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]

Manulife’s ‘Hongkie’ finds a home in Malaysia

by Alfean Hardy
The insurance industry was the last thing on young Michael Chan Yui Ling's mind when he began his working career. For the Hong Kong Islander, the life of an accountant was what he wanted. Leading the operations of Manulife Holdings Bhd here was probably not something he would have imagined was in his future.
"I'm a Hongkie, a Hong Kong person. I was educated there, I met my wife there, my house is there, my car is there, I got my kids there.
"For the past 15 years, I've been doing a lot of regional projects for (parent company Manulife Financial Corp) but I've always been in Hong Kong. This is my first international assignment," he told The Malaysian Reserve recently.
As a graduate of Hong Kong Polytechnic University with an accountancy degree, Chan had set his sights on becoming an accountant. At no time had the idea of venturing into the insurance business crept into his mind.
"The shift was unplanned. After I graduated, I went to the government to become an accounting officer. Then I decided to see the commercial world in 1982 but, unfortunately, there was a market crash in 1983 and the company I was in was being wound up.
"At that time, because the market was bad, I needed a job. So, I got a job with a local insurance brokering firm, Everbest, and that's how I started my insurance career," he added.
After 10 years with the firm, Chan got a call from Manulife Hong Kong. "I was doing well at Everbest, being an accountant as well as taking care of its subisidiary, which later became a top broker for Manulife.
"And it was in 1991 that the Manulife group insurance vice president approached me and said 'why not join and see the other part of the business'.
"I told him I didn't want to join and that I was happy with my job and my company. But he was consistent. He talked to me consistently for 10 months. He was serious. He wanted someone to run their sales and marketing. Finally, I met their general manager for Asia and other people and I was impressed. I finally joined Manulife in 1992, Feb 15," he added.
Between that time and now, Chan has held three positions within the Manulife group.
"I was the head of sales and marketing for group insurance and pension. When group insurance was split between pensions and group life and health insurance, I headed (the latter) in 1999.
"In 2004, I was appointed head of agency for Manulife Hong Kong. I was there until 2009 when I was asked to run a country (operation). "It was something that I hadn't done before and it was a good development in my career. And I welcome that," he said.
Chan said he had been well prepared by his predecessors for how things were here. "Manulife in the Asian region is a very transparent operation and there's a lot of chance to talk to the senior management of other countries. I knew the management here well and I anticipated the situation before I came.
"I like the country, especially the clean air and the clean city. I like the food here. Malaysia is a good country because there are a lot of advantages because of the environment, the resources and there aren't too many people per area compared to my hometown where you see people every where.
All the time you see people," he said. Chan is here on his own, with his wife visiting regularly from Hong Kong. His eldest son is currently in a UK university, his second son is set to enter a university in Hong Kong this year and his daughter is in her last year of high school.
"My wife has promised that she will join me here once our daughter graduates," he said. Asked how long his posting was, Chan said that depended on his boss. "I hope I can stay here long. I love the country and I like the working team. If I can be longer here, I would be more happy to be here. I like it here," he added.

(This story appeared in The Malaysian Reserve on May 27, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER)

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)

Manulife to grow agency force, looking for partners

By ALFEAN HARDY
MANULIFE Holdings Bhd is looking to grow its agency force and is in talks to expand its bancassurance distribution network as it looks to maximise on opportunities amidst the current economic climate, its group CEO Michael Chan Yui Lung said.
Speaking to reporters on April 24 after the company's AGM in Kuala Lumpur, Chan said Manulife was keen to grow its agency force, which currently numbers about 1,500 nationwide.
"The percentage of new business coming from the agency force is about 73% of (new sales)," he said. "Our target this year is to recruit between 600 and 800 new agents," he added. Chan said the current situation was ideal to increase Manulife's agency force.
"The current economic situation may make a lot of people fear that they will lose their jobs and our agency force can provide them with an opportunity to join," he said.
"This is a good (time) for us to recruit more agents and we've seen the number of new agents joining us increase by about 10% so far this year. There is plenty of opportunity to grow here in terms of life insurance operations, given the penetration (rate) of about 40% in the Malay market alone," he added.
Chan said Manulife was also keen on growing its bancassurance dist ribut ion chain. The company currently has bank partnerships with four banks, HSBC Bank Malaysia Bhd, Citibank Malaysia, Alliance Bank Malaysia Bhd and OCBC Bank (Malaysia) Bhd.
"This gives us a range of about 200 branches (nationwide)," he added.
Chan also said the company was in active talks with a few potential partners but declined to elaborate until negotiations have firmed up.
Asked to elaborate on agency recruitment, Manulife Financial executive vice president and South-East Asia operations general manager Philip Hampden-Smith said it was during these challenging times that the quality of agents being recruited also improved.
"We get a lot of people from banks and qualified professionals like accountants who come to us... not just in Malaysia but in Asia as well," he said.
"And insurance companies have a slightly longer term perspective on the markets or seem to in the way they do their business, so that makes us an attractive proposition in terms of the financial services sector. So we're expanding rather than contracting," he added.

(The Malaysian Reserve, April 27, 2009, p4)

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

ING Insurance lowers new premiums

By T Vignesh
ING Insurance Bhd, has lowered its new premiums target to RM830 million in 2009 compared to RM870 million recorded last year.
CEO and president of ING Insurance Bhd Datuk Dr Nirmala Menon said the company has lowered the target due to the tight economic outlook.
"Due to the recession, the amount of money put into a policy may decrease, but the number of policies being sold may increase," she told reporters after the launch of ING's new product — INGeasi for family in Kuala Lumpur on Mar 31.
On the new product, she said it combined varying protection, health, education and investment needs of every member of the family. ING expects to sell between RM50 million and RM60 million of the new product.
Chief financial officer and chief risk officer Anusha Thavarajah who was also present said that INGeasi for family is timely with the current financial climate where it is imperative for families especially to have some form of financial protection at these uncertain times.
She said INGeasi for family is designed to take care of the family income needs with a maintenance fund payment given to the family in the event the breadwinner is no longer able to provide due to unforeseen circumstances.
"With this, the family can have the peace of mind knowing well that they will be financial protected and their lifestyles continue to be safeguarded," she added. For the breadwinner of the house, the plan comprehensively provides protection and health coverage besides education and investment options for their immediate family.
Anusha said in the event that the breadwinner is no longer able to provide, the plan offers them special income protection, which provides monthly income replacement for up to five years. She said for spouses, INGeasi for family offers personalised life protection and this includes critical illnesses and accidental coverage.
In the event of death, total permanent disability or critical illness, a monthly income replacement for up to five years is again provided to the family. Anusha said for children, the plan makes it simpler by providing for education savings to help parents to fulfill their children's educational potential.
In addition, all future premiums for the plan will be waived if the payor is diagnosed with critical illness. "On top of protection and savings, INGeasi for family provides the flexibility to choose from eight different combinations of local and global unit-linked investment funds to suit families changing needs at different stages of their lives and risk levels," she added. - The Malaysian Reserve, p9, Apr 1, 2009

MCIS Zurich CEO appointed LIAM president

MCIS Zurich Insurance Bhd chief executive officer Md Adnan Md Zain has been elected at the president of Life Insurance Association of Malaysia (LIAM) at its 35th annual general meeting (AGM) on March 25, taking over the helm of the industry body from Am-Life Insurance Bhd CEO Ng Lian Lu.
Ooi Say Teng (picture, left), their counterpart at Uni.Asia Life Assurance Bhd, was elected as the vice president.
The two top positions at LIAM are elected at every AGM with the maximum term in office of the president being three consecutive years.
Adnan, who began his career in the banking industry with Standard Chartered Bank (SCB) in 1981, headed the bank's key regional corporate banking project based in Hong Kong from 1990 until 1992.
He was the head of global electronic banking, reporting directly to the group head office in London, prior to leaving SCB in 1995. He subsequently held various key management positions within the banking industry, including being the acting CEO of Alliance Merchant Bank in 2003, before going to MCIS Zurich in April 2005 as its deputy CEO and subsequently being appointed as CEO in February 2006.
Md Adnan sits on the boards of the Malaysian Insurance Institute and Malaysian Life Reinsurance Group Bhd.
Ooi, who graduated with a Bachelor of Science (Honours) degree in Actuarial Science from the City University, London, in 1993, has about 26 years of experience in the insurance industry, LIAM said in a statement.
Prior to joining Uni.Asia Life as its CEO in January 2003, he was the assistant general manager of Mayban Life Assurance Bhd from January 2000 to December 2002, and deputy general manager of MBA Life (now known as Allianz Life Insurance Bhd) from 1996 to 1999. Ooi started his career with MCIS Insurance (now known as MCIS Zurich) in 1983 as an actuarial officer. He is a director at Malaysian Life Reinsurance Group Bhd. -- The Malaysian Reserve (Mar 31, 2009)

LIAM: ‘BNM’s risk-based capital regime has benefitted industry’

By Habhajan Singh
The central bank's recommendation back in 2001 to establish prudential risk management standards has contributed to a significant strengthening of the life insurance sector, says the nation's life insurance body.
"Insurance companies are now very adequately capitalised based on the risks undertaken by the companies.
"Risk management practices have also been significantly enhanced as a result of a risk-based capital regime," Life Insurance Association of Malaysia (LIAM) president Ng Lian Lu told The Malaysian Reserve in a recent interview.
He was commenting on the position of the industry today since Bank Negara Malaysia (BNM) introduced the Financial Sector Masterplan in 2001, which also involved the insurance sector.
Below are extracts from the interview covering a number of issues facing the industry:

Industry Developments

TMR: What is the latest take on the critical illness scheme with EPF?Ng: We are currently in discussions with various stakeholders on the roll out of the scheme. As the scheme is made available to all EPF members who have been a member for at least three months, the potential number of people signing up for the scheme is very significant. Various bodies have requested information and explanation of the scheme's features, hence we see the need to engage the key stakeholders before the scheme is launched. This is despite the fact that the scheme is not compulsory and members have complete freedom in deciding whether to purchase the product and whether the scheme benefits meet their needs.

TMR: What is the progress of members adopting the Risk-Based Capital (RBC) framework?
Ng: The RBC came into force on Jan 1, 2009. All member companies have adopted the RBC. There was never a doubt that the transition to the new 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 RBC.

TMR: A CEO of an insurance company has suggested that the RBC regime provides an opportunity for consolidation, as the regulatory demands greater levels of judiciousness by insurance companies to manage their capital adequacy levels based on the risks they took. Do you share this view?
Ng: Based on the statistics of BNM as at end-2007, there were eight life insurers, 25 general insurers and eight composite insurers. It is not hard to see that there is high potential for consolidation to happen in the general insurance industry. Under the RBC regime, capital required is linked to risks undertaken, (and) insurance companies need to have a proper capital management plan to ensure the efficient deployment of capital. This creates the opportunity for risk diversification through mergers and acquisitions. Companies that manage capital well may also be able to create value by taking over companies that have not managed capital efficiently. TMR: Are we set to see any major M&As in the life insurance sector? Ng: We do not rule out M&As in the life insurance sector in Malaysia. Personally, I would have thought that more M&A activities are likely to happen in the general insurance industry than the life sector.

(to be continued)

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

LIAM denies issuing ranking on insurance companies

The Life Insurance Association of Malaysia (LIAM) has denied issuing any public information regarding the ranking of life insurance companies in Malaysia.
In a statement released in Kuala Lumpur on March 2, LIAM clarified that the few advertisements placed by a life insurance company recently claiming it was ranked the No.1 life insurer in Malaysia, was inaccurate.
The insurer according to LIAM, cited it as the source of the ranking. But LIAM stated the ranking was not endorsed by it.
LIAM, which has 18 members, of whom 16 are life insurance companies and two life reinsurance companies, however did not name the company.
LIAM meanwhile said that the unfavourable investment and economic conditions had resulted in a slowdown in the sales of investment linked products, which recorded a decrease of 32.6%. — Bernama (Mar 2, 2009)