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.
Milliman has announced the findings of its study on reported year-end 2016 embedded value (EV) results for 34 major insurance companies operating in Asia, excluding Japan. The report highlights trends among companies reporting EVs and reveals a growth in reported 2016 EV of 15.3% by Asian insurance companies. This was primarily driven by a 40% growth over 2015 in value of new business (VNB) across the region in 2016.
The Milliman 2016 Embedded Value Results: Asia (excl. Japan) report analyses and discusses the EV methodologies and assumptions with the impact of regulations, as well as recent developments in the long-awaited International Financial Reporting Standard (IFRS) 17 reporting regime.
‘The China and Hong Kong markets were the main drivers of the VNB explosion in the region; both having mainland consumers to thank for these results,’ said Milliman principal and consulting actuary Paul Sinnott. ‘Although we have some longer-term concerns about the sustainability of profit margins in the region, recent yield curve rises are relieving some margin pressure in the short term.’
A few key insights from the Asian report include:
• In 2016, total reported Asian EV grew by 15.3%, on a comparable basis, to USD 339 billion from USD 294 billion.
• While some European multinationals reduced their Asian EV reporting last year, there were three companies disclosing EV results for the first time in India, along with the first comprehensive Indian Embedded Value (IEV) disclosure associated with ICICI Prudential’s initial public offering (IPO) in September 2016.
• Life insurance sales continued to rise strongly in the region during 2016. Gross written premium (GWP) is estimated to have increased by 28%, with China’s 43% growth being a major contributor.
• Value of in-force (VIF) increased for all markets. South Korea recorded the largest VIF growth of 31%, mainly from margin-driven growth in VNB across all companies; Hong Kong also posted strong VIF growth of 20%, driven by large volumes of business sold to mainland Chinese visitors.
To download the report, click here.
Milliman has released the findings of a study analysing and comparing participating (par) business across seven Asian insurance markets, notably Singapore, India, Malaysia, Hong Kong, China, Indonesia and Sri Lanka. The report collates in-depth information not otherwise available and provides insight from survey results about par business in Asia.
‘Par products have been a core insurance offering for many decades in many markets across Asia Pacific and in Singapore, Hong Kong and India they remain a cornerstone of the industry,’ said Richard Holloway, managing director for Milliman’s South East Asia and India life consulting practice. ‘However, increased regulatory scrutiny of par business in countries such as Malaysia and the onset of risk based capital solvency regimes in most markets may lead to a gradual decline in the popularity of such products. This report unlocks key considerations for companies offering par products across the region, highlighting differences in performance, investment approach, and governance of par across the seven markets.’
The ‘Milliman Participating Business in Asia’ report includes:
• A regional view of common themes and differences among the seven selected markets
• Detailed country commentary on par business performance, regulatory environments and key challenges
• Results of our survey providing qualitative insights into par business in these countries
• Analysis of the governance frameworks in place and roles of policyholder advocates
To download the report, click here.
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.
Join Milliman consultants for a deeper dive beyond the numbers in an exclusive webinar on the implications of the recently published study, Embedded Values in Asia 2015. The webinar will include a 20-minute presentation led by Milliman Principal and Consulting Actuary Paul Sinnott, followed by a brief Q&A session.
Date: Wednesday, 7 December
Time: 12 noon Hong Kong time
To confirm your participation please RSVP here before 28 November. 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 today announced the availability of two new reports detailing embedded value (EV) results for 32 major insurance companies in Europe and Japan and 14 major insurance companies operating in Asia. The reports examine trends among those companies that reported EVs as of midyear 2015.
“In Europe, embedded value results in the first part of 2015 exceeded gains from the first six months of 2014,” said Milliman Principal and Consulting Actuary Philip Simpson. “Japanese companies reported strong results for the fiscal year ending in March 2015. Nonetheless, insurers remain cautious given the volatile markets and persistently low interest rates.”
Key insight from the European report include:
• Approximately half the companies saw their embedded value fall.
• Insurers’ market capitalizations have broadly mirrored embedded values in the first half of 2015, with both rising around 5%.
• Japanese life insurers have seen significant increases in value through new sales and investment gains, with EV growth often accompanying growth in market valuation.
• Insurers continue preparation for Solvency II regulations that come into force on 1 January 2016.
“The big story in Asia is the breakout growth of value of new business (VNB) in the first half of 2015 compared with the same period in 2014. This growth has been mainly new business volume driven (rather than by major margin enhancement efforts), primarily as a result of the burgeoning middle class in many Asian countries,” said Milliman Principal and Consulting Actuary Paul Sinnott.
Key insight from the Asian report include:
• Chinese companies experienced major growth in VNB compared with the same period in 2014, reflecting increased new business volumes and better profitability margins, which are typically heavily supported by optimistic increasing investment return assumptions.
• The low interest rate environment, especially for longer-dated bonds, remains a challenge for insurers in China, South Korea, and Taiwan in particular.
To obtain a copy of the Milliman studies, click here.