insurance trends in asia - swissre.com0f928d00-ace7-4666-b3ff-dab9a839a369/... · adoption of rbc...
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Asia's insurance market outlook and drivers
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aAsia is now a significant part of the global primary insurance market
Source: Swiss Re sigma 2/2010 December 2010 update
Premiums, USD bn 2009
3
aThough regional markets are fragmented and at different stages of development
Life premiums, 2009 (USD 10 billion)
Non-life premiums, 2009 (USD 10 billion)
South Korea
Taiwan
Hong Kong
Australia
Japan
PhilippinesID
IndiaSingapore
MYTH China
Vietnam
South Korea
China
Vietnam
Australia
Japan
Taiwan
India
TH
ID
SG
MY
Sources: Oxford Economics; Swiss Re ER&C. Yellow bubbles represent life insurance while grey bubbles represent non-life insurance. Size of bubble represents premiums in 2009. SG: Singapore; HK: Hong Kong; MY: Malaysia; TH: Thailand; ID: Indonesia.
PH
HK
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aSteep growth paths of Asia’s life markets highlight catch-up potential of emerging markets
* Data series of penetration start from 1980 onwards except Vietnam: 1996; China: 1982; Hong Kong: 1990Source: Swiss Re Economic Research & Consulting
Life premiums/GDP (%)
Per capita GDP, USD ‘000 (log scale)
Current penetration of emerging markets
Potential
0%
2%
4%
6%
8%
10%
12%
14%
16%
0.1 1.0 10.0 100.0
Australia China Hong Kong India Indonesia Japan Malaysia
Philippines Singapore South Korea Taiwan Thailand Vietnam
India
China
Japan
Taiwan
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a
* Data series of penetration start from 1980 onwards except Vietnam: 1987; Hong Kong: 1988.Source: Swiss Re Economic Research & Consulting
Growth of non-life penetration reflects stages of economic development
Non-life premiums/GDP (%)
Per capita GDP, USD ‘000 (log scale)
Current penetration of emerging markets
Potential
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
0.1 1.0 10.0 100.0
Australia China Hong Kong India Indonesia Japan Malaysia
Philippines Singapore South Korea Taiwan Thailand Vietnam
ChinaIndia
Japan
Taiwan
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aNear term economic trends will impact insurance demand
Sustained economic growth of Asia
Rebalancing of national
economies
Infrastructure investment
Private consumption
Accelerating inflation
Commodity/food prices &
exchange rates
Fiscal consolidation
Fiscal deficit and ageing population
Capital inflows
Macro-prudential
supervision
Major themes
Related issues
Source: Swiss Re Economic Research & Consulting.
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aDemographic changes will demand more longevity solutions
Sources: Swiss Re Economic Research & Consulting; United Nations Population Division
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aRegulatory developments in Asia will continue to have significant impacts
Higher minimum capital requirements
Adoption of RBC solvency systems
Introduction of dynamic stress tests and the use of scenarios
Tightening of solvency
regimes
Regulatory uncertainty remains high
Consolidation is expected to accelerate in some markets
A driver for insurance M&As
Impacts on insurance portfolio and asset management
Increase demand for reinsurance
Convergence of regional regulations
Increased focus on consumer protection (eg establishment of policyholder protection funds)
Alignment of accounting standards to IFRS
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a
Sources: National insurance authorities; Swiss Re Economic Research & Consulting.
Market access regimes – status quo and expected changes
Establishment of subsidiaries Establishment of branches Expected changes
China No restriction in non-life; JV only in life No restriction in non-life; JV only in life None (CIRC has recently affirmed JV only in the life sector)
India JV only (26% maximum foreign share) JV only (26% maximum foreign share)
The proposed amendments to Insurance Law to increase foreign investment ceiling to 49% and to permit foreign reinsurers to
setup branches has been approved by the government and were introduced in the upper house of parliament in December 2008.
Final approval is still pending.
Indonesia JV only (no limit to foreign share) JV only (no limit to foreign share) None
Malaysia No restriction No new branch license at the moment
Malaysia announced in April 2009 that foreign equity participation thresholds in insurance companies and takaful operators will be increased to a maximum of 70%, from the
current level of 49%.
Thailand Not allowed No new branch license at the moment
Plans to raise foreign share to 49% from 25% but no timetable was given
Vietnam No restrictions (usually restricted to write non-domestic business)
No restriction (usually restricted to write non-domestic business)
Relaxation of foreign branching in pursuant to WTO accession commitments
The other market (Australia, Hong Kong, Japan, Korea, the Philippines, Singapore and Taiwan) have no restriction on market access.
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a
Growth and profitability
1111
a
aPremium growth projection – emerging Asian insurance markets will continue to outperform
Forecasts as of January 2011 and has not taken into account impact of recent events in Japan.Source: Swiss Re Economic Research & Consulting
11.2%
9.2%
9.2%
7.3%
6.1%
6.0%
5.3%
4.9%
4.7%
4.3%
3.7%
3.4%
1.9%
11.9%
10.4%
10.5%
6.1%
6.5%
6.0%
5.0%
5.7%
5.2%
4.2%
3.5%
3.4%
2.0%
0% 4% 8% 12% 16%
Vietnam
China
India
Indonesia
Philippines
Thailand
Malaysia
Korea
Singapore
Hong Kong
Taiwan
Australia
Japan
2010-2020 2010-2015
Non-life direct premium growth Life direct premium growth12.73%
11.02%
10.25%
8.30%
6.98%
6.95%
6.22%
6.21%
5.48%
5.48%
3.85%
3.53%
2.08%
13.51%
11.12%
10.50%
9.01%
6.74%
7.06%
6.17%
5.97%
5.72%
5.31%
3.82%
3.52%
2.12%
0% 4% 8% 12% 16%
Vietnam
Indonesia
India
China
Singapore
Thailand
Philippines
Malaysia
Hong Kong
Australia
Korea
Taiwan
Japan
2010-2020 2010-2015
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aForeign market share in different Asian markets
Share of foreign companies in non-life insurance, 2009
Sources: National insurance supervisory authorities; Swiss Re Economic Research & Consulting.
Share of foreign companies in life insurance, 2009
Note: For India, all joint ventures (JVs) with 26% maximum foreign shares are considered foreign companies in this table.
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aUnderwriting profitability of domestic primary insurers versus joint ventures and foreign branches
P&C
Sources: National insurance authorities; Swiss Re Economic Research & Consulting.
L&H
Note. U/W profits are statutory reported figures or equal to premiums less claims, com-missions and internal expenses otherwise. U/W Profit margin equal to the U/W results divided by premiums.
Markets covered: in P&C profitability analysis: Australia, China, Hong Kong, India, Japan, Korea, Indonesia, Malaysia, Singapore, Taiwan
Markets covered in L&H profitability analysis: China, India, Indonesia, Japan, Korea, Taiwan
Note. The charts depicting premium per insurer 2009 cover the following markets: Australia, China, Japan, India, Korea, Hong Kong, Taiwan, Singapore, Indonesia, Malaysia, Thailand, Philippines, Vietnam.
92.6
-26.9-16.6
-40
-20
0
20
40
60
80
100
Domestic Foreign JV
Net profit per life insurer 2006-08 average(mean value, USDm)
3227
761391
0
500
1000
1500
2000
2500
3000
3500
Domestic Foreign JV
Premium per life insurer 2009(all markets, mean value, USDm)
0.02%
-2%
-5%-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
Domestic Foreign JV
Net profit margin of the median life insurer 2006-08 average (%)
452
5492
0
100
200
300
400
500
Domestic Foreign JV
Premiums per non-life insurer 2009(all markets, mean value, USDm)
-13.6
2.0
-2.5
-16
-12
-8
-4
0
4
Domestic Foreign JV
UW profit per P&C insurer 2006-08 average
(mean value, USDm)
-0.3%
6%
-2%-4%
-2%
0%
2%
4%
6%
8%
Domestic Foreign JV
U/W profit margin of the median non-life insurer 2006-08 average (%)
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aLarge life markets carried the bulk of life profits while smaller markets showed healthy P&C underwriting results
Japan4168
Taiwan-374
India-780
Indonesia212
Korea1607
China2823
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
-20000 80000 180000 280000 380000
Net
pro
fit
mar
gin
%, 2
00
6-2
00
8 m
arke
t av
erag
e
Total life market premiums, USD m
China-1925.1
India-928
Korea-955
Australia1532
Singapore103
Hong Kong167
Taiwan17
Malaysia35
Indonesia74 Japan
-361
-20%
-15%
-10%
-5%
0%
5%
10%
-20000 30000 80000
U/W
pro
fit
mar
gin
%, 2
00
6-2
00
8 m
arke
t av
erag
e
Total non-life market premiums, USD m
Note: P&C & L&H analysis based on 2006-08 average for selected markets where official data is available. U/W profits equal to premiums less claims, com-missions and internal expenses. U/W Profit margin equal to the U/W results divided by premiums.
Sources: National insurance authorities; Swiss Re Economic Research & Consulting.
Size of bubble represents relative size of net profits/losses Size of bubble represents relative size of underwriting profits/losses
Life insurance Non-life insurance(GAAP basis) (GAAP basis)
Indonesia
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a
Questions & answers
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Corporate calendar
15 April 2011 147th Annual General Meeting Zurich 05 May 2011 First Quarter 2011 results Conference call04 August 2011 Second Quarter 2011 results Conference call03 November 2011 Third Quarter 2011 results Conference call09 December 2011 Investors' Day
Investor Relations contacts
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Corporate calendar & contacts
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aLegal notice
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Although all the information used was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies be liable for any financial and/or consequential loss relating to this presentation.
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