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.