
eral “rebound” from the
nary profit increased sigthat generates a huge mortality and
previous fiscal year, which
nificantly due to improved
morbidity profit gain, which forms
was negatively affected by
investment, but the rise
the basis of their core profit.”
the March 11, 2011 earthwas offset by the negaMM Lee
quake and tsunami, said
tive impact of decreased
general manager of analytics,
MM Lee, general manager
deferred tax assets due to
of analytics at A.M. Best
a change in corporate tax,
A.M. Best Asia Pacific Ltd.
Asia Pacific Ltd.
said Watanabe in a finanDespite a downward
cial presentation.
trend for life insurers in terms of sums insured in Japan,
Another factor affecting life insurers’ profitability is
Lee said “leading life companies do have a large book interest margin, said Lee. Companies set aside additional
of in-force business that generates a huge mortality and reserves to cope with the low interest-rate environment
morbidity profit gain, which forms the basis of their over the past several years. As insurers did not have such
core profit.”
a burden in the 2011 fiscal year, the profit before tax
Nippon Life, a mutual and Japan’s largest life insurer, ■ See PROFITS, Page 2
By Iris Lai
Hurdles for a Privatized Insurance Market in Myanmar
By Rebecca Ng
In Myanmar, the insurance industry’s anticipated privatization will trigger legislative reforms that favor market
development, but capital adequacy questions and fraud
risks will be among the obstacles to growth, according to
Myanmar-based consultancy Thura Swiss Ltd.
Current economic and insurance market development
in Myanmar (Burma) together with global insurers’ risk
appetites and limited access to capital in the country will
Cambodia
2 Nipponkoa targets
growth in
Cambodia.
Credit Ratings
4-5 Monthly round-up
of A.M. Best credit rating
actions in Asia-Pacific.
probably mean the larger local companies will set up
insurance operations initially as the market opens.
“There are still a lot of restrictions to forming new
public companies in Myanmar. Only the big conglomerates will have enough capital to set up an insurance
company as a greenfield project in the initial stage,” said
Aung Thura, chief executive officer of Thura Swiss.
“In the future, the conglomerates might split off their
■ See MYANMAR, Page 3
Australia
6 Asteron Life focuses on
growing with
independent
advisers.
Stocks
7 A.M. Best insurance
stock indexes.
Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
No part of this report or document may be distributed in any electronic form or by any means, or stored in a database or retrieval
system, without the prior written permission of the A.M. Best Company. Refer to our Terms of Use for additional details.
BESTWEEK Asia/Pacific
Japan
■ PROFITS
From page 1
increased substantially
compared with the previous year. The impact of
the tax adjustment led to a
mild increase in net profit.
Looking ahead, Lee
said the “current profit
level is sustainable” given
the capabilities of leading life companies in Japan. The profit level could likely
go up with a smaller tax adjustment impact. Although
insured sums for the life market continue to decrease
in Japan, there is positive momentum for premiums
through higher demand for health and annuity coverage
due to demographic changes.
In contrast to the life sector, Japan’s nonlife insurance
results have been hurt by natural catastrophes in the
2011 fiscal year. The Tohoku earthquake and tsunami
and Thailand floods brought “unprecedented losses “ to
the three largest nonlife groups, affecting results in two
successive fiscal years, said Randall Wada, chief executive officer of insurance intermediary JLT Holdings
Japan Ltd.
Tokio Marine Holdings Inc. said catastrophes from
both foreign and domestic markets led to a 91.7%
drop in net income to ¥6 billion for the 2011 fiscal
year. MS&AD Insurance Group Holdings Inc. posted
a net loss of ¥169.4 billion for the 2011 fiscal year.
NKSJ Holding Inc.’s net loss widened to ¥92.3 billion
in 2011 from a net loss of 12.9 billion yen a year earlier (Best’s News Service, May 23, 2012).
All major nonlife groups were hit by large losses from
the Thailand floods in late 2011. Lee said “it’s been two
consecutive years of catastrophe losses for the industry”
that coincided with tighter capital requirements from
the regulator.
To improve capitalization, Lee said a few companies
issued subordinated notes and most accelerated risk assets
reduction. In the medium term, he said it has become evident companies must specifically strengthen underwriting
profitability in a depressed investment market.
The financial impact has been significant to nonlife companies and their acquisitions have been materially impeded.
But compared with global insurers, Wada said the big three
Japanese nonlife groups’ balance sheets remain strong.
“While the big three can absorb the impact of the
2011 events, the psychological impact is likely to be
a strong factor in their collective ability to get back
to business as usual,” said Wada. As a fair degree of
increased conservatism will likely remain for a while, he
added this will have an effect on their performance.
In the past, nonlife groups’ major priority was to
gain growth momentum through overseas or life insurance expansion. Now, Lee noted “improving underwriting profit structure has gained high attention if
not higher than growth momentum by the industry.”
Responsively, motor business, the largest nonlife portfolio,
have increased premium rate.
Japanese nonlife companies will strive to improve
their risk-based capitalization and profitability. Overall,
Lee noted “the downside risk for risk-based capitalization
is lower” than before and the nonlife sector is expected
“to report stronger earnings in the medium term.”
As the domestic nonlife market has decelerated, Japanese nonlife companies continue to seek expansion in
overseas and life business for risk diversification and to
maintain growth momentum. Profitability of the nonlife
market “will likely improve” in the medium term, said Lee.
Nippkonka Targets Cambodia Growth Through New Office
Nipponkoa Insurance Co. Ltd., a subsidiary of NKSJ
Holding Inc., has opened a new representative office
in Phnom Penh, Cambodia, as part of a plan to increase
investment in the region.
Nipponkoa is the first Japanese insurer to set up a
representation office in Cambodia, the insurer said. The
new office will work together with Campu Lonpac
Insurance plc, a nonlife joint venture of Nipponkoa with
its Malaysian business partner, Lonpac Insurance Bhd.
In cooperation with Campu Lonpac, Nipponkoa said
it aims to enhance its services to Japanese corporate
clients in Cambodia. Campu Lonpac is jointly owned by
Cambodian Public Bank, Public Bank Malaysia and LPI
Capital Bhd., the parent company of Lonpac.
There are currently five nonlife insurers and one reinsurer in Cambodia.
2
BestWeek Asia/Pacific • 12 June, 2012
Japanese corporate investments are expected to
accelerate in Cambodia, said Nipponkoa. Cambodia and
its neighbor Myanmar are expected to follow a similar
development path taken by Vietnam by drawing Japanese investment to counter increasing production costs
and shortage of labor supply in other Asian countries.
NKSJ said it plans to expand its international business
by looking into merger and acquisition opportunities in
emerging markets as part of its diversification strategy,
driven by stagnant growth in its domestic Japan market.
In 2011, Nipponkoa raised its stake in PT Asuransi Permata Nipponkoa Indonesia to 80%, converting it into a
subsidiary (Best’s News Service, Feb. 7, 2012).
In China, Nipponkoa gained approval to set up a
branch in the northern province of Shandong last March.
—Iris Lai
Oyanmar
VERLINE
M
■ MYANMAR
From page 1
insurance business and
Myanmar By
raise capital through the
developing capital market,” The Numbers
Population: 54.6 million
noted Thura.
Myanmar is one of the
Median Age: 26.9
three countries where the
Population Growth Rate: 1.07%
insurance industry is solely
Life Expectancy: 65.24
controlled by the governGross Domestic Product:
ment, along with North
US $50.2 billion
Korea and Cuba.
GDP Growth Rate: 5.5%
The Myanmar Insurance Law, enacted in 1993, Source: CIA World Factbook
cleared the way for the
market’s opening, according to the Ministry of Finance
and Revenue.
Although Myanmar is now opening its insurance
sector, domestic insurers do not seem to be authorized
to underwrite risks in a foreign currency, which will
offer foreign insurers a market opportunity, said Vincent
George, CEO of Poe Ma International Insurance Broker
Co., Ltd.
“I think that these companies that do not yet have
experience will limit themselves to underwrite narrow
risks with preset amounts, including individual risks, life
insurance, accidents, and so on. I believe that they will
not be able to provide the modern solutions that foreign
investors will need,” said George.
Myanmar’s insurance industry has been exclusively
controlled by the state for nearly 50 years, since all
78 foreign insurers previously operating in the country were nationalized in 1963. The Insurance Business
Supervisory Board of Myanmar has recently deregulated
private companies and allowed them to apply for life
and nonlife operation licenses until the end of June.
Thura Swiss noted the privatization will lead to legislative reform in the sector, as regulatory authorities will
initially set caps on insurance premiums and commissions similar to the way the central bank sets interest
rates for banks.“The market will also play a bigger role in
the price-setting mechanism” while the sector develops
and competition plays a bigger role,Thura said.
“The legislation will probably also expand areas of
compulsory insurance and target at eliminating the fraud
that is probably almost inevitable at a time when a market is just at its initial stage of development,” he added.
Myanma Insurance Corp., a state-owned organization,
is the sole insurance company responsible for all types
of insurance in the country at present. The consultancy
expects Myanma Insurance will become more of a regulatory authority, as well as the insurer of state enterprises and
big projects in fields like development of natural resources.
As the market opens, Myanma Insurance has stipu
BESTWEEK Asia/P
lated minimum capital requirement for life insurers
of at least 6 billion kyat (US$7 million) when operating
through state-run banks. For general insurers, the minimum is 46 billion kyat.The company also requires 40% of
insurers’ capital to be maintained in bank accounts with
Myanmar Economic Bank, one of the state-owned banks.
Thura sees the privatization of the insurance sector
as a good opportunity for local companies, but any new
insurer’s main challenge will probably be “the lack of
technical know-how to estimate risks” as there is practically no precedent for private insurance in Myanmar.
“The lack of skilled people will make it very hard for
the local companies and a lot of money can get burnt at
the beginning,” said Thura.
“Fraud will be another challenging factor,” he noted.
“The lack of infrastructure and data will make it quite
difficult for insurance companies to uncover fraud.”
The consultancy also said insurance products will be
needed first for the business side, covering things such
as buildings, machines and facilities.
“The general low level of income in Myanmar will
make it virtually impossible for many years to establish
mandatory insurance schemes for private persons; for
example, health insurance. But there will be a growing
middle and upper class that would be very interested in
health insurance,” Thura noted.
Natural catastrophe risk, including f loods and
cyclones, is another major concern for local insurers,
as those catastrophes are often on a scale that exceeds
a national insurer’s capacity and in other countries are
typically backed by international reinsurers, said Thura.
The solution for insurers who want to underwrite
risk related to natural disasters in Myanmar is to work
through a broker that would provide technical details
necessary for risk evaluation.
U.S. sanctions also make it “very difficult” to find a foreign insurer who would be interested in Myanmar, said
George.
Audio:
Listen to the entire interview with Aung Thura at
http://www.bestweek.com/v.asp?v=thura612.
For access on iPads
and mobile devices:
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12 June, 2012 • BestWeek Asia/Pacific
3
BESTWEEK Asia/Pacific
Financial Strength
Current List of Asia-Pacific Credit Ratings
T
his report includes credit ratings for all companies domiciled in Asia-Pacific, as well as their
Outlooks and Implications. Credit ratings consist
of the Financial Strength Rating (FSR) and Issuer Credit
Rating (ICR) for each company.
Detailed reports, including rationales, are made
available to subscribers on our website shortly after
ratings are released. These company reports have been
considerably enhanced, reflecting expanded financial
analysis and commentary. For explanations of rating
terminology, refer to the Guides to Best’s ratings following this report.
Ratings are effective as of 31 May, 2012. For
current ratings please visit www.ambest.com.
AMB# Company Name
Ultimate Parent
Issuer
Financial Credit
Outlook
StrengthOutlook
Rating
Implication Rating Implication
Australia
086552
086085
086993
086052
086652
077834
084314
Ansvar Insurance Limited
Chubb Insurance Company of Australia Limited
First American Title Insurance Company of Australia Pty Limited
General Reinsurance Australia Ltd
General Reinsurance Life Australia Ltd.
Guild Insurance Limited
QBE Insurance (International) Ltd
Allchurches Trust Limited
The Chubb Corporation
First American Financial Corporation
Berkshire Hathaway Inc
Berkshire Hathaway Inc
The Pharmacy Guild of Australia
QBE Insurance Group Limited
090810
090957
088692
090955
090079
078649
090988
Aioi Nissay Dowa Insurance (China) Company Limited
China Life Reinsurance Company Ltd.
China Investment Corporation
China Property & Casualty Reinsurance Company Ltd.
China Investment Corporation
China Reinsurance (Group) Corporation
China Investment Corporation
Hyundai Insurance (China) Co., Ltd.
Hyundai Marine & Fire Insurance Co, Ltd
Lloyd's Insurance Company (China) Limited
Lloyd's
NIPPONKOA Insurance Company (China) Limited
NKSJ Holdings, Inc.
a-
aa+
a-
aa+
aa+
a-
a+
Stable
Stable
Stable
Stable
Stable
Stable
Stable
A-
A++
A- A++
A++
A-
A
Stable
Stable
Stable
Stable
Stable
Stable
Stable
a-
a
a
a
bbb+
a+
a-
Stable
Stable
Stable
Stable
Positive
Stable
Stable
A-
A
A
A
B++
A
A-
Stable
Stable
Stable
Stable
Positive
Stable
Stable
a-
a-
a
a
a-
a-
bbb
bbb+
Stable
Stable
Stable
Stable
Stable
Stable
Positive
Stable
A-
A-
A
A
A-
A-
B++
B++
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
a-
a-
bbb+
bbb+
Stable
Stable
Stable
Stable
A-
A-
B++
B++
Stable
Stable
Stable
Stable
bbb
Positive
B++
Stable
a+
aa-
a-
a+
aa
aa-
a+
aa-
aa-
aa+
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
A
A+ A-
A
A+
A+
A
A+
A+
A++
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
a-
a-
a-
a-
Positive
Stable
Stable
Stable
A-
A-
A-
A-
Positive
Stable
Stable
Stable
China
Hong Kong
090678
086939
083761
090772
087838
085029
085637
084822
Blue Cross (Asia-Pacific) Insurance Limited
Hong Leong Insurance (Asia) Limited
NIPPONKOA Insurance Company (Asia) Limited
Starr International Insurance (Asia) Limited
Sun Hung Kai Properties Insurance Limited
Taiping Reinsurance Company Limited
Tugu Insurance Company Limited
Wing Lung Insurance Company Limited
Bank of East Asia Limited
Hong Leong Financial Group Berhad
NKSJ Holdings, Inc.
Starr International Company, Inc.
Sun Hung Kai Properties Limited
China Taiping Insurance Group Co.
PT PERTAMINA (PERSERO)
China Merchants Bank Co., Ltd.
086041
086043
086044
085412
General Insurance Corporation of India
The New India Assurance Company Limited
New India Assurance Company Limited
The Oriental Insurance Company Limited
United India Insurance Company Limited
India
Indonesia
078591
PT Asuransi Jasa Indonesia (Persero)
Japan
085028
085446
085251
085358
084422
085457
084413
085258
085179
085100
Aioi Nissay Dowa Insurance Company Limited
MS&AD Insurance Group Holdings, Inc.
American Family Life Assurance Company of Columbus (Japan Branch)
The Fuji Fire & Marine Insurance Company, Limited
American International Group, Inc
Meiji Yasuda Life Insurance Company
Meiji Yasuda Life Insurance Company
Mitsui Sumitomo Insurance Company, Limited
MS&AD Insurance Group Holdings, Inc.
Nippon Life Insurance Company
Nippon Life Insurance Company
NIPPONKOA Insurance Company Ltd
NKSJ Holdings, Inc.
Sompo Japan Insurance Inc.
NKSJ Holdings, Inc.
The Toa Reinsurance Company, Limited
The Toa Reinsurance Company, Limited
Tokio Marine & Nichido Fire Insurance Co., Ltd.
Tokio Marine Holdings, Inc.
078304
089625
084138
084244
China Taiping Insurance (Macau) Company Limited
China Taiping Insurance Group Co.
Luen Fung Hang Insurance Company Limited
Macau Insurance Company Limited
Dah Sing Financial Holdings Limited
Macau Life Insurance Company Limited
Dah Sing Financial Holdings Limited
Macau
4
BestWeek Asia/Pacific • 12 June, 2012
Financial Strength
AMB# Company Name
Ultimate Parent
BESTWEEK Asia/P
Issuer
Financial Credit
Outlook
StrengthOutlook
Rating
Implication Rating Implication
Malaysia
090060
090756
091203
091202
091269
086913
089132
078303
ACR ReTakaful SEA Berhad
ACR ReTakaful Holdings Limited
Asia Capital Reinsurance Malaysia Sdn Bhd
Khazanah Nasional Berhad
BEST RE Family (L) Limited
Islamic Arab Insurance Co. (Salama)
BEST RE (L) Limited
Islamic Arab Insurance Co. (Salama)
Energas Insurance (L) Limited
Petroliam Nasional Berhad
Labuan Reinsurance (L) Ltd
Lonpac Insurance Bhd
LPI Capital Berhad
Malaysian Reinsurance Berhad
MNRB Holdings Berhad
089260
090607
091859
091593
086434
086363
091826
084340
090870
091607
086379
090784
078332
090239
086375
078302
091252
091290
086328
086404
086188
089186
078699
091065
090234
ACS (NZ) Limited
Allchurches Trust Limited
Aioi Nissay Dowa Insurance Company, Limited (New Zealand Branch)
AMI Insurance Limited
BNZ Life Insurance Limited
China Taiping Insurance (NZ) Limited
China Taiping Insurance Group Co.
CIGNA Life Insurance New Zealand Limited
Cigna Corporation
Co-operative Life Limited
Co-operative Bank Limited
Consumer Insurance Services Limited
Fisher & Paykel Appliances Hldgs Ltd
Contractors Bonding Limited
The Education Benevolent Society Incorporated
Farmers' Mutual Group
Farmers' Mutual Group
Fidelity Life Assurance Company Limited
FMG Insurance Limited
Farmers' Mutual Group
The New India Assurance Company Limited (New Zealand Branch)
New Zealand Local Government Insurance Corporation Limited
New Zealand Local Govt Ins Corp Ltd
Pacific International Insurance Limited
Partners Life Limited
Police Health Plan Limited
New Zealand Police Association
Southern Response Earthquake Services Limited
Sovereign Assurance Company Limited
Commonwealth Bank of Australia
TOWER Health & Life Limited
TOWER Limited
TOWER Insurance Limited
TOWER Limited
TOWER Life (N.Z.) Limited
TOWER Limited
Union Medical Benefits Society Limited
Virginia Surety Company, Inc. (New Zealand Branch)
077617
086771
Malayan Insurance Co., Inc.
Pan Malayan Mgmt & Investment Corp
National Reinsurance Corporation of the Philippines
a-
a-
a-
a-
a
a- u
a-
a-
Stable
Stable
Stable
Negative
Stable
Negative
Stable
Stable
A-
A-
A-
A-
A
A- u
A-
A-
Stable
Stable
Stable
Negative
Stable
Negative
Stable
Stable
bbb-
a+
a-
a
bbb
a-
bbb+
bbb
bbb-
bbb
a
a-
a
a-
bbb+
bbb
bbb
bbb
a-
aa-
a-
a-
a-
a-
a-
Negative
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Negative
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Positive
B+
A
A-
A
B++
A-
B++
B++
B+
B++
A
A-
A
A-
B++
B++
B++
B++
A-
A+
A-
A-
A-
A-
A-
Negative
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Negative
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Positive
bbb
bbb
Stable
Stable
B++
B++
Stable
Stable
a-
a-
a
a-
a
a+
a-
a-
a
a
a+
Stable
Stable
Stable
Negative
Stable
Stable
Stable
Stable
Stable
Stable
Positive
A-
A-
A
A-
A
A
A-
A-
A
A
A
Stable
Stable
Stable
Negative
Stable
Stable
Stable
Stable
Stable
Stable
Positive
a
bbb
a-
a
a-
a-
aa+
Stable
Stable
Positive
Stable
Stable
Stable
Stable
A
B++
A-
A
A-
A-
A++
Stable
Stable
Positive
Stable
Stable
Stable
Stable
a
a-
Stable
Stable
A
A-
Stable
Stable
bbb
Stable
B++
Stable
bbb-
bbb-
bbb+
Stable
Stable
Stable
B+
B+
B++
Stable
Stable
Stable
New Zealand
Philippines
Singapore
078461
088853
089433
078966
091577
088684
091559
085224
091708
089446
086781
Asia Capital Reinsurance Group Pte. Ltd.
ACR Capital Holdings Pte. Ltd.
China Taiping Insurance (Singapore) Pte. Ltd.
China Taiping Insurance Group Co.
First Capital Insurance Limited
Fairfax Financial Holdings Limited
PARIS RE Asia Pacific Pte. Ltd.
PartnerRe Ltd
Samsung Reinsurance Pte. Ltd.
Samsung Fire & Marine Insurance Co, Ltd
SCOR Reinsurance Asia-Pacific Pte Ltd
SCOR SE
SHC Capital Limited
See Hoy Chan Sdn. Berhad
Singapore Reinsurance Corporation Limited
Starr International Insurance (Singapore) Pte. Ltd.
Starr International Company, Inc.
Tenet Insurance Company Ltd
NKSJ Holdings, Inc.
United Overseas Insurance Limited
United Overseas Bank Limited
087968
086796
085468
085225
086459
085600
085850
Dongbu Insurance Company, Ltd.
Dongbu Insurance Company Ltd
Hanwha General Insurance Company Limited
Hyundai Marine & Fire Insurance Co., Ltd.
Hyundai Marine & Fire Insurance Co, Ltd
Korean Reinsurance Company
LIG Insurance Company Limited
MERITZ Fire & Marine Insurance Co., Ltd.
Meritz Financial Group Inc.
Samsung Fire & Marine Insurance Co., Ltd.
Samsung Fire & Marine Insurance Co, Ltd
086496
084184
Central Reinsurance Corporation
South China Insurance Co., Ltd.
Hua Nan Financial Holdings Co. Ltd.
085568
Asian Reinsurance Corporation
South Korea
Taiwan
Thailand
Vietnam
091542
091541
091397
PVI Insurance Corporation
PVI Reinsurance Company
Samsung Vina Insurance Limited
Vietnam National Oil & Gas Group
Vietnam National Oil & Gas Group
Samsung Fire & Marine Insurance Co, Ltd
12 June, 2012 • BestWeek Asia/Pacific
5
BESTWEEK Asia/Pacific
Financial Strength/Australia
Asteron Life Targets
Corporate Market Growth
Group life and group income protection opportunities in the small to medium-size corporate market are a
key business focus for Asteron Life Ltd., according to its
Sydney-based financial parent Suncorp Group.
Asteron Life operates in the group wholesale or
corporate, retail and direct market segments. It has
refreshed its strategy to concentrate on the corporate,
superannuation fund and platform provider markets;
while relying on the intermediated distribution model
— its independent financial advisers.
“The group risk refresh is based on a growth strategy
for these segments,” said Andrew Reddy, national manager of business development for group risk at Suncorp.
Asteron Life Results
(A$ million, US$1 = A$1.03)
2011
2010
2009
2008
Gross premiums written
482.0
439.0
403.2
552.5
Net premiums written
352.3
318.7
287.0
394.8
Balance on technical account(s)
96.1
175.0
87.8
62.9
Profit/(loss) before tax
96.5
175.5
88.5
62.9
Profit/(loss) after tax
67.9
131.3
52.8
87.4
Source:
, AMB Credit Report
“It was completed following a review of market needs,
our capabilities, resources and competitor offerings. The
strategy has evolved rather than being a material change.”
The group risk market is worth A$3.4 billion (US$3.3
billion) and is growing strongly, but is a highly competitive market characterized by high volumes and narrow
margins, noted Asteron Life.
The Sydney-based insurer said it is now seeking opportunities in the small to medium corporate market by
offering insurance packages to company-sponsored and
superannuation fund groups with 50 to 5,000 members.
According to Asteron Life, the corporate market as
the employer-sponsored benefits market includes insurance programs created and paid for by companies, with
advice from advisers, consultants and brokers.
The superannuation segment relates to employer superannuation or pension funds in their accumulation phase, where
insured benefits are also provided, and where the policyowner is the trustee of the superannuation or pension trust.
Group risk is central to the company’s strategy to
build distribution reach and capability in the IFA market.
Reddy said the IFA model “is an attractive segment for
us financially with reasonable margins and sustainable
pricing,” and the insurer will partner with IFAs to further
develop the group business.
—Rebecca Ng
6
BestWeek Asia/Pacific • 12 June, 2012
RATING ACTIONS OVERVIEW
Rating Definitions
A Best’s Financial Strength Rating is an independent opinion of an
insurer’s financial strength and ability to meet its ongoing insurance
policy and contract obligations.
A Best’s Issuer Credit Rating is an independent opinion of an issuer/
entity’s ability to meet its ongoing senior financial obligations.
Rating Disclosures
The Financial Strength Rating opinion addresses the relative ability
of an insurer to meet its ongoing insurance policy and contract
obligations. The rating is not assigned to specific insurance
policies or contracts and does not address any other risk,
including, but not limited to, an insurer’s claims-payment policies
or procedures; the ability of the insurer to dispute or deny claims
payment on grounds of misrepresentation or fraud; or any specific
liability contractually borne by the policy or contract holder. The
rating is not a recommendation to purchase, hold or terminate any
insurance policy, contract or any other financial obligation issued
by an insurer, nor does it address the suitability of any particular
policy or contract for a specific purpose or purchaser.
The Issuer Credit Rating opinion addresses the relative credit
risk of an issuer/entity. Credit risk is the risk that an entity may
not meet its contractual, financial obligations as they come due.
This rating does not address any other risk, including, but not
limited to, liquidity risk, market value risk or price volatility of rated
securities. The rating is not a recommendation to buy, sell or hold
any securities, insurance policies, contracts or any other financial
obligations, nor does it address the suitability of any particular
financial obligation for a specific purpose or purchaser.
In arriving at a rating decision, A.M. Best relies on third-party
audited financial data and/or other information provided to
it. While this information is believed to be reliable, A.M. Best
does not independently verify the accuracy or reliability of the
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Best’s Financial Strength Ratings and Issuer Credit Ratings
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Copyright © 2012 by A.M. Best Company, Inc.
Version 071111
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BESTWEEK
ASIA/PACIFIC
Editorial
Editor: David Pilla, 908-439-2200, ext. 5229
Managing Editor: Rick Cornejo
Asia/Pacific Bureau Manager: Iris Lai, +852-2827-3400
Asia/Pacific News Editor: Rebecca Ng, +852-2827-3420
Group Vice President Communications: Lee McDonald
Assistant Vice President News: Marilyn Ostermiller
Circulation: Linda McEntee
Production Services
Senior Manager: Susan L. Browne
Designer: Shannon E. Wallace
Philippines/Stocks
BESTWEEK Asia/P
Philippine Regulation Drives Consolidation
A regulatory increase in the minimum level of paidup capital required of Philippines insurers is pressing some struggling domestic insurance companies to
resort to consolidation. Time is running short for these
insurers to meet the new minimum capital level of 250
million pesos (US$5.8 million) by Dec. 31, 2012.
All domestic insurers are required to comply with the
minimum paid-up capital level by the end of 2012, or their
licenses will not be renewed, said Rey Vergara, chief insurance specialist in the actuarial division of the Insurance
Commission, Department of Finance in the Philippines.
Some domestic companies, mostly nonlife insurers,
failed to meet last year’s increased minimum paid-up
capital of 175 million peso by year-end 2011. Most of
those are now in the process of merging with others as
a solution to their capitalization problem, said Vergara.
The regulator will not extend the compliance date
for the new capital level by the end of this year. Companies have no choice but to comply, said Vergara. Foreign
insurance companies are subject to higher levels of
increased capitalization depending on the proportion of
their shareholding in Filipino companies.
A planned 1 billion peso minimum paid-up capital
requirement was to be implemented in 2016, but Vergara
said there is discussion about extending that to 2020 to
give insurance companies more time to comply.
In the Philippines,
there were 31 life, 81 nonlife and four composite
insurance companies and
one reinsurer as of February 2012, according to
Insurance Commission.
The total number of insurance players is expected
to drop as the industry consolidates under increasing
capitalization requirements. Mergers have only taken
place for domestic companies so far, said Vergara. Integration has been seen mostly among nonlife insurers.
There were only 18 nonlife insurers with paid-up
capital of 250 million pesos or more, while 25 insurers
had paid-up capital of 175 million pesos or above, out
of a total of 87 nonlife companies, as of December 2010,
according to Insurance Commission. In the life sector,
17 companies had paid-up capital of 250 million pesos
or above and 18 life insurers had paid-up capital of 175
million pesos or above, out of 34 life insurers in 2010.
The gradual increase of minimum paid-up capital
started in 2006 with a regulatory order by the country’s
Department of Finance. The initial minimum capital level
was 50 million pesos for domestic companies in 2006.
—Iris Lai
STOCK INDEXES
A.M. Best Stock Indexes Performance
All indexes are made up of insurance industry companies that are publicly traded, are listed on
major global stock exchanges, and have an interactive Best’s Credit Rating. The exceptions
are the insurance brokers indexes (AMBUB and AMBGB), which contain companies that are
not rated by A.M. Best.
AMBG
Global Composite Index
AMBAP
Asia/Pacific Insurance Index
AMBEUR European Insurance Index
AMBGB
Global Insurance Brokers Index
AMBGL
Global Life Insurance Index
AMBGML Global Multi-Line Insurance Index
AMBGNL Global Non-Life Insurance Index
AMBGR
Global Reinsurance Index
AMBUB
U.S. Insurance Brokers Index
AMBUH
U.S. Health and HMO Insurance Index
AMBUL
U.S. Life Insurance Index
AMBULH U.S. Life and Health/HMO Insurance Index
AMBUML U.S. Multi-Line Insurance Index
AMBUPC U.S. Property/Casualty Insurance Index
AMBUS
U.S. Insurance Index
*Current results as of market close 7 June, 2012.
Market Price*
811.6
852.8
677.7
1,260.8
770.1
468.1
1,187.8
1,003.1
1,174.4
1,282.9
653.6
923.2
203.8
1,309.4
873.6
% 1 Week
1.9%
2.8%
4.1%
0.5%
2.3%
3.5%
1.1%
1.5%
0.4%
1.7%
1.3%
1.5%
1.6%
0.9%
1.2%
% This Year
1.9%
-5.1%
-2.5%
0.4%
0.5%
-0.7%
4.4%
6.0%
0.4%
2.6%
-0.4%
1.3%
14.8%
6.2%
4.4%
Visit www.ambest.com/stocks throughout the business day for continuously updated stock trading results.
12 June, 2012 • BestWeek Asia/Pacific
7
BESTWEEK Asia/Pacific
Underwriting
Best’s Underwriting Guide Snapshot:
Zoos
Published by A.M. Best Company
BESTWEEK
ASIA/PACIFIC
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A look at the risks involved when insuring a zoo.
http://www.bestweek.com/v.asp?v=bugzoos
Brought to you by Best’s Underwriting and Loss Control Center,
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BestWeek Asia/Pacific • 12 June, 2012
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