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.
The latest issue of Milliman’s Asia ERM Newsletter authored by Michael Daly, Richard Holloway, Sam Morgan, and Wing Wong, features an in-depth update on the China Risk Oriented Solvency System (C-ROSS). C-ROSS, China’s first-generation factor-based solvency regulation system, was put into place in 2007 after four years of preparation. It subsequently suffered from the same shortcomings as Europe’s Solvency I, a similar regime.
In 2012 plans and an implementation timeline were announced for a risk-based capital (RBC) solvency framework in China. Get the latest developments in the newsletter, which also includes a report on a recent RBC 2 industry round-table discussion held in Singapore, updates on other developments in China, Taiwan, and Indonesia, and more information of interest to enterprise risk management professionals.
This Milliman Asia ERM Newsletter highlights the latest developments in enterprise risk management (ERM) across the Asia Pacific region. ERM activity in the insurance sector is accelerating at a rapid pace around the region, especially since a number of regulators have introduced Own Risk and Solvency Assessments (ORSA). Even in countries where ORSA has not been introduced yet, there is an increased interest among risk managers who realize the value that ERM can add to their business through enhanced business resilience.
The newsletter features regulatory and market developments related to ERM from India, Singapore, and Thailand. An article by Neil Cantle on the complexity of risk within businesses is also included.