By Alfean Hardy
Takaful Ikhlas Sdn Bhd, which has invested RM97 million on two tower blocks in Bangsar South, Kuala Lumpur, is targeting similar investments going forward given the long-term sustainability of rental income for revenue generation, its president and chief executive officer Datuk Syed Moheeb Syed Kamarulzaman said.
The Islamic insurance firm used RM87 million of its policy holders’ funds to buy the commercial property and another RM10 million was invested in renovating both towers. The company has more than a million individual and group policy holders to date.
The unit of main boardlisted MNRB Holdings Bhd moved into all of Ikhlas Point Tower 11A and three floors of Ikhlas Point Tower 11 on Feb 1, 2010. Covering a built-up area of 99,286 sq ft in total, some 32,000 plus sq ft in one of the towers have been earmarked for rental/future expansion.
Speaking at a media briefing in Kuala Lumpur last Thursday, Syed Moheeb said, essentially, the buildings were not Takaful Ikhlas’s.
"These buildings were paid by policy holders’ funds coming from our risk fund. So, inevitably, the policy holders are the owners of the buildings, we’re merely renting it from them.
"We chose this strategy because we wanted to ensure rental income to policy holders and, over the last few years, one of the better revenue generating strategies is rental income, which is more sustainable over the long-term," he said.
Going forward, he said Takaful Ikhlas would make use of either shareholders’ funds or policy holders’ funds to purchase buildings and then rent them out to generate rental income.
"By doing this, we will slowly acquire property. Eventually, we also want to house all our branches in our own buildings. We’re not sure yet whether we will use funds from our shareholders or from our policy holders (when we buy these buildings)," he said, adding that Takaful Point was the firm’s first property investment.
Syed Moheeb said Takaful Ikhlas could have ventured into property investment earlier, but he felt that the firm needed to ensure that, whatever it bought, would have made an impact to investment income.
"The fact that (the two towers) have a capital appreciation of more than 20% indicates that this was a good decision.
"Among some of the things that we’re looking at will be rentable office premises and it won’t be anything else at this point in time. Our investment policy has been very cautious and has been more towards capital preservation and, in any thing that we do, we have to make sure that we don’t have to answer to any bad decisions later on," he said.
Syed Moheeb said Takaful Ikhlas was currently looking at housing two new branches in Klang, Selangor, and Kuala Terengganu, Terengganu, by middle of the year in new properties.
"At this point in time we haven’t identified yet any properties yet (for these two new branches). If you look at the 10 branches that we have currently, these are the areas that we would be looking to make investment opportunities," he said.
The Islamic insurer currently has branches in Kota Baru, Johor Baru, Sungai Petani, Ipoh, Kuching and Kota Kinabalu in Kelantan, Johor, Kedah, Perak, Sarawak and Sabah respectively. Asked on how much would be set aside for Takaful Ikhlas’s property buy war chest going forward, Syed Moheeb said the company’s investment strategy was set by the board, which decides how much went into equities, governmentbacked securities and others.
"Where property is concerned, we’re looking at not more than 20%. In the shorter term at least, until our financial year ending Mar 31, 2011, we will cap this at 20%," he said.
(This story appeared in The Malaysian Reserve on 1 March 2010. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh, at http://islamicfinanceasia.blogspot.com/)
Showing posts with label Insurance. Show all posts
Showing posts with label Insurance. Show all posts
Friday, March 19, 2010
Sunday, August 2, 2009
Zainuddin: From humble beginnings to moving mountains
By Alfean Hardy
Options were not plentiful if you were a secondary school graduate in Rembau, Negri Sembilan, in the late 70s. According to HSBC Amanah Takaful (Malaysia) Sdn Bhd executive director and chief executive officer Zainuddin Ishak, the most most people could look forward to was working in a factory in Senawang.
"My father was a rubber tapper and my mother a housewife. There were eight of us in the family and life at that time was borderline poverty or poverty. I went to a kampung school in Rembau and graduated from a secondary school that was also in Rembau," he told The Malaysian Reserve recently.
With no career advisers around to guide an impressionable youth from a large family, perhaps that was where Zainuddin would have ended up. It was sound advice from his eldest brother, a former Institut Teknologi Mara (ITM) student, that changed his life. "He advised me to take up an insurance qualificaion. He told me it was a very difficult course, an external course with the professional papers coming from the UK.
"He said that amongst his friends who managed to clear some of the papers, and not the full syllabus, made it big time in the insurance industry. So, I said to myself, it sounds good, make money, why not," he added. This, Zainuddin said, was in 1984.
"To cut a long story short, I got accepted into ITM (now known as Universiti Teknologi Malaysia, or UITM). Prior to doing the associate (paper), you had to sit for the certificate. "There were 80 of us in that batch class of 1984 sitting for the certificate. Only 30 went on to do the associate. Of that, only four of us made it through," he added.
Zainuddin said, those who did not clear the associate papers could still get a decent job. For him, though, the challenge of being able to take on a difficult endeavour was a prime motivator and it was this drive within him, he felt, that helped him make it all the way through. "I made it, not because I'm clever, but because I've always had the tenacity and the stamina to complete any task placed before me. I guess that's my strong point. The more difficult it is, the more determined I am to clear the hurdles," he said.
The start of a long and fruitful career in the industry began in 1989, as a management trainee at Aviva with the possibility of getting a full time job within six months. Unfortunately for Zainuddin, this opportunity came at the tail end of a recession, which spelled stiff competition for a permanent position. "When I first joined the industry, because (of the) recession, there were a lot of unemployed people in the industry. There was big competition to get a permanent position (in Aviva) but the internship gave me the opportunity to work in a world-class organisation.
"My first real job was after that, as a full executive, was with a company owned by Kompleks Kewangan in the early 1990s called Trust International Insurance (TII), developing a bancassurance channel for the company. "I got my exposure in sales in the insurance industry," he added. That break with TII was pivotal for Zainuddin. After three years, he went on to join Norwich Winterthur before moving on to Malaysia National Insurance Bhd (MNI) and eventually to American National Insurance, which was owned by the New Straits Times Press Bhd (NSTP) group at the time. "I stayed there for a long while. What changed was the company. Because of a series of acquisitions, from NSTP to Bank of Commerce to CIMB, I stayed with one company that changed its shareholders until I became chief executive officer of CIMB Bank Aviva Takaful," he added.
All in all, Zainuddin stayed with the firm for almost 14 years, slowly and steadily moving up the ranks every two years or so. Eventually, though, it was the challenge of something new that attracted him to make the change in mid-January 2009. "If you look at the takaful industry, there are various stages of maturities amongst the eight companies here. HSBC clearly has gone through its crucial, formative stage.
"When you're at the formative stage, it's good to have internal people because you understand the people and the culture.
"When you want to take it to the next stage, you need to get outside people and bring in the industry expertise to come in and take a company to the next level. "I felt that this was a good time for me to come in and bring the company to that next level. HSBC is an admired brand and it gives you more opportunities and avenues to grow," he said. Formed in 2006, HSBC Takaful is a joint venture (JV) that is 49%-owned by HSBC Insurance (Asia Pacific) Holdings Ltd, 31%-owned by Jerneh Asia Bhd and 20%-owned by the Employees Provident Fund (EPF).
To Zainuddin, his challenge for this relatively new venture was to take it to the next level. "In everything, nothing is ever good enough. Every day is a challenge, nothing is ever good enough. Every day you're looking at opportunities to improve from yesterday.
"We're always improving. It's always the next level, it's always a moving target. You've got lots of room to improve. Every day is about improving what we are today," he said.
"Another challenge is to bring takaful to the HSBC world because Malaysia is the first takaful outfit (within the group) and vice versa. "We need, (and) the industry certainly needs, big names like HSBC to champion takaful so that it will make takaful very prominent. That's my challenge, how to fulfill the vision, the set of targets, etc," he added.
The task for the boy from Rembau is certainly a challenging one, what with a very competitive industry and a global economy that has a bad case of the flu but, somehow, you sense that, with his drive, determination and desire to succeed, Zainuddin will certainly move mountains to get the job done.
(This story appeared in The Malaysian Reserve on July 22, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Prudential’s biggest ad campaign
Prudential Assurance Malaysia Bhd has allocated RM7mil for its biggest advertising campaign to-date to promote its new medical insurance plan, PRUhealth, reports The Star (July 18, 2009).
According to chief marketing officer Thomas Wong, the campaign starting July 20 via television, radio, print and outdoor advertising, is expected to generate a considerable amount of interest for the unique medical insurance plan, which rewards policyholders for staying healthy by giving them no claims bonus.
“We expect to secure a large proportion of new and existing customers for this first of its kind product in the market,” he said. One of the biggest medical insurers in Malaysia, Prudential paid a third of the industry’s medical costs last year, which amounted to RM900mil, the newspaper reported.
According to chief marketing officer Thomas Wong, the campaign starting July 20 via television, radio, print and outdoor advertising, is expected to generate a considerable amount of interest for the unique medical insurance plan, which rewards policyholders for staying healthy by giving them no claims bonus.
“We expect to secure a large proportion of new and existing customers for this first of its kind product in the market,” he said. One of the biggest medical insurers in Malaysia, Prudential paid a third of the industry’s medical costs last year, which amounted to RM900mil, the newspaper reported.
Wednesday, July 8, 2009
Axa Affin sees plenty of potential post liberalisation
By Alfean Hardy
Axa Affin Life Insurance Bhd, a local-international joint venture (JV), sees a lot of potential for itself going forward in the new climate of liberalisation in the finance and insurance sectors, and is making plans to tap into these opportunities, its chief marketing officer Nicholas Kua Choo Ming said.
Despite being a relatively young start-up, Axa Affin sees a lot of opportunities to tap into going forward.
"When the liberalisation was announced, there were reports that spoke of opportunities for foreign players and that local players would feel more pressure," Kua said. "For Axa Affin, we see it as an opportunity. Granted that we're a start-up and we're entering into a new era of liberalisation, (but) we have a head start over new entrants coming in.
"We are already operating and, with our business model, we can outpace our competitors in terms of growth and emerge stronger and in a better position," he told The Malaysian Reserve in Kuala Lumpur recently.
Axa Affin is 51%-owned by local giant Affin Holdings Bhd and 49%-owned by global financial protection and wealth management giant Axa Group. The JV was incorporated in early 2006. Previously, both parties had been collaborating in the general insurance area for many years. Under the liberalisation of the finacial sector announced in April 2009, foreign equity participation in insurance and takaful JVs was raised to 70%. In addition, locally-incorporated foreign insurance and takaful companiess are now allowed to establish branches nationwide without restriction, while the restriction for such firms to enter into bancassurance/bancatakaful arrangements with banking institutions have also been lifted. Axa Affin's strengths, Kua said, stemmed from having strong parents.
"We're part of a very strong group, the Axa Group, which is a leading global player, and we have a strong shareholder in Affin," he said. "We are able to leverage on Axa's expertise and its robust business platform. We have access to eight other operating entities in Asia like China, India and Hong Kong. "Whether it's product innovation, distribution management and customer services, we have best practices that we can follow," he said.
"As part of the LTAT Group, Affin's business is across almost the entire Malaysian landscape and there are major opportunities to work with local groups, either via their group insurance or banking group," he said, adding that about half of Affin Bank's 80-plus branches already have dedicated Axa Affin advisers attached to them, making it the only bancassurance relationship of its kind currently. "And, as Affin expands, we will expand with them," he said.
Kua said one of the challenges going forward was building its distribution channel, which mostly consisted of its agency force and its bancassurance relationship with Affin Bank and other bank partners. "One of the challenges is growing our agency manpower. We're above 300 now and we aim to hit the 1,000 threshold by the end of the year," he said. He also said that the firm is upgrading the capabilities of its agency force to eventually see a fully professional force. The target time frame is by 2012, to coincide with Axa's global aspirations to be the preferred company of choice by then. Kua said Axa Affin was also able to sign up with other banks under a multi-provider bancassurance model.
"We are currently working with three or four other partners. With liberalisation, the key now is how we work with these banks (who have other providers as well) and make ourselves the preferred provider," he said. "Axa, on a regional basis, has always believed in a multi-distribution platform. The same is true whether we're in Thailand, the Philippines, Hong Kong or Indonesia. "We have both bank partners and the agency force. The blue print is there, (and) the business model is there in every entity that we enter into," Kua said.
(This story appeared in The Malaysian Reserve on July 8, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Tuesday, June 23, 2009
Motor insurance premium rebate blindsides agents
COMMENT by Habhajan Singh
The central bank should have done better when managing the policy directive on rebates for direct purchases from insurance companies.
The directive is wonderful: It is pro-people and puts money into their pockets should they buy their policies directly from the insurer. It also fits perfectly with Bank Negara Malaysia's (BNM) liberalisation plans for the financial industry.
However, the move jolted some 40,000 insurance agents. They claim that they first knew of the directive when they read it in the newspapers. Little wonder then, that they had a hard time digesting the news that the central bank would now allow individuals to pocket up to 10% of the premium value the next time they renewed their motor insurance directly with the insurer.
At a press conference to announce the initiative last week, BNM deputy govenor Datuk Mohd Razif Abd Kadir used the weight of his office to announce the move, despite protests from various corners.
Effective July 1, individuals who purchase general insurance coverage directly from insurance companies will be eligible to receive premium rebates, with the quantum depending on the type of incover purchased, the central bank said in a statement.
For motor insurance, it stated that an individual would receive 5% of the premium within the first year of implementation and 10% thereafter. For others including businesses, insurance companies have the flexibility in providing these rebates. The direct purchase includes walk-in, through the internet, direct mailing and via the telemarketing channel. In relation to consumers, it is a laudable move.
Consumers will now be able to renew their insurance policies directly, if they choose not to engage an agent, thereby actually saving cost. For insurers', they can no longer book as revenue the commission should customers come to them directly.
But they have been in the loop all this while. Left out in the cold, it would seem here, are the agents.
When asked, BNM officials at the press conference confirmed that they have been talking to officials at the Persatuan Insurans Am Malaysia (Piam), but not directly with any particular outfit representing the interests of the agents.
Here's the beef. Piam represents these companies, and not the agents. True, the agents come under the companies. Therefore, it is possible to argue that when the central bank talks to these companies, the message should reach the agents. But that does not seem to have taken place in this instance. With notice in advance, agents could have planned to weather a potential drop in income.
Some may have been spurred to add value in their offerings to customers. After all, not every customer is going drop their agent in light of the rebate. However if prior notice was offered, agents could have taken preemptive measures to keep their customers. One forward looking car seller cum insurance agent has, for example, been returning a portion of the commission earned to customers. This was to entice customers to stay with them.
With a little bit of warning, others may have come out with such simple but effective game plans.
(This story appeared in The Malaysian Reserve on June 24, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
The central bank should have done better when managing the policy directive on rebates for direct purchases from insurance companies.
The directive is wonderful: It is pro-people and puts money into their pockets should they buy their policies directly from the insurer. It also fits perfectly with Bank Negara Malaysia's (BNM) liberalisation plans for the financial industry.
However, the move jolted some 40,000 insurance agents. They claim that they first knew of the directive when they read it in the newspapers. Little wonder then, that they had a hard time digesting the news that the central bank would now allow individuals to pocket up to 10% of the premium value the next time they renewed their motor insurance directly with the insurer.
At a press conference to announce the initiative last week, BNM deputy govenor Datuk Mohd Razif Abd Kadir used the weight of his office to announce the move, despite protests from various corners.
Effective July 1, individuals who purchase general insurance coverage directly from insurance companies will be eligible to receive premium rebates, with the quantum depending on the type of incover purchased, the central bank said in a statement.
For motor insurance, it stated that an individual would receive 5% of the premium within the first year of implementation and 10% thereafter. For others including businesses, insurance companies have the flexibility in providing these rebates. The direct purchase includes walk-in, through the internet, direct mailing and via the telemarketing channel. In relation to consumers, it is a laudable move.
Consumers will now be able to renew their insurance policies directly, if they choose not to engage an agent, thereby actually saving cost. For insurers', they can no longer book as revenue the commission should customers come to them directly.
But they have been in the loop all this while. Left out in the cold, it would seem here, are the agents.
When asked, BNM officials at the press conference confirmed that they have been talking to officials at the Persatuan Insurans Am Malaysia (Piam), but not directly with any particular outfit representing the interests of the agents.
Here's the beef. Piam represents these companies, and not the agents. True, the agents come under the companies. Therefore, it is possible to argue that when the central bank talks to these companies, the message should reach the agents. But that does not seem to have taken place in this instance. With notice in advance, agents could have planned to weather a potential drop in income.
Some may have been spurred to add value in their offerings to customers. After all, not every customer is going drop their agent in light of the rebate. However if prior notice was offered, agents could have taken preemptive measures to keep their customers. One forward looking car seller cum insurance agent has, for example, been returning a portion of the commission earned to customers. This was to entice customers to stay with them.
With a little bit of warning, others may have come out with such simple but effective game plans.
(This story appeared in The Malaysian Reserve on June 24, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Asia attractive to major players
IN THE PHOTOGRAPH: (from left) LIAM president Md Adnan Md Zain, Kerzner, Bank Negara Malaysia assistant governor YBhg Dato' Muhammad Ibrahim and Malaysian Host Committee chairman Ng Lian Lu at the 17th Limra/Loma Strategic Issues Conference held in Kuala Lumpur recently
By Alfean Hardy
Asia's relatively young and large population and its growing middle class have made the region an attractive venture for many North American and European life insurance companies looking for opportunities amidst the current economic downturn, Limra, Loma and LL Global Inc president and chief executive officer Robert Kerzner said.
Limra is an association that provides research, consulting and other services to the insurance and financial services sectors. Loma is an international association of insurance and financial services companies. LL Global is their parent organisation.
In his speech at the 17th Limra/Loma Strategic Issues Conference held in Kuala Lumpur recently, Kerzner said, over the last few weeks, capital has once again begun to flow and US firms like Prudential Financial and Metropolitan Life Insurance Co have been raising capital via stock and/or debt offerings, which he sees will help fuel future growth in the global insurance sector. As the sector transforms, he said many firms will begin to decide in which market and country they would want to play.
"Many will look to Asia. What we're seeing worldwide, major players are pulling out of some major green field markets and are choosing to play much harder in others. And it's clear that the growth of the next decade is clearly much more focussed in Asia than the US or Western Europe," he added.
Kerzner said, with the renewed capital within the system, many chief executive officers of major US companies have expressed an intent to make use of the global financial crisis to gain ground and grow market share over their competitors.
"In the US, 79% of chief financial officers (CFOs) say they want to buy life (insurance) companies and 75% want to buy the group operations.
"At the same time, they have their eyes clearly on Asia. Prudential has already bought one company in Japan and is rumoured to be looking at others. At the same time, the president of Metropolitan said he would sleep better at night if they owned another asset in Japan," he added. Speaking to reporters later, Kerzner said Asia's large population and not as mature markets meant there were more opportunities to sell a whole array of products.
"In many Asian countries, you have an ageing population and, there by all accounts, there's simply been not enough money saved for retirement, and this was prior to the crisis," he said.
"Also, Asia has many who are coming into the new middle market of having more assets and your economy is growing wealth at a faster pace and so there's a broad need for more products that life insurance companies have. When you look at the demographics across Asia, over time, the outlook is optimistic," he added.
All countries within Asia, Kerzner said, are attractive. "Japan is mentioned more often because, for some of the western companies have a better understanding of the Japanese economy and there's a more immediate need for retirement products (given its large ageing population) there," he said.
"But I think you're going to see the Europeans, in particular, and the North Americans look broadly within Asia. "When I talked about green field operations of the Europeans being closed down, that may mean more focus is given here in the Asian countries and choose to be a fierce competitor in the markets that they've decided are crucial.
"Also, there's also a history that shows that, when one or two of these (Asian expansions) are announced, then others will feel the need to get in before it's too late. "You could see, over the next year, as capital frees up and companies look to where they really want to expand strategically, then you will see Asia becoming a focus again," he added.
Kerzner said regulatory restrictions and competition would not be major hurdles for western life insurance companies venturing into Asia as many of these firms have already operated in regulated industries in the west.
"The major barrier to entry is culture and really understanding what's crucial within each individual Asian country," he said.
"If you look at history, many have entered the US and Western European markets, that's because that's where there's been a great deal of wealth. "I think companies have traditionally looked at where the needs are the greatest but where's the most activity versus longer-term involvements in countries that will be slower to grow.
"I also think, if you look at Asia, the companies that have done well in Asia for many years, particularly those not based within the Asia region have a stong base in (Asian) countries and, as the country grew, they grew as well.
"So, I believe the new entrants will tend to sometimes look for the more matured markets but those who look for a long-term view will look at the more emerging markets and take more of a five, 10, 15-years view," he added. Kerzner said it had been the European global players that have had the broadest reach worldwide.
"I can't comment on specific companies but if you look at announcements made last week in China and Taiwan, you are seeing and will see many, many more deals being announced or at least companies buying lines of businesses and licenses to expand and leave open opportunities for the future," he added
(This story appeared in The Malaysian Reserve on June 24, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
BNM: Trust and growth essential for insurance sector
By Alfean Hardy
Bank Negara Malaysia has identified four priorities that insurers should adopt and is itself undertaking more measures in the pipeline to insure the growth, and the public trust and confidence in the insurance sector, its Assistant Governor Datuk Muhammad Ibrahim said.
"The first area of priority is ensuring strong capital buffers and sound risk management by insurers. The second area of priority concerns the management of financial risks by insurers," he told delegates in his keynote address at the recent LOMA/LIMRA Strategic Issues Conference in Kuala Lumpur
"Thirdly, there is also a need for more uniform global approaches to the effective regulation of reinsurance activities. Fourthly, as part of the financial system, a key imperative for insurers is re-building the confidence of retail investors and consumers in financial institutions," he added. Muhammad said the recent decades had indicated that the significance of the insurance industry to financial stability has become more pronounced and the adoption of core fundamentals essential.
"Insurance and reinsurance companies have become an important and growing class of financial market participants," he said.
"The involvement of the insurance industry in the capital markets has both deepened and broadened substantially (and), from being important investors, insurers and reinsurers have evolved to become important intermediaries in a broad range of financial markets," he added.
Muhammad said recent problems indicated that the lines between the insurance and banking sectors had become more blurred amd that unregulated activities and failure in internal risk management of a large global insurance group could adversely affect derivatives, and bank counterparties in creditrisk transfer transactions on a scale that had led to unprecedented market failure.
"As an integral and important component of the financial system, building the resilience of the insurance industry is therefore, critical. Unless adequate attention is directed towards promoting resilience in all of the core components of the financial system, efforts to preserve financial stability and prevent the occurrence of a future financial crisis and its consequences would be jeopardised," he added.
Muhammad said achieving more meaningful and consistent protection for consumers was also critical to rebuild confidence. To that extent, he said that in July 2009, all licensed local insurers and takaful operators would be required to comply fully with its guidelines on the introduction of new products.
"A large part of the Guidelines is devoted to addressing the responsibilities of the operators towards consumers in ensuring that the needs and rights of consumers are respected, and that consumers are clearly and fully informed of the nature and risks associated with the products," he added.
Muhammad said the local industry was undergoing a transformation that would provide a strong foundation for a more resilient and competitive industry. He said that the introduction of the risk-based capital framework and other initiatives were part of a broader move to introduce a regulatory regime that would allow greater flexibility to insurers under a rigorous internal supervisory and oversight framework.
"These developments will create opportunities for insurers to build financial solidity, restore consumer confidence and respond proactively to changing consumer needs in a more uncertain environment. Later this year, the bank will also consult the industry on risk management standards that insurers are expected to observe as part of this evolution.
"The priorities of the industry should be equally weighed between preserving the inherent strengths and original purpose of insurance, while committing to meaningful change that is needed to secure long-term viability and contribute to financial stability," he added.
(This story appeared in The Malaysian Reserve on June 24, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Life insurers urged to focus on fundamentals to ride out storm
By Alfean Hardy
The Life Insurance Association of Malaysia (LIAM) is calling upon the life insurance sector to remain focussed on the industry's key fundamentals in order to ride out the global financial crisis and its president, Md Adnan Md Zain, is predicting single digit growth for the sector in spite of the current economic climate.
In a speech at the 17th Strategic Issues Conference in Kuala Lumpur yesterday, Md Adnan said 2008 had been a challenging year for the indusry, given a global financial turmoil that has been considered the worst since the Great Depression of the 1930s.
"Nevertheless, there are always sliver linings that will appear with untapped business opportunities, multiplied with unexpected growth possibilities. By focussing on key fundamentals, including sound risk management, highly prudential and regulatory standards, and strong corporate governance, we are confident that we'll be able to ride out this stormy crisis," he added.
Speaking to reporters later, Md Adnan said that the country had benefited from steps undertaken by the authorities, like the adoption of the risk-based capital framework in January 2009, which aimed to create a strong risk management structure.
"Players are now more mindful that of ensuring that they put in place good processes and proper management practices to be able to bring out strengths in various areas for the betterment of themselves and their policyholders and, that in itself, will make the players perform at far higher standards," he added.
Md Adnan, who is also the chief executive officer of MCIS Zurich, said the life insurance sector has also been helped by a public at large that has come to a great understanding on the importance of life insurance in their lifes, barring investment-linked products.
"Even as we speak, the economic situation is the one that is not encouraging. Yet, there's still growth in the life insurance industry. Perhaps, because of the investment climate, investmentlinked products may not be featuring very well in terms of growth but the traditional life insurance is still showing good developments. People are still buying insurance. That clearly shows the knowledge, the awareness and people are recognising the importance of life insurance, both in terms of protection as well as savings. Medical is also another area that is shifting up well. And, for a country like ours, these are areas that will really see more growth opportunities with the growing population and the understanding of needs of people protecting themselves. Medical costs are also increasing and people have become more conscious of the good of insurance to provide them with a good position to provide for themselves and their families through insurance coverage," he added.
Md Adnan said, to question about growth forecast for the sector this year was his personal view that the life insurance sector would see single digit growth this year.
"We have been having some double digit growth in the past. You will see growth but it will be single digit growth," he said. "For traditional life insurance, growth is fairing much better. but investment linked is slowing down. It's cyclical and with the measures being undertaken by the authorities, in ensuring the stability of the economy, it's a matter of time that you will find the positive changes taking place and that will again bring back the confidence in the investmentlinked segment," he added.
(This story appeared in The Malaysian Reserve on June 23, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
The Life Insurance Association of Malaysia (LIAM) is calling upon the life insurance sector to remain focussed on the industry's key fundamentals in order to ride out the global financial crisis and its president, Md Adnan Md Zain, is predicting single digit growth for the sector in spite of the current economic climate.
In a speech at the 17th Strategic Issues Conference in Kuala Lumpur yesterday, Md Adnan said 2008 had been a challenging year for the indusry, given a global financial turmoil that has been considered the worst since the Great Depression of the 1930s.
"Nevertheless, there are always sliver linings that will appear with untapped business opportunities, multiplied with unexpected growth possibilities. By focussing on key fundamentals, including sound risk management, highly prudential and regulatory standards, and strong corporate governance, we are confident that we'll be able to ride out this stormy crisis," he added.
Speaking to reporters later, Md Adnan said that the country had benefited from steps undertaken by the authorities, like the adoption of the risk-based capital framework in January 2009, which aimed to create a strong risk management structure.
"Players are now more mindful that of ensuring that they put in place good processes and proper management practices to be able to bring out strengths in various areas for the betterment of themselves and their policyholders and, that in itself, will make the players perform at far higher standards," he added.
Md Adnan, who is also the chief executive officer of MCIS Zurich, said the life insurance sector has also been helped by a public at large that has come to a great understanding on the importance of life insurance in their lifes, barring investment-linked products.
"Even as we speak, the economic situation is the one that is not encouraging. Yet, there's still growth in the life insurance industry. Perhaps, because of the investment climate, investmentlinked products may not be featuring very well in terms of growth but the traditional life insurance is still showing good developments. People are still buying insurance. That clearly shows the knowledge, the awareness and people are recognising the importance of life insurance, both in terms of protection as well as savings. Medical is also another area that is shifting up well. And, for a country like ours, these are areas that will really see more growth opportunities with the growing population and the understanding of needs of people protecting themselves. Medical costs are also increasing and people have become more conscious of the good of insurance to provide them with a good position to provide for themselves and their families through insurance coverage," he added.
Md Adnan said, to question about growth forecast for the sector this year was his personal view that the life insurance sector would see single digit growth this year.
"We have been having some double digit growth in the past. You will see growth but it will be single digit growth," he said. "For traditional life insurance, growth is fairing much better. but investment linked is slowing down. It's cyclical and with the measures being undertaken by the authorities, in ensuring the stability of the economy, it's a matter of time that you will find the positive changes taking place and that will again bring back the confidence in the investmentlinked segment," he added.
(This story appeared in The Malaysian Reserve on June 23, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Monday, June 15, 2009
Motor insurance needs an overhaul
By Habhajan Singh
Motor insurance in Malaysia requires a serious overhaul, with the perennially unprofitable third party coverage demanding a separate treatment altogether, says a senior industry executive.
The issue has come to a boil for general insurers and takaful providers active in the motoring sector, with most of them now no longer providing third party motor insurance coverage due to the high claims ratio.
"I'm proposing a rethink of our Road Transport Act 1987 and a review of the motor insurance policy. A new government agency should be set up to handle at least the Act cover, while redesigned insurance policies should only cover one's own damage, leaving third party claims to the agency. An industry pool could provide base underwriting," said Datuk Syed Moheeb Syed Kamarulzaman, the newly appointed chairman of the Malaysian Takaful Association (MTA).
Under this proposal, a new industry pool would be setup to manage third party made compulsory by the Act, commonly referred to as the Act cover.
Here, Syed Moheeb proposes that each vehicle licensed holder should contribute individually to the pool. Currently, third party insurance is pegged to the vehicle, irrespective of the number of drivers nor the name it is insured under. A family car may be insured under the head of the family, when in fact it could be driven by all children. This could result in a situation of inadequate premium against the risks exposed.
The suggestion by the seasoned insurer is for everyone with a valid licence to bear a portion of the risk.
"When you pay for your motor licence, a portion automatically goes to cover third party claims. This way, the third party risk is automatically handled by the new pool," said Syed Moheeb who is also the president and chief executive officer of Takaful Ikhlas Sdn Bhd.
This would also mean insurers and takaful operators will only provide coverage for claims other than those mandated under the Act.
The pool could replace the Malaysian Motor Insurance Pool (MMIP), a high-risk insurance pool run collectively by the industry under orders from the regulators, which acts as the insurer of last resort.
Under the present set-up, when a vehicle owner is unable to get any insurer to provide him liability cover for third party, MMIP would step in to provide the cover, at a rate higher than what insurers are allowed to charge. Industry players have been lobbying for years to change the tariff-driven premium structure for motor insurance, claiming that providing coverage mandatory under the Act is almost a sure loss-making proposition.
The move has not yielded results thus far, industry executives said.
"So far, we have been looking at tweaking insurance premiums rather than changing the whole structure. Perenially, we have a problem of inadequate premiums to pay for the increasing third party claims.
"This year, several insurers have found it difficult to continue writing third party risks. So, if we want different results, we need to do things differently. We need to reengineer. This suggestion, if it happens, will be headed by a new body supported by the government," said Syed Moheeb.
Syed Moheeb, a seasoned insurer with experience in reinsurance, was involved some years ago when the general insurance association, Persatuan Insurans Am Malaysia (Piam), was actively discussing with Bank Negara Malaysia (BNM) suggested changes to the motor insurance premium tariffs.
In the meantime, industry executives said writing third party motor cover had become more and more untenable from the profit standpoint, forcing players to steer clear of the segment.
On May 27, The Malaysian Reserve reported that insurance companies are no longer willing to provide third party motor insurance under their banner, thus sending their customers to the highrisk insurance pool instead.
On June 1, this newspaper also reported that Pacific & Orient Insurance Co Bhd (P&O Insurance), one of the local top guns in motor insurance, was set to pull out completely from the third party motor insurance segment, following the trend of other insurance providers in Malaysia who have stayed clear of the sector.
The general insurer, a subsidiary of listed Pacific & Orient Bhd (P&O), was second only to Kurnia Insurans (M) Bhd for underwriting third party motor insurance covers in 2008.
From latest figures released, Piam said combined loss ratios for the motor insurance business in 2007 and 2008 stood at 114% and 115% respectively. It said insurers have also expressed their concerns over the rapidly increasing claims pay-outs especially for third party bodily injury claims. The claims ratio for third party bodily injury claims skyrocketed to 262% in 2007 and 288% in 2008, it added.
Industry sources estimate that the standalone motor 'Act' insurance, which is the portion compulsory for all motorists, has generated gross premiums of close to RM600 million last year, with Kurnia Insurans and P&O Insurance conducting close to half of the industry's total.
The motor 'Act' insurance policy provides protection against death and injury to third parties. The third party motor insurance also provides protection against other legal liabilities such as damage to the property of a third party (usually somebody else's car or motorcycle or a neighbour's gate) and certain specified legal costs.
Under the third party cover, a policyholder may opt to include protection for loss or damage to his own vehicle due to fire or theft only.
(This story appeared in The Malaysian Reserve on June 15, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Motor claims a major drag on profits of insurance firms
By Habhajan Singh
Claims for motor insurance were a major drag on the operating profits of general insurance and takaful operators last year, according to an analysis of statistics released by Bank Negara Malaysia (BNM).
For 2008, operating profit of the general insurance and takaful business, which declined by 44.5% to RM0.7 billion, was affected by a higher claims ratio of 84.2%, mainly from due to claims by motor vehicle.
Last year, the claims ratio stood at 79.6%, which meant that for every ringgit of premium collected by these insurers and takaful operators, close to 80 sen went to claims. And the situation is expected to worsen, going by the caution thrown in by the the central bank's Financial Stability and Payment Systems Report 2008 released in March.
The BNM report said claims are expected to intensify due to higher incidences of theft and fraud as well as less regular maintenance. This will certainly put more pressure on providers of motor insurance, many of whom are pulling the plug when it comes to providing third party motor coverage.
"Bodily injury makes about 90% of third party claim. It is increasing, making it very painful for insurers.
"To make matters worse, there are fears that fraud syndicates are reaping big, big money from fraudalent third party bodily injury claims," said Takaful Ikhlas Sdn Bhd president and chief executive officer Datuk Syed Moheeb Syed Kamarulzaman.
Major players in the motor insurance sector include Kurnia Insurance (M) Bhd, Allianz General Insurance Company (Malaysia) Bhd, AmG Insurance Bhd, Tokio Marine Insurans (M) Bhd, Pacific & Orient Insurance Co Bhd, Berjaya Sompo Insurance Bhd and Uni.Asia General Insurance Bhd.
The high claims ratio has seen insurers steering clear from underwriting third party liability coverage, the minumum insurance cover mandated by the Road Transport Act 1987. Besides providing insurance protection against death and injury to third parties (which is provided under the 'Act Only' motor insurance policy), third party motor insurance also provides protection against other legal liabilities such as damage to the property of a third party (usually somebody else's car or motorcycle or a neighbour's gate) and certain specified legal costs.
Under the third party cover, a policyholder may opt to include protection for loss or damage to his own vehicle due to fire or theft only.
"It is the Act claim that is rising, and rising fast," Syed Moheeb said.
For this year, the central bank report released three months ago noted that the Malaysian insurance and takaful sector will also be affected by the potential lower demand for protection and related products in a highly competitive industry.
"In particular, the expected decline in vehicle sales will negatively impact the motor insurance and takaful business which constituted 45% of gross insurance premiums in 2008. Premiums are also likely to be affected due to an increase in surrender rates and lower sums insured as a result of policyholders' efforts to reduce costs during these difficult periods.
"In addition, claims are expected to intensify due to higher incidences of theft and fraud as well as less regular maintenance," the report said.
In the report, the central bank also noted that the insurance and takaful sector, while maintaining a comfortable solvency position, faced challenges in maintaining the growth in premiums and contributions from new businesses, compounded by intense competition in the industry. It said total net premium and contribution income grew by 2.4%, mainly attributed to the expansion in takaful business.
It also noted that demand for general insurance and takaful coverage on motor and marine, aviation and transportation related businesses moderated in tandem with the slower trade activities and a more subdued automotive demand outlook.
It said the gross direct premium and contribution for the general insurance and takaful business registered an increase of 5.5% to RM11.5 billion, driven mainly by the expansion in the fire segment.
(This story appeared in The Malaysian Reserve on June 15, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Claims for motor insurance were a major drag on the operating profits of general insurance and takaful operators last year, according to an analysis of statistics released by Bank Negara Malaysia (BNM).
For 2008, operating profit of the general insurance and takaful business, which declined by 44.5% to RM0.7 billion, was affected by a higher claims ratio of 84.2%, mainly from due to claims by motor vehicle.
Last year, the claims ratio stood at 79.6%, which meant that for every ringgit of premium collected by these insurers and takaful operators, close to 80 sen went to claims. And the situation is expected to worsen, going by the caution thrown in by the the central bank's Financial Stability and Payment Systems Report 2008 released in March.
The BNM report said claims are expected to intensify due to higher incidences of theft and fraud as well as less regular maintenance. This will certainly put more pressure on providers of motor insurance, many of whom are pulling the plug when it comes to providing third party motor coverage.
"Bodily injury makes about 90% of third party claim. It is increasing, making it very painful for insurers.
"To make matters worse, there are fears that fraud syndicates are reaping big, big money from fraudalent third party bodily injury claims," said Takaful Ikhlas Sdn Bhd president and chief executive officer Datuk Syed Moheeb Syed Kamarulzaman.
Major players in the motor insurance sector include Kurnia Insurance (M) Bhd, Allianz General Insurance Company (Malaysia) Bhd, AmG Insurance Bhd, Tokio Marine Insurans (M) Bhd, Pacific & Orient Insurance Co Bhd, Berjaya Sompo Insurance Bhd and Uni.Asia General Insurance Bhd.
The high claims ratio has seen insurers steering clear from underwriting third party liability coverage, the minumum insurance cover mandated by the Road Transport Act 1987. Besides providing insurance protection against death and injury to third parties (which is provided under the 'Act Only' motor insurance policy), third party motor insurance also provides protection against other legal liabilities such as damage to the property of a third party (usually somebody else's car or motorcycle or a neighbour's gate) and certain specified legal costs.
Under the third party cover, a policyholder may opt to include protection for loss or damage to his own vehicle due to fire or theft only.
"It is the Act claim that is rising, and rising fast," Syed Moheeb said.
For this year, the central bank report released three months ago noted that the Malaysian insurance and takaful sector will also be affected by the potential lower demand for protection and related products in a highly competitive industry.
"In particular, the expected decline in vehicle sales will negatively impact the motor insurance and takaful business which constituted 45% of gross insurance premiums in 2008. Premiums are also likely to be affected due to an increase in surrender rates and lower sums insured as a result of policyholders' efforts to reduce costs during these difficult periods.
"In addition, claims are expected to intensify due to higher incidences of theft and fraud as well as less regular maintenance," the report said.
In the report, the central bank also noted that the insurance and takaful sector, while maintaining a comfortable solvency position, faced challenges in maintaining the growth in premiums and contributions from new businesses, compounded by intense competition in the industry. It said total net premium and contribution income grew by 2.4%, mainly attributed to the expansion in takaful business.
It also noted that demand for general insurance and takaful coverage on motor and marine, aviation and transportation related businesses moderated in tandem with the slower trade activities and a more subdued automotive demand outlook.
It said the gross direct premium and contribution for the general insurance and takaful business registered an increase of 5.5% to RM11.5 billion, driven mainly by the expansion in the fire segment.
(This story appeared in The Malaysian Reserve on June 15, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Takaful Malaysia sees light at the end of tunnel
By Alfean Hardy
Syarikat Takaful Malaysia Bhd is seeing the light at the end of the global economic crisis tunnel and is planning to leverage on the improving e conomy and increasing customer appetite for investment products, its group managing director Datuk Mohamed Hassan Md Kamil said in a recent email interview with The Malaysian Reserve.
"We are of the view that the global economy will slowly stabilise towards the end of this year considering the massive stimulus packages and accommodative monetary policies introduced worldwide to support the downturn," he said. "Since equity markets normally recover a few months ahead of the economy, we expect the local market to steadily recover in the second half of this year.
"Hence, it is timely to offer an investment-linked product with equity exposure to take advantage of the upside when market recovers.
"We believe that investors are constantly looking for the best investible asset to invest in and Takaful myInvest provides them more alternatives to diversify their portfolios while at the same time obtain takaful protection," he added.
Takaful Malaysia recently launched an open-ended investment-linked product, Takaful myInvest, to cater to investors who want takaful protection while looking for alternatives to diversify their portfolios.
The product offers takaful protection in the event of death or total permanent disability during the investment period. It has four different investment funds — Dividend Fund (Irad), Blue Chips Fund (Istifad), Index Tracker Fund (Ihfaz) and Growth Fund (Ittihad) — that can be mixed to suit different investment appetites.
The funds will be invested in Bursa Malaysia-listed Shariah-compliant stocks approved by the Securities Commission's Shariah Advisory Council. The product is also designed to be invested in Islamic deposits and the money market.
Mohamed Hassan said Takaful myInvest is for all types of investors who hold an optimistic view on the equity market's recovery locally and would like to position their investment portfolios to take advantage of that recovery as well as the unlimited upside of potential returns that equity investments offer.
"While we are aware of the opportunities offered in the overseas markets as a result of the financial meltdown, we opine that the risks are also higher, which we need to avoid.
"The local market is more defensive in nature but it also offers tremendous growth," he said. "With the current economic condition, domestic investments would be the most prudent and best way to contain risk exposure.
"The domestic equity market still offers decent earnings in terms of dividend as compared to other regional markets, and money market investment ensures that liquidity is intact while at the same time offering the opportunity of stable returns," he added.
Asked whether Takaful Malaysia had an overseas variant of Takaful myInvest in the pipeline, Mohamed Hassan said the company was constantly working to offer innovative products to its valued customers.
"As such, there are plans on launching more investmentlinked products that will be associated with the performance of foreign investments, for example, structured products, provided that the global sentiment improves and that economic recovery is forthcoming," he said.
(This story appeared in The Malaysian Reserve on June 10, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Malaysian Re’s IFS rating affirmed by Fitch
Malaysian Reinsurance Bhd (Malaysian Re) has had its A — insurer financial strength (IFS) rating — affirmed by Fitch Ratings with a stable outlook, incorporating the firm's dominant position in the local market, its healthy capital position and prudent management.
A unit of MNRB Holdings Bhd, Malaysian Re is the country's leading reinsurance company and is an underwriter of general reinsurance business. Fitch is a global rating agency that covers entities in 90 countries, including IFS ratings of about 2,000 insurance companies worldwide.
In a recent statement, Fitch Ratings said Malaysian Re, as the national reinsurer, is the largest player in the local maket and it believes that its dominance is likely to remain unchallenged, mainly due to the voluntary cession arrangements that exist in the local market, which provide a sustainable premium base.
"Under the existing voluntary cessions market agreement, all local general insurance companies are required to cede a portion of their business to Malaysian Re.
"Consequently, Malaysia is the core market for (the firm), constituting over 80% of its total business. The company also actively participates in various local industry initiatives, which has helped strengthen its relationships with domestic insurance companies," it added.
Fitch said it viewed Malaysian Re's capital position as healthy and of very good quality, which consists of ordinary equity and retained profits with no debt issuance.
It said a RM20 million capital injection from its MNRB parent in April 2009 had further boosted paid up capital to RM500 million from RM480 million previously.
"Additionally, at the holding company level, there is above RM500 million of surplus capital, which could be a source of support if required," it added.
However, Fitch warned that, due to Malaysian Re's limited business geographical diversification, it faces the challenge of maintaining its good operating performance under current market conditions as well as the potential risk that the existing voluntary cession agreements could be reduced due to market liberalisation.
"Against the backdrop of a challenging business environment with poor investment sentiments, Malaysian Re's net income for its financial year ended March 31, 2009, is estimated by the company to reach about RM40 million, compared to RM85.1 million for FY08," Fitch said. — by Alfean Hardy
(This story appeared in The Malaysian Reserve on June 10, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
A unit of MNRB Holdings Bhd, Malaysian Re is the country's leading reinsurance company and is an underwriter of general reinsurance business. Fitch is a global rating agency that covers entities in 90 countries, including IFS ratings of about 2,000 insurance companies worldwide.
In a recent statement, Fitch Ratings said Malaysian Re, as the national reinsurer, is the largest player in the local maket and it believes that its dominance is likely to remain unchallenged, mainly due to the voluntary cession arrangements that exist in the local market, which provide a sustainable premium base.
"Under the existing voluntary cessions market agreement, all local general insurance companies are required to cede a portion of their business to Malaysian Re.
"Consequently, Malaysia is the core market for (the firm), constituting over 80% of its total business. The company also actively participates in various local industry initiatives, which has helped strengthen its relationships with domestic insurance companies," it added.
Fitch said it viewed Malaysian Re's capital position as healthy and of very good quality, which consists of ordinary equity and retained profits with no debt issuance.
It said a RM20 million capital injection from its MNRB parent in April 2009 had further boosted paid up capital to RM500 million from RM480 million previously.
"Additionally, at the holding company level, there is above RM500 million of surplus capital, which could be a source of support if required," it added.
However, Fitch warned that, due to Malaysian Re's limited business geographical diversification, it faces the challenge of maintaining its good operating performance under current market conditions as well as the potential risk that the existing voluntary cession agreements could be reduced due to market liberalisation.
"Against the backdrop of a challenging business environment with poor investment sentiments, Malaysian Re's net income for its financial year ended March 31, 2009, is estimated by the company to reach about RM40 million, compared to RM85.1 million for FY08," Fitch said. — by Alfean Hardy
(This story appeared in The Malaysian Reserve on June 10, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
TM Asia Life targets RM40m premiums in 3 wks
TM ASIA Life Malaysia Bhd is confident of locking in RM40 million in premiums within three weeks of the launch of its short-term single premium capital protected investment-linked product, Asia Jade.
Asia Jade is strategically designed and offers a 3.75-year capital protection investment plan with 20% Head Start Coupon and potential Maturity Bonus of 10%, issued by HSBC Bank Malaysia Bhd. The product is available from June 8-30, 2009.
TM Asia Life deputy CEO Jun Tokura said that Asia Jade is a close-ended fund that offers life protection insurance and the opportunity to invest into three promising stocks in China.
"We are very optimistic about this fund as it is specially selected to capitalise on the strength of China's economy and the stimulus package offered by the China government targeting on infrastructure development. "With this, we have carefully chosen three promising stocks, which are China Mobile Ltd, China Railway Group Ltd and China National Offshore Oil Corp Ltd," he said.
Following the successful launch of Asia TriMax in October last year and due to popular demand from our customers, Tokura said TM Asia Life has chosen to tie up with HSBC Bank Malaysia again to introduce Asia Jade, its second investment plan. The company is confident that the new product will appeal to many investors as it offers life protection and potentially high capital growth within a short time frame.
"Based on the back testing results of China Mobile and China National Offshore Oil Corp from July 1, 2002 to April 7, 2009, investors can expect average returns of 29.33% at maturity", he added.
Asia Jade fund requires a minimum investment of RM10,000. Investors will be assured of 100% capital protected returns upon maturity, which will be in 2013.
The life insurance will offer financial protection of up to 125% of basic premium against death and TPD (Total and Permanent Disability). Potential investors as young as 19 years of age are eligible to invest in Asia Jade, while life assured can be as young as one month to 75 years old.
TM Asia Life also offers education, endowment, whole life, term, medical, investment linked and group insurance solutions, covering a range of over 20 products.
It is the first Japanese owned life insurance company in Malaysia following the acquisition of Asia General Holdings by Tokio Marine & Nichido Fire Insurance Co Ltd, a unit of Japan's largest insurer, Tokio Marine Holdings, Inc.
(This story appeared in The Malaysian Reserve on June 9, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Another local party keen on PacificMas’ insurance biz: FD
PacificMas Bhd has found another interested party to acquire its insurance business and an application has been made to Bank Negara Malaysia (BNM) to enter into negotiations, PacificMas non-independent director George Lee said.
“It’s pending approval,” he told reporters after the company’s AGM in Kuala Lumpur on June 10, 2009, reports The Edge Financial Daily.
He did not name the interested party, the report added.
THE REPORT GOES ON:
Lee expressed confidence that the impending round of negotiations would work out, as the interested party is believed to be prepared to pay PacificMas’ asking price — a price tag which is pegged at a premium of the insurance business’ net book value of RM123 million as at March 31, 2009.
“It’s a local party and they are prepared to pay. After having failed on two previous occasions (due to pricing), we would not want to go into discussions with this party if we don’t have a fairly good indication that they are at least prepared to pay the price that the board feels is a fair price,” Lee said.
Lee is also the executive vice-president and head of group investment banking of Oversea-Chinese Banking Corporation Ltd (OCBC).
“We have a certain price in mind as we think it’s a profitable business. Therefore, it should be sold at a certain premium to book value and we are looking at a certain valuation,” he added.
The previous interested parties included EON Capital Bhd, OSK Holdings Bhd and even T Ananda Krishnan’s company — Usaha Tegas Sdn Bhd.
On PacificMas’ plans for the cash from the sale, Lee said the board may look at alternative investments, principally in finance services. “Also, we will definitely look at growing our fund management and leasing businesses,” he said.
“After careful evaluation and if the conclusion is that we can’t find a viable alternative and the money is put in fixed deposit, then it’s better we return the money to the shareholders than to put money in the bank,” Lee added.
For the year ended Dec 31, 2008, its insurance business contributed 29% to the group’s profits while its leasing and fund management businesses contributed 34% and less than 1% respectively. In 2007, the fund management business contributed 15% to group profits.
“Immediately after we sell the insurance (business), group profitability will shrink. What we are looking at over time is for the fund management and leasing businesses to contribute incremental profit on an absolute basis,” Lee said.
He added there was potential for the businesses to develop as currently the group’s fund management segment managed RM1.7 billion while the biggest fund in the country managed close to RM30 billion. The leasing business has a 1.5% market share of the RM50 billion market.
Industry observers believe PacificMas’ plan to grow these businesses has potential given that the group would also be able to leverage on OCBC.
On speculation of OCBC injecting Great Eastern Life Malaysia (GELM) into PacificMas post-disposal, Lee said the exercise was proposed twice but had failed.
“Nothing came out of the discussions and there must be very valid reasons why such mergers could not be consummated and I believe after two unsuccessful attempts… but I can’t speculate,” he said.
As OCBC has a 63.5% stake in PacificMas following its takeover exercise early last year, BNM imposed a condition on OCBC that it could not own two insurance companies in Malaysia. PacificMas has until October this year to sell its insurance business.
Meanwhile, on the company’s performance this year, PacificMas chief executive officer Ng Hon Soon said: “We expect better profitability.”
He added the second quarter was expected to see the same performance as its first quarter ended March. For its 1QFY09, PacificMas registered a net profit increase of 200% year-on-year to RM8.4 million.
“It’s pending approval,” he told reporters after the company’s AGM in Kuala Lumpur on June 10, 2009, reports The Edge Financial Daily.
He did not name the interested party, the report added.
THE REPORT GOES ON:
Lee expressed confidence that the impending round of negotiations would work out, as the interested party is believed to be prepared to pay PacificMas’ asking price — a price tag which is pegged at a premium of the insurance business’ net book value of RM123 million as at March 31, 2009.
“It’s a local party and they are prepared to pay. After having failed on two previous occasions (due to pricing), we would not want to go into discussions with this party if we don’t have a fairly good indication that they are at least prepared to pay the price that the board feels is a fair price,” Lee said.
Lee is also the executive vice-president and head of group investment banking of Oversea-Chinese Banking Corporation Ltd (OCBC).
“We have a certain price in mind as we think it’s a profitable business. Therefore, it should be sold at a certain premium to book value and we are looking at a certain valuation,” he added.
The previous interested parties included EON Capital Bhd, OSK Holdings Bhd and even T Ananda Krishnan’s company — Usaha Tegas Sdn Bhd.
On PacificMas’ plans for the cash from the sale, Lee said the board may look at alternative investments, principally in finance services. “Also, we will definitely look at growing our fund management and leasing businesses,” he said.
“After careful evaluation and if the conclusion is that we can’t find a viable alternative and the money is put in fixed deposit, then it’s better we return the money to the shareholders than to put money in the bank,” Lee added.
For the year ended Dec 31, 2008, its insurance business contributed 29% to the group’s profits while its leasing and fund management businesses contributed 34% and less than 1% respectively. In 2007, the fund management business contributed 15% to group profits.
“Immediately after we sell the insurance (business), group profitability will shrink. What we are looking at over time is for the fund management and leasing businesses to contribute incremental profit on an absolute basis,” Lee said.
He added there was potential for the businesses to develop as currently the group’s fund management segment managed RM1.7 billion while the biggest fund in the country managed close to RM30 billion. The leasing business has a 1.5% market share of the RM50 billion market.
Industry observers believe PacificMas’ plan to grow these businesses has potential given that the group would also be able to leverage on OCBC.
On speculation of OCBC injecting Great Eastern Life Malaysia (GELM) into PacificMas post-disposal, Lee said the exercise was proposed twice but had failed.
“Nothing came out of the discussions and there must be very valid reasons why such mergers could not be consummated and I believe after two unsuccessful attempts… but I can’t speculate,” he said.
As OCBC has a 63.5% stake in PacificMas following its takeover exercise early last year, BNM imposed a condition on OCBC that it could not own two insurance companies in Malaysia. PacificMas has until October this year to sell its insurance business.
Meanwhile, on the company’s performance this year, PacificMas chief executive officer Ng Hon Soon said: “We expect better profitability.”
He added the second quarter was expected to see the same performance as its first quarter ended March. For its 1QFY09, PacificMas registered a net profit increase of 200% year-on-year to RM8.4 million.
Thursday, June 4, 2009
MAA may conclude unit sale to AMG by fourth quarter
KUALA LUMPUR: MAA Holdings Bhd expects to conclude the sale of its general insurance business and 4.9% stake in MAA Takaful Bhd to AMG Insurance Bhd by the fourth quarter, said chief executive officer Muhamad Umar Swift.
The general insurance business was priced at RM274.8mil and the MAA Takaful stake at RM16.2mil, Bernama quoted him as saying.
Both parties had agreed to the terms and the next step was to secure the approval of Bank Negara and shareholders, he said after the group AGM yesterday.
MAA Holdings chairman Tunku Datuk Ya’acob Tunku Abdullah said the group was also looking to raise its capital to further grow business and would opt for a rights issue or issuing new notes.
“MAA has not raised capital in the last 20 years. In the past, we funded via medium-term notes, for which we will start repayment next year for five years.
“We are still deliberating on the ideal structure to raise capital,” he said, adding that it was also looking at disposing its non-core businesses.
Muhamad Umar said once the transaction with AMG Insurance was completed, the group would have a clearer picture on the best course of action to raise fund. “We are trying to move away from debt and towards equity funding,” he said.
On the group’s plan to expand its overseas operations, Muhamad Umar said it was business as usual and MAA Holdings was open to any beneficial tie-ups.
“We have invested a lot in these operations and are looking for strategic partners that can take us to the next capital level to expand,” he said.
Meanwhile, MAA Holdings has posted a net profit of RM24mil, or 7.88 sen per share, in the first quarter ended March 31, mainly on higher operating income recorded by the group’s shareholders ’ fund.
“The profit in shareholders’ fund was due to mainly reversal of fair value loss of RM25.3mil arising from an interest rate swap transaction resulted from improvement in the market condition of the US municipal bond,’’ it said.
Revenue during the period under review was RM485mil versus RM519mil a year ago.
(THE STAR, Saturday May 30, 2009)
The general insurance business was priced at RM274.8mil and the MAA Takaful stake at RM16.2mil, Bernama quoted him as saying.
Both parties had agreed to the terms and the next step was to secure the approval of Bank Negara and shareholders, he said after the group AGM yesterday.
MAA Holdings chairman Tunku Datuk Ya’acob Tunku Abdullah said the group was also looking to raise its capital to further grow business and would opt for a rights issue or issuing new notes.
“MAA has not raised capital in the last 20 years. In the past, we funded via medium-term notes, for which we will start repayment next year for five years.
“We are still deliberating on the ideal structure to raise capital,” he said, adding that it was also looking at disposing its non-core businesses.
Muhamad Umar said once the transaction with AMG Insurance was completed, the group would have a clearer picture on the best course of action to raise fund. “We are trying to move away from debt and towards equity funding,” he said.
On the group’s plan to expand its overseas operations, Muhamad Umar said it was business as usual and MAA Holdings was open to any beneficial tie-ups.
“We have invested a lot in these operations and are looking for strategic partners that can take us to the next capital level to expand,” he said.
Meanwhile, MAA Holdings has posted a net profit of RM24mil, or 7.88 sen per share, in the first quarter ended March 31, mainly on higher operating income recorded by the group’s shareholders ’ fund.
“The profit in shareholders’ fund was due to mainly reversal of fair value loss of RM25.3mil arising from an interest rate swap transaction resulted from improvement in the market condition of the US municipal bond,’’ it said.
Revenue during the period under review was RM485mil versus RM519mil a year ago.
(THE STAR, Saturday May 30, 2009)
MAA mulling options to improve capital structure
by Alfean Hardy
MAA Holdings Bhd, which is in the midst of hiving off its general insurance business, is mulling over various options up to and including a rights issue as it seeks to raise funds to improve its capital structure, its chief executive officer/group managing director, Muhamad Umar Swift said.
As of its fiscal year ended Dec 31, 2008, the insurance firm's cash and cash equivalents fell 7.79% to RM51.35 million. The company expects to complete a RM254.8 million sale of its general insurance to AMG Insurance Bhd by year-end.
The exercise also includes an additional RM16.2 million deal to sell a 4.9% stake in MAA Takaful Bhd to AMG. Speaking to reporters after MAA's AGM in Kuala Lumpur last Friday [May 29, 2009], Muhamad Umar said one of the options being looked at aside from the disposal of MAA's general insurance business was a rights issue.
"The sale recapitalises our business and the rights issue (can) allow us to address the cash flow needs of the group," he said. "While that process is ongoing, we will also be disposing of our non-core businesses and activities and freeing up that cash as well.
These are activities like Wira Guards and our stake in Mithril Bhd (it holds a 33% stake as of end FY08).
These are non-core activities. Our focus is protection," he added. Muhamad Umar said it was MAA's long term vision to be an un-geared holding company. "There might be overdraft lines but the main will be equity-funded with investmentable business, life insurance business, and our funds management and mutual funds business," he added.
MAA has subsidiaries and associate firms overseas.
Asked what the company was going to do with those companies, Muhamad Umar said at the end of the day, MAA was a Malaysia-centric business.
"We're a Malaysian brand serving Malaysians," he said. "We expect our Philippines operations to be profitable this year and we're seeing a lot of consolidation in that market.
And, while we like our assets in the Philippines, should someone like it more we'd be more than willing to sell it.
While there's been some discussions, with the current recession, this is probably not the best time to market this asset," he added.
Muhamad Umar said Indonesia was another matter. "It's a more interesting issue for us with 250 million people, a large market force and we've invested time and effort there. It's wait-and-see. It's a profitable asset for us now but, again, how much capital do we need to take it to the next level. We're looking for a strategic partner to help us take it to the next level," he said.
"For (Australian associate) Columbus Capital Australia, the asset was profitable this year and it has an interesting business model but is it a core asset for us? No, so we're looking to dispose of that asset as well," he added.
MAA executive chairman Tunku Datuk Ya'acob Tunku Abdullah said, while it was nice to play overseas, changing central bank capital requirements meant that the firm required money for its Malaysian businesses.
"If there's an offer, we will sell. I don't think there's any offer (at this moment).
For now the businesses run as is," he said. "We're not expanding those overseas operations. We're reserving all our money for our Malaysian operations. If there's a need to increase capital requirements (set by governments there), we will then look for strategic partners to put in the difference," he added.
Asked about the rights issue, Tunku Ya'acob said, for now, it was only an option for MAA as it seeks to raise capital. "We're still deliberating what would be the ideal structure to finance MAA's financial requirements. Other options include to issue new notes and discontinue rolling our RM200 million medium-term notes facility," he added.
(This story appeared in The Malaysian Reserve on June 1, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
MAA Holdings Bhd, which is in the midst of hiving off its general insurance business, is mulling over various options up to and including a rights issue as it seeks to raise funds to improve its capital structure, its chief executive officer/group managing director, Muhamad Umar Swift said.
As of its fiscal year ended Dec 31, 2008, the insurance firm's cash and cash equivalents fell 7.79% to RM51.35 million. The company expects to complete a RM254.8 million sale of its general insurance to AMG Insurance Bhd by year-end.
The exercise also includes an additional RM16.2 million deal to sell a 4.9% stake in MAA Takaful Bhd to AMG. Speaking to reporters after MAA's AGM in Kuala Lumpur last Friday [May 29, 2009], Muhamad Umar said one of the options being looked at aside from the disposal of MAA's general insurance business was a rights issue.
"The sale recapitalises our business and the rights issue (can) allow us to address the cash flow needs of the group," he said. "While that process is ongoing, we will also be disposing of our non-core businesses and activities and freeing up that cash as well.
These are activities like Wira Guards and our stake in Mithril Bhd (it holds a 33% stake as of end FY08).
These are non-core activities. Our focus is protection," he added. Muhamad Umar said it was MAA's long term vision to be an un-geared holding company. "There might be overdraft lines but the main will be equity-funded with investmentable business, life insurance business, and our funds management and mutual funds business," he added.
MAA has subsidiaries and associate firms overseas.
Asked what the company was going to do with those companies, Muhamad Umar said at the end of the day, MAA was a Malaysia-centric business.
"We're a Malaysian brand serving Malaysians," he said. "We expect our Philippines operations to be profitable this year and we're seeing a lot of consolidation in that market.
And, while we like our assets in the Philippines, should someone like it more we'd be more than willing to sell it.
While there's been some discussions, with the current recession, this is probably not the best time to market this asset," he added.
Muhamad Umar said Indonesia was another matter. "It's a more interesting issue for us with 250 million people, a large market force and we've invested time and effort there. It's wait-and-see. It's a profitable asset for us now but, again, how much capital do we need to take it to the next level. We're looking for a strategic partner to help us take it to the next level," he said.
"For (Australian associate) Columbus Capital Australia, the asset was profitable this year and it has an interesting business model but is it a core asset for us? No, so we're looking to dispose of that asset as well," he added.
MAA executive chairman Tunku Datuk Ya'acob Tunku Abdullah said, while it was nice to play overseas, changing central bank capital requirements meant that the firm required money for its Malaysian businesses.
"If there's an offer, we will sell. I don't think there's any offer (at this moment).
For now the businesses run as is," he said. "We're not expanding those overseas operations. We're reserving all our money for our Malaysian operations. If there's a need to increase capital requirements (set by governments there), we will then look for strategic partners to put in the difference," he added.
Asked about the rights issue, Tunku Ya'acob said, for now, it was only an option for MAA as it seeks to raise capital. "We're still deliberating what would be the ideal structure to finance MAA's financial requirements. Other options include to issue new notes and discontinue rolling our RM200 million medium-term notes facility," he added.
(This story appeared in The Malaysian Reserve on June 1, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Sunday, May 31, 2009
Great Eastern aims for RM800m in new premiums: BT
By Rupinder SinghGREAT Eastern Life Assurance (Malaysia) Bhd, the Malaysian unit of Singapore based Great Eastern Life Assurance Co Ltd, aims to rake in new business premiums of RM800 million this year, on product innovation and the help of its agency force.
New business premiums stood at RM629 million in 2008.
"Our sales target for 2009 is to achieve RM800 million in total weighted new business premiums," said its chief executive officer Koh Yaw Hui, who is also director of Great Eastern Malaysia.
Koh said the insurance industry in Malaysia is showing positive signs, following a sluggish 2008 as a result of the global financial crisis.
This was reflected in its first quarter result, where it posted a 59 per cent growth in weighted new business premiums of RM170 million compared with RM107 million a year ago.
"This sterling performance is encouraging especially in this challenging and trying times," he told reporters after the company's Life Planning Advisory (LPA) programme graduation ceremony in Kuala Lumpur yesterday [May 20, 2009].
To meet its 2009 target, Great Eastern Malaysia is repositioning its investment-linked plans to meet specific needs namely in protection, investment, education and retirement.
"We plan to roll out these investment-linked products in June or July this year," he said.
It also plans to enhance its current stand-alone medical products.
Koh added that the core strategy will be to enhance the quality and professionalism of its agents through its agent transformation project.
Ninety five per cent of Great Eastern Malaysia's weighted premiums come from its 17,000 agents nationwide, servicing 2.25 million policyholders.
To expand its market reach, the company plans to open more branches nationwide now that the government has lifted restrictions for foreign insurers.
"We have identified a site in Petaling Jaya and on mainland Penang for a new branch. We plan to open the new branches in the next two to three years," he said. It currently has 24 branches nationwide.
Also in line with the recently announced liberalisation measures, the company plans to establish a bancassurance partnership, its first, with Overseas-Chinese Banking Corp Ltd (OCBC) in the next two to three months.
OCBC is the ultimate holding company of Great Eastern Malaysia.
Koh said the company will initially launch as many as three bancassurance products.
On its LPA programme, Koh said the company hopes to have up to 3,000 graduates by end of 2010.
Since the launch of the programme in December 2006, Great Eastern Malaysia has seen 600 graduating from LPA.
[Business Times, May 21, 2009]
New business premiums stood at RM629 million in 2008.
"Our sales target for 2009 is to achieve RM800 million in total weighted new business premiums," said its chief executive officer Koh Yaw Hui, who is also director of Great Eastern Malaysia.
Koh said the insurance industry in Malaysia is showing positive signs, following a sluggish 2008 as a result of the global financial crisis.
This was reflected in its first quarter result, where it posted a 59 per cent growth in weighted new business premiums of RM170 million compared with RM107 million a year ago.
"This sterling performance is encouraging especially in this challenging and trying times," he told reporters after the company's Life Planning Advisory (LPA) programme graduation ceremony in Kuala Lumpur yesterday [May 20, 2009].
To meet its 2009 target, Great Eastern Malaysia is repositioning its investment-linked plans to meet specific needs namely in protection, investment, education and retirement.
"We plan to roll out these investment-linked products in June or July this year," he said.
It also plans to enhance its current stand-alone medical products.
Koh added that the core strategy will be to enhance the quality and professionalism of its agents through its agent transformation project.
Ninety five per cent of Great Eastern Malaysia's weighted premiums come from its 17,000 agents nationwide, servicing 2.25 million policyholders.
To expand its market reach, the company plans to open more branches nationwide now that the government has lifted restrictions for foreign insurers.
"We have identified a site in Petaling Jaya and on mainland Penang for a new branch. We plan to open the new branches in the next two to three years," he said. It currently has 24 branches nationwide.
Also in line with the recently announced liberalisation measures, the company plans to establish a bancassurance partnership, its first, with Overseas-Chinese Banking Corp Ltd (OCBC) in the next two to three months.
OCBC is the ultimate holding company of Great Eastern Malaysia.
Koh said the company will initially launch as many as three bancassurance products.
On its LPA programme, Koh said the company hopes to have up to 3,000 graduates by end of 2010.
Since the launch of the programme in December 2006, Great Eastern Malaysia has seen 600 graduating from LPA.
[Business Times, May 21, 2009]
Sunday, May 17, 2009
AXA Affin sees great potential for local takaful biz
By Alfean Hardy
AXA Affin Life Insurance Bhd, which is 51%-owned by Affin Holdings Bhd, is bullish over the recent liberalisation of Malaysia's financial sector and sees a lot of potential for conventional insurance and, more specifically, in takaful, its chief marketing officer Nicholas Kua Choo Ming said.
Among the measures announced by the government were the issuing of two new family takaful licenses, the increase of foreign equity holdings to 70% on a case-by-case basis, no restrictions on locally incorporated foreign insurance firms/takaful operators establishing branches and the lifting of restrictions for such operators to enter into bancassurance/banctakaful arrangements with locally-based financial institutions.
The 49% balance in the company is held by global financial protection and wealth management giant AXA Group. The JV was incorporated in early 2006.
Speaking to The Malaysian Reserve last Friday, Kua said the local industry had been acknowledged as one of the more promising ones in the region.
"We are not at the level of maturity where you'd probably have a lot of difficulty in getting higher penetration of the market," he said.
"We're only at about 40% versus Singapore, which is already at 90%, and the like of Japan, which is at 200%. There are a lot of opportunities and the same optimism is felt throughout the whole industry. You have so many new entrants trying to grab a pie of the Malaysian market over the last two years alone.
"This tells you that foreign players continue to view Malaysia as a very promising market. You don't see the same type of activity in Singapore, Thailand and the Philippines, for instance," he added.
Kua said the liberalisation could probably see a lot more foreign players being keen on the local market, with an eye to seek out strategic partners with the local players.
"Then there's the new takaful licenses, which means more players into the market. This only shows that the regulator and the industry at large views the market as a very promising one.
"The same applies for AXA Affin as well. We wouldn't have formed the JV back then if we didn't see the opportunities in the market," he added. Kua said he was not surprised by the government's move to liberalise the financial and insurance sectors here.
"If you look at the region, Singapore has shown aspirations to grab a piece of the pie. Hong Kong is keen and Indonesia, of late, has also announced their aspirations to be a hub as well," he said.
"Malaysia has a head start and does have the perfect infrastructure and talent to spur the growth of Islamic finance and insurance to become the premier Islamic finance hub in the region," he added.
AXA Affin does not currently have a takaful wing and, while Kua would not comment on the firm's plans on the matter, he said who would not want to have an Islamic insurance division here at this point in time.
"From an industry perspective, who wouldn't be keen on those two new licences? I'm sure everyone's eyeing that," he said.
While the company did not track the takaful sector numbers per se, he said that independent evaluation provided a lot of positives for firms looking to venture into the local takaful segment.
"Any interested player coming into this market, looking at the statistics, would have a lot of confidence that this is the market to get into as a new start-up," he added.
(This story appeared in The Malaysian Reserve on May 18, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Wednesday, May 13, 2009
MUNICH RE: World’s first microinsurance in the offing
By Alfean Hardy
Munich Re, a global leader in reinsurance, has teamed up with German government agency Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) and Indonesian insurance firm Asuransi Wahana Tata (AWT) to launch the world's first microinsurance flood product.
The GTZ is currently active in numerous microinsurance projects and is helping to implement about 50 technical assistance projects globally in the field of social protection.
Microinsurance is being seen as a growing market, given that only 3% of the world's low income earners currently have access to insurance products. In a joint statement issued recently, the three parties said floods and inundation were a recurring threat to the livelihood of the people of Jakarta, Indonesia, and that impacts brought about by such disasters, such as property damage, higher medical expenses and rising food prices, constituted a heavy burden to those affected.
"The idea behind the joint project is to offer affordable, easy understandable and non-bureaucratic insurance cover specially adapted to this segment of the population. Instead of a lengthy policy document, the insured will receive a simple protection card that costs 50,000 rupiahs (RM16.75) per card and guarantees a one-off payment of 250,000 rupiahs (RM8,383) if the waters rise to or above 950cm (Alert 1) at the Manggarai Water Gate in Jakarta," they added.
The Alert 1 Manggarai Protection Card will offer the low income households in Jakarta with the opportunity to insure themselves against the direct economic losses and social risks brought about by severe flooding. Under the scope of the venture, AWT is to act as primary insurer and will be involved in the marketing, distributing and selling of the product. Munich Re developed its features and would also act as the sole reinsurer of the product.
GTZ was involved in researching the needs of the target group and also conducted a microinsurance awareness campaign within the pilot region of Jakarta.
The fourth largest country in terms of population, the World Bank has estimated that about 49% of the Indonesian population live below the US$2 (RM7.02) purchasing power parity rate. The local population is expected to hit the 243 million mark in 2010.
Susanne Krippner of the GTZ-supported Promotion of Small Financial Institutions programme in Indonesia said, "In developing countries in particuar, low income households are often those least protected against the financial and social consequences of natural catastrophies and other risks."
"Innovative microinsurance solutions can significantly improve the economic and social protection of the population and, thereby, contribute to the fight against poverty," she added.
Munich Re Asia board member Dr Ludger Arnoldussen said, "Thanks to Munich Re's risk management expertise and risk assessment we can help devise insurance solutions to cover people in exposed regions for whom protect ion was previously unavailable. It means that natural catastrophies will not automatically bring more poverty."
AWT president commissioner Rudy Wanandi said the project was an excellent chance to provide simple and affordable insurance cover to the low-income market combined with fast claims payment.
"With the right partners, a defined product and through our wide network within the region, we are able to reach people and explain our innovative solutions. It will raise the insurance awareness of society and bring more economic stability and social security to people who live in exposed regions," he added.
The Malaysian Reserve, May 13, 2009, p32
HLA group MD tipped to helm Prudential, says Star
Hong Leong Assurance Bhd (HLA) group managing director (MD) and chief executive officer (CEO) Charlie E. Oropeza is tipped to become Prudential Assurance Malaysia Bhd’s (PAMB) new CEO, reports The Star (May 14, 2009).
The newspaper, without quuting sources, said it had learnt that his last day at Hong Leong Assurance will be at the end of this month.
It added that he will head Prudential Assurance next month pending approval from Bank Negara.
The report said, according to sources, HLA’s chief operating officer (life division) Loh Guat Lan would for the time being oversee the operations of the company.
HLA has not at the moment identified any suitable candidate to replace Oropeza.
There had been talk of late that since Bill Lisle, the former CEO of PAMB, jumped ship to join Aviva Asia as its regional director, PAMB had two candidates in mind – Oropeza and AIA Bhd CEO Khor Hock Seng.
Oropeza was picked to helm PAMB due to his expertise and vast experience in regional markets, one source said. Prior to joining HLA, he was the chief executive of Prudential Life Assurance Indonesia and the CEO of Prudential Vietnam Assurance.
He started his career with Allstate Insurance Co, United States in 1981.
A graduate of La Salle University and University of New Haven in the United States, Oropeza has more than 25 years of experience in international life and general insurance, mutual funds and consumer finance.
He assumed the position of group MD and CEO of HLA on July 10, 2007.
In view of liberalisation and growing competition in the financial services industry, many insurers are roping in experienced CEOs and other senior executives.
PAMB posted new business annual premium equivalent (NBAPE) (with life insurance sales and takaful contributions combined) of RM659mil for the financial year ended Dec 31, 2008, a 9% increase from 2007.
NBAPE consists of regular premium sales plus one-tenth of single premium insurance sales.
The newspaper, without quuting sources, said it had learnt that his last day at Hong Leong Assurance will be at the end of this month.
It added that he will head Prudential Assurance next month pending approval from Bank Negara.
The report said, according to sources, HLA’s chief operating officer (life division) Loh Guat Lan would for the time being oversee the operations of the company.
HLA has not at the moment identified any suitable candidate to replace Oropeza.
There had been talk of late that since Bill Lisle, the former CEO of PAMB, jumped ship to join Aviva Asia as its regional director, PAMB had two candidates in mind – Oropeza and AIA Bhd CEO Khor Hock Seng.
Oropeza was picked to helm PAMB due to his expertise and vast experience in regional markets, one source said. Prior to joining HLA, he was the chief executive of Prudential Life Assurance Indonesia and the CEO of Prudential Vietnam Assurance.
He started his career with Allstate Insurance Co, United States in 1981.
A graduate of La Salle University and University of New Haven in the United States, Oropeza has more than 25 years of experience in international life and general insurance, mutual funds and consumer finance.
He assumed the position of group MD and CEO of HLA on July 10, 2007.
In view of liberalisation and growing competition in the financial services industry, many insurers are roping in experienced CEOs and other senior executives.
PAMB posted new business annual premium equivalent (NBAPE) (with life insurance sales and takaful contributions combined) of RM659mil for the financial year ended Dec 31, 2008, a 9% increase from 2007.
NBAPE consists of regular premium sales plus one-tenth of single premium insurance sales.
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