Tag Archives: Asia

Insurers in Asia report steady embedded value growth amid COVID-19 pandemic

Milliman today released its annual ‘2020 mid-year embedded value results: Asia’ report. This update supplements the ‘2019 embedded value results: Asia’ report released in September 2020, and includes 2020 mid-year embedded value (EV) and value of new business (VNB) results posted by major multinational and domestic life insurers across Asia.

“Most companies in the region recorded steady EV growth in the first half of 2020 despite the economic impact of the COVID-19 pandemic,” said Milliman Principal and Consulting Actuary Paul Sinnott. “The growth in VNB was mixed across Asian markets, with new business sales in some markets severely affected by government restrictions in response to the coronavirus.”

A complimentary copy of the report is available for download here.

A few key insights from the report include:

  • The China and Japan markets led EV growth in the Asia region with most insurers recording double-digit growth in EV.
  • When compared with the first half of 2019, changes in VNB and new business margins in the first half of 2020 were varied. China, which entered and exited lockdown earlier than other Asian markets, was less affected than most VNB, growth-wise. In Hong Kong, the continuing social unrest, restrictions on travel from mainland China, virus-related lockdowns and lower interest rates all contributed to a significant decline in VNB.  
  • All multinationals disclosing results reported a decline in VNB, which they commonly attributed to lower new business sales, unfavourable economic changes and changes to operating assumptions in key markets.
  • The COVID-19 pandemic led to a greater focus on product innovation and digital transformation across the region. Insurers and regulators have taken steps to facilitate digital sales in response to lockdowns and social distancing measures adopted by most governments. This helped insurers in some markets mitigate reductions in sales to an extent.
  • The pandemic has also typically increased demand for protection products across Asia.

For more details, please contact Paul Sinnott in Hong Kong at paul.sinnott@milliman.com.

Insurers across Asia report double-digit embedded value growth through 2019

Milliman today announced the findings of its annual study on reported year-end 2019 embedded value (EV) and value of new business (VNB) results for 53 major multinational and domestic life insurers across Asia. The Milliman 2019 Embedded Value Results: Asia report highlights trends in published EV results, including a total growth in reported EV in 2019 of 11.1% to USD 816 billion but a VNB fall of 3.6% to USD 51.1 billion. The report also provides an in-depth analysis of the EV methodologies and assumptions adopted, as well as the impact of key regulations and other market developments in the region.

“All of Asia’s markets, apart from Japan, reported positive growth in EV results for the year.” said Milliman Principal and Consulting Actuary Paul Sinnott. “VNB results were more mixed, with some markets being adversely affected by record low interest rates and reduced sales volumes. It is important to recognise that the effects of the COVID-19 pandemic are yet to be felt in these results, however, as most Asian markets have a 31 December financial year-end.”

A complimentary copy of the report is available for download here.

A few key insights from the report include:

  • The China and Hong Kong markets led EV growth, posting increases of 20% and 19% respectively. Several other markets also reported double-digit growth in EV.
  • China Life continues to report the largest EV among insurers across Asia. Among multinationals, AIA continues to be the largest insurer in Asia, both by EV and VNB.   
  • Strategic shifts towards selling more protection business continue, as interest rates fall throughout the region, making traditional savings-oriented business less profitable.
  • Risk Based Capital regulations continue to evolve across Asia and will have an impact on EV and VNB in the longer term.
  • Traditional Embedded Value methodologies continue to be most popular in the region, with Market Consistent EV/VNB reporting being prevalent in Japan and India, as well as in European insurers’ Asian subsidiaries.
  • The 2019 EV results act as a useful starting point for analysing the effects of the COVID-19 pandemic, which will be partially reflected in insurers’ H1 2020 EV disclosures and are expected to show up to a greater extent in the 2020 year-end EV results.

Positive developments in the Bangladesh life insurance market

Despite the ongoing COVID-19 pandemic, this year has seen several positive developments in the Bangladesh life insurance market.

For example, authorities in Bangladesh are currently considering a proposal to permit bancassurance based on an “open architecture” model where banks would have to distribute the products of more than one life insurer. This could go into effect some time in 2021. There is also growing interest in the Bangladesh life insurance market from multinational insurance companies.

To read more about recent developments in the life insurance market in Bangladesh, read this Milliman Asia e-Alert.

Comparative analysis of life insurance capital regimes in Asian markets

This report by Milliman consultants covers the capital regimes in 10 markets in Asia plus the 2018 International Capital Standard field test. The report seeks to provide a comparison of key quantitative and qualitative aspects of life insurance capital regimes in Asia and an analysis of key capital results based on information publicly available and other market sources.

New business helps drive 19% embedded value (EV) growth for life insurers in Asia

Milliman today announced the findings of its study on reported year-end 2017 embedded value (EV)/value of new business (VNB) results for 31 major insurance companies operating in Asia, excluding Japan. The report highlights trends in published EV results, including a total growth in reported EV in 2017 of 19.2%, and similarly a 19.1% growth in value of new business (VNB).

Beyond EV results, the Milliman 2017 Embedded Value Results: Asia (excl. Japan) report analyses and discusses the EV methodologies and assumptions and the impact of regulations, as well as recent developments with International Financial Reporting Standard (IFRS) 17 as it gains momentum in the region.

‘China’s clampdown on high guarantee universal life sales reduced premium volumes but had little effect on EV and VNB results due to profitability of this line of business typically being very low or even negative,’ said Milliman principal and consulting actuary Paul Sinnott. ‘Overall, those insurers that successfully reoriented their product strategies from savings to protection business seem to have performed best.’

A few key insights from the Asian report include:

• EV growth across Asia ranged from 10% to 28%, with 2017’s total reported Asian EV increasing by 19.2% on a comparable basis to USD 480 billion, up from USD 403 billion in 2016.
• South Korea, citing profitable new business, efficiencies gains, and a change in investment assumptions, reported the highest comparable EV growth, at 22%, with Hong Kong and China reporting the next-highest total EV growth, at 21%.
• Life insurance sales decreased slightly overall, with gross written premium (GWP) estimated to have reduced by 4%. This was largely due to China’s USD 32 million decrease in GWP, mainly as a result of the restrictions imposed on the sales of universal life business.
• The value of in-force (VIF) increased for all markets. South Korea recorded the largest VIF growth of 103%, mainly as a result of increased investment return assumptions reflecting the yield curve rise last year. Hong Kong also posted a strong VIF growth of 20%, largely driven by high volumes of new business from mainland Chinese visitors.

A copy of the report detailing these and other pertinent trends is available for download at Milliman.com.

New Milliman report maps Asia’s life insurance regulatory landscape

Milliman has released its latest report entitled ‘Regulatory diversity across Asia.’ The report is a compilation and insightful analysis of current regulations applicable to life insurers across 14 Asian markets. It provides an analysis of the life insurance regulations in Brunei, China, Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.

The report includes an overview of the main regulations in these 14 markets, governing the following areas:

• Products and pricing
• Distribution
• Reserving
• Capital and solvency requirements
• Investments
• Policyholder protection
• Taxation
• Enterprise risk management (ERM)

Understanding the different stages of evolution of the regulatory regime across Asia will help life insurers, and other organisations with an interest in the life insurance industry, get a better perspective and help them in strategic business planning, market entry, mergers and acquisitions (M&A) and cross-border activities in these markets.

A few observations from the report:

• The markets in Asia are still very much ‘rules-based’ (as opposed to ‘principle-based’). Detailed rules and regulations govern different aspects of the industry.
• Regulators are increasingly looking at areas such as customer protection and meeting policyholders’ reasonable expectations (PREs), although these areas are still at a nascent stage in many of the markets.
• There is also an increasing focus on strengthening the governance environment through the Appointed Actuary/Chief Actuary systems and the role of board committees.
• There is a clear trend towards adoption of risk-based capital (RBC) regimes and the enhancement of such frameworks, wherever already adopted.
• The regulations in several markets are changing rapidly.

To read the report, click here.