Tag Archives: Stephen Conwill

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.

Mixed outlook for participating business across Asia

Milliman has released the findings of a study analysing and comparing participating (par) business across seven Asian insurance markets, notably Singapore, India, Malaysia, Hong Kong, China, Indonesia and Sri Lanka. The report collates in-depth information not otherwise available and provides insight from survey results about par business in Asia.

‘Par products have been a core insurance offering for many decades in many markets across Asia Pacific and in Singapore, Hong Kong and India they remain a cornerstone of the industry,’ said Richard Holloway, managing director for Milliman’s South East Asia and India life consulting practice. ‘However, increased regulatory scrutiny of par business in countries such as Malaysia and the onset of risk based capital solvency regimes in most markets may lead to a gradual decline in the popularity of such products. This report unlocks key considerations for companies offering par products across the region, highlighting differences in performance, investment approach, and governance of par across the seven markets.’

The ‘Milliman Participating Business in Asia’ report includes:

• A regional view of common themes and differences among the seven selected markets
• Detailed country commentary on par business performance, regulatory environments and key challenges
• Results of our survey providing qualitative insights into par business in these countries
• Analysis of the governance frameworks in place and roles of policyholder advocates

To download the report, click here.

Asian investors: Rising from the East

In the past, acquisitions in the European insurance market were conducted largely by European—and occasionally other western—insurers. There was little or no interest from Asian buyers, but this is changing. Asian investors are not afraid of spending their money on the right company. They have the capital western insurance companies need and are willing to invest in their future and deliver better returns than they might expect from domestic markets. This Milliman Impact article provides more perspective.

Life insurance risks: Observations on Solvency II and the modeling of capital needs

Many of the core ideas of Solvency II are drawn from the realms of finance and investing. These may or may not extend naturally to the domain of insurance risk. Tools are increasingly available that enhance our ability to develop forecasts and to critique these forecasts as part of the capital management, business planning, and decision-making process. There is an explosive growth in potential applications of data analytics, predictive algorithms, and behavioral modeling to challenges related to insurance risk. In this paper, Milliman’s Stephen Conwill describes several key areas that can serve as building blocks for a new analytical framework.

Adult diaper sales shine light on longevity

According to consumer data in Japan, it appears more adults are girded in diapers than babies. This statistic offers an analogy for the country’s aging population. Increased life expectancy is putting a financial strain on individuals. There is also evidence that increased longevity can have an economic effect on a country’s finances. In a recent Best’s Review (subscription required) article, Milliman consultant Stephen Conwill talks about the role the life insurance industry can perform to help governments cover the costs of those living longer.

Here is an excerpt:

Living longer has massive financial implications, both for individuals and governments…

Stephen Conwill, chief executive officer of Japan Milliman, said the insurance sector can pick up where governments leave off.

“Governments are usually successful when they provide something very simple, the basic needs, and then let the insurance sectors provide either more complex risks or fill in the gaps the government can’t adequately provide,” he said. “That’s certainly been the philosophy in Japan with respect to both health care and pensions. It’s worked very well to date, but the government plans are under extreme pressure for cost cutting, figuring out how to fund it going forward.

“So funding is really the issue and I think it’s really on the funding side that the insurance and private sector can hopefully get in and encourage people to do a little more for themselves, and can encourage companies to work together and provide solutions.”