Milliman has released its latest report, 2017 Mid-Year Embedded Value Results (excl. Japan), which summarises mid-year 2017 embedded value (EV) results disclosed by Asian insurers in eight key countries. The report examines the results at a company and country level and supplements the 2016 Embedded Value Results: Asia (excl. Japan) report released in August 2017. It also includes an update of the India 2016 full-year results, not available earlier due to the market’s March financial year-end. The findings highlight an overall increase in growth of EV, increase in value of new business (VNB) and improvement in new business margins.
‘As expected, positive performances by Asian equity markets and improving yields have led to an increase in the EV of life insurers within the region,’ said Milliman principal and consulting actuary Paul Sinnott. ‘These favourable economic conditions, combined with refined product strategies and improved distribution channel productivity, continue to drive growth in life insurance premiums, margins and the overall business in Asia.’
Key findings from the report include:
• Overall, insurers have reported positive gains in their 2017 mid-year embedded values over their 2016 mid-year values, with many companies showing single-digit EV growth but some posting larger gains in Hong Kong and mainland China.
• Hong Kong and mainland China insurers continued to report significant increases in VNB in the first half of 2017 compared to the first half of 2016, with over 50% increases in VNB for several companies, primarily driven by strong new business sales.
• Nearly all operating entities reported an increase in their new business margins between the first half of 2016 and the first half of 2017, with single- or double-digit increases in new business margins for many.
• As initial public offering (IPO) activity among insurers continues in India, companies are adopting the market-consistent Indian Embedded Value methodology (which is prescribed for IPO disclosures).
A copy of the report is available for download here.
Join Milliman consultants on this webinar as they consider the implications of the recently published “Asia retirement income report.” The webinar will include a 20-minute presentation led by Wade Matterson, practice leader for Milliman’s Australia office, and Richard Holloway, managing director for Milliman’s South East Asia and India Life consulting practice. A 20-minute Q&A session will follow.
Date: Wednesday, 23 August
Time: 11 a.m. India time
12:30 p.m. Thailand/Indonesia time
1:30 p.m. Singapore/Hong Kong/Taiwan/Malaysia time
3:30 p.m. Sydney time
To confirm your participation, RSVP before 16 August. Registered participants will receive a link to the webinar and local/toll-free numbers for most countries in the Asia-Pacific region a few days prior to the webinar.
Milliman has released comprehensive new research analyzing the current and future state of the retirement income market in the Asia-Pacific region. The report is based on a survey of over 100 insurance companies and financial institutions across eight countries. The results, along with case studies and in-depth analysis, provide insight into the economic and regulatory factors most affecting Asian retirement income markets, including consumer demand, product development, and opportunities for growth in the industry.
“Across Asia-Pacific, there is the potential for private market providers to complement and fill gaps that exist from government-sponsored retirement systems and employer-sponsored pension arrangements,” said Richard Holloway, managing director for Milliman’s South East Asia and India life consulting practice. “With this report we’re able to gain valuable insight into opportunities that may exist, on a country-by-country basis, and offer perspectives on ways to capitalize.”
“Technology advancements have now made it possible for financial institutions to provide consumers with tailored investment strategies and product solutions to achieve their goals in retirement. The development of robo-advice has begun to gain traction in the superannuation industry in Australia, and we expect the same to occur in Asia in the near future,” said Milliman Australia practice leader Wade Matterson.
Key findings from the report include:
• The vast majority of respondents feel their national retirement systems’ provisions are inadequate—even those traditionally considered to have more advanced systems such as Singapore and Australia.
• Regarding the most important features in a retirement income product, respondents feel consumers would value some type of guarantee, either income or capital protection, with simplicity being a consistent third across most countries.
• When it comes to financial advice, over 60% of participants felt financial advice was needed but 63% cited cost as the primary impediment for consumers.
Interested parties may obtain a copy of the Milliman study here.
In the past, acquisitions in the European insurance market were conducted largely by European—and occasionally other western—insurers. There was little or no interest from Asian buyers, but this is changing. Asian investors are not afraid of spending their money on the right company. They have the capital western insurance companies need and are willing to invest in their future and deliver better returns than they might expect from domestic markets. This Milliman Impact article provides more perspective.
Milliman co-sponsored the 19th Asian Actuarial Conference earlier in November and conducted a survey on innovation and potential future trends affecting the insurance industry in Asia. Survey participants included actuaries from all of the main Asian insurance markets. To read the key findings from the survey, click here.
Milliman today announced the release of a new research report, “Participating business in Asia: Where do we go from here?” The research highlights strong demand for participating business (par) in Asia, and the challenges it has faced from the recent low interest-rate environment.
“Par business represents a significant proportion of the new business being sold in Asian markets and has been gaining market share in recent years”, said Milliman Principal Richard Holloway. “Following the Global Financial Crisis, we have seen a general shift away from unit-linked products toward par products, perhaps because consumers have come to recognize the value of the underlying guarantees that par offers. With this latest research, we look more closely at the concept of unitized with-profits (UWP) as an alternative product offering for insurers in Asia to consider. UWP has yet to develop a foothold in Asia, but it may be a more appropriate platform for writing par policies in the future.”
The report offers an overview of par business in China, Hong Kong, India, and Singapore before introducing the concept of UWP, which became the main type of par business offered in the UK during the 1990s. It then explores how UWP could be applied in the specific example of the Singapore market, with comparisons to existing products.
To read the entire research report, click here.