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]

Strong capital foundation with new RBC

By Habhajan Singh
The implementation of the Risk-Based Capital Framework for Insurers (RBC) on Jan 1, 2009, completed an "important component" of the overall objective towards ensuring a strong capital foundation for the financial sector, the central bank said.
In its annual report for 2008, Bank Negara Malaysia (BNM) noted that the RBC provides for capital assessments that are more aligned to the specific risk profiles of individual insurers and is reflective of market consistent valuations.
"After a parallel run of almost two years during which the framework underwent several refinements to enhance its integrity, legislative changes were approved to bring the framework into effect," it said in its recently-released Financial Stability and Payment Systems Report 2008. The framework replaces the previous margin of solvency regime.
"A key objective of RBC is to ensure that prudential buffers reflect the underlying risk profiles of individual insurers. To achieve this, the RBC requires more explicit quantification of the various risks inherent in the insurance business," it said.
Under the RBC, the central bank noted that capital adequacy requirements are more granular and risksensitive compared to the previous solvency regime, which did not differentiate between the nature and sources of risk. Providing an example, it said insurers whose asset portfolios are concentrated in high-risk assets or assets that are inadequately matched with the corresponding liabilities will be required to hold more capital under the RBC compared to the previous solvency regime.
Similarly, insurers who underwrite volatile lines of business or are highly concentrated in a single line of business will be required to hold more capital than insurers with diversified portfolios of relatively stable lines of business.
In an interview with The Malaysian Reserve last month, then-president of Life Insurance Association of Malaysia (LIAM) Ng Lian Lu said, there was never a doubt that the transition to the new RBC regime would be smooth as companies have conducted parallel runs for two years and all teething problems have been addressed prior to the implementation of the new framework.
The central bank also noted that since the implementation of the framework, further adjustments have been necessary to address the impact of market interest rates used in the valuation standards moving significantly out of line with historical norms. Neighbouring Singapore went into the RBC mode some years ago.
In a statement dated Aug 25, 2004, the Monetary Authority of Singapore (MAS) announced an RBC for insurers in Singapore. In conjunction with the new framework, its regulator said the RBC aims to put in place a more transparent and risk-focused capital and valuation basis that reflects all major financial risks of insurers. It was developed in close consultation with insurance practitioners, and the actuarial and accounting professions, it said.
MAS also issued two consultation papers to discuss how the RBC and regulations will be integrated into the Insurance Act. The shift from a one-size fits all approach will also encourage insurance companies in Singapore to manage their financial risks more actively and raise overall prudential standards, it added.
Meanwhile, in its report, BNM said that the insurance and takaful sectors — while recording a stronger solvency position of RM16.6 billion compared to RM11.7 billion the year before, and attaining a capital adequacy ratio of 187.6%, which is well above the minimum requirement of 100% (2007: 158.4%) — faced challenges in maintaining the growth in premiums and contributions from new businesses amidst strong competition in the industry.
It said total net premium and contribution income of this industry grew by 2.4%, attributed mainly to the expansion in the market share of takaful business. At the same time, the growth of 5.5% in the general insurance and takaful sectors was driven mainly by the expansion in the fire segment while the modest growth of 1% in the life and family takaful sectors were a result of the weaker demand in investment linked business.
Nevertheless, it noted that the operating profit of the general insurance and takaful business declined by 44.5% to RM0.7 billion, mainly due to unrealised losses and deterioration in the motor insurance portfolio, as reflected in the higher claims ratio of 84.2%. - The Malaysian Reserve, p32, Apr 1, 2009

(This story appeared in The Malaysian Reserve on Mar 30, 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, edited by Habhajan Singh.)

Singapore insurance policy bonus set to fall

In view of the global financial crisis and economic recession, policyholders of participating life insurance policies (popularly known as par policies) can expect non-guaranteed benefits, in the form of bonuses, to be revised downwards for 2008 and into the future, said Singapore's Life Insurance Association (LIA).
These bonus changes are needed due to the poor investment climate in 2008, it added in a recent statement. It said par policies offer both protection and savings through a combination of guaranteed benefits and non-guaranteed benefits in the form of bonuses. Bonuses are determined based on the performance of the par funds.
Like many other financial products and investments, par funds have not been spared from the brunt of the recent financial market meltdown.
The bonuses for par policies in 2008 are therefore expected to be lower than those declared in preceding years.
LIA president Darren Thomson said despite an extremely turbulent past year, all life insurers have been able to maintain the solvency of their par funds. "We remain able to continue to allocate bonuses to par policyholders, albeit at a lower level." - The Malaysian Reserve, p32, Apr 1, 2009