The Chinese Insurance Market

Transcription

1 The Chinese Insurance Market China Mainland April to June 2012 Issue 21 (April to June 2012) Welcome to Issue 21 of the China Newsletter, covering developments in the Chinese insurance market in the second quarter of This quarter has witnessed the entrance of more regional insurance players such as Huaxin P&C, Soochow Life and Xinan Auto insurance. Headquartered in provincial cities, they are allowed to run their businesses within that province for the first 2 years. They may subsequently be permitted to expand nationally. The companies are typically sponsored by leading provincial entities. This continues the trend started in 2009 when the China Insurance Regulatory Commission ( CIRC ) looked to establish provincial / regional based insurance companies. In the second quarter of 2012, Sunshine Group, Minsheng Life and AVIVA- COFCO Life have been approved to establish asset management companies by the CIRC. There are now a total 16 insurance asset management companies in the Chinese market. CIRC issued several policies to improve marketization of insurance funds investment. CIRC relaxed the constraints on bonds, equities and real-estates investments in terms of products types, investment amounts, etc. We hope you continue to find this Newsletter interesting and informative. We would particularly like to receive your feedback on how we can improve this Newsletter over time to increase its value to you. Towers Watson Risk Consulting and Software, China In this issue Industry statistics Market update New entrants Expansion and capital injection Corporate developments Regulatory update Listed insurance companies are allowed to issue convertible subordinate debt CIRC releases bond investment regulations CIRC releases equity and real-estate investment regulation CIRC adjusts the delivery frequency of the compulsory traffic accident liability insurance actuarial report CIRC standardizes the non-life insurance business reserve retrospective analysis Further strengthen the management of investment products of P&C companies CIRC further standardizes insurance intermediary entrance Distribution Agency firms and insurance brokers Insurance assessment institutions Products Personnel changes Contact details towerswatson.com 1

2 Industry statistics January to June 2012 From 2011, CIRC started to publish premium income under China GAAP accounting standards whereby premiums received in respect of policies which are deemed to be non-insurance products are excluded. Figures in this newsletter are under China GAAP, unless stated otherwise. The Chinese insurance industry generated gross written premiums of RMB billion from January to June in 2012, up 6% compared with the same period last year, according to the CIRC. The contribution of life premiums was RMB billion, basically flat compared with the corresponding period in The contribution of non-life premiums was RMB billion and personal accident and health 66.8 billion, up 14% and 23% year-on-year respectively. Life insurers The total life premium income collected by domestic life insurance companies for the first half of 2012 was RMB billion, a slight increase of 2% compared with the same period last year. Most major domestic insurers have reported positive growth in the first half of 2012 except for China Life and Taikang. China Life reported a 5% decrease in premium income, standing at RMB billion. Taikang reported premium income of RMB 36.7 billion, down 8% compared with the same period last year. Ping An remained in second position, behind China Life, with premium income of RMB 75.4 billion, a year-on-year growth rate of 4%. New China Life also reported an increase of 10% in premium income and stood at RMB 55.9 billion, while China Pacific Life had similar premium income as last year of around RMB 55.2 billion. PICC Group (life and health) reported a 3% year-on-year increase with premium income standing at RMB 48 billion. Taiping (life and pension combined) reported an increase of 10% and stood at RMB 22.6 billion. For other domestic insurers, China Post Life has expanded aggressively in the first half of 2012, with RMB 8.2 billion premium income, up 144% compared with the same period last year. Foreign life companies generated premium income of RMB 21.9 billion in the first half of 2012, up 13% compared with the corresponding period last year. Non-life insurers Domestic non-life insurers gross premium income increased by 15% and stood at RMB 277 billion from January to June Foreign companies gross premium income reached RMB 3.4 billion, up 28% compared with the same period last year. PICC Property & Casualty Insurance (RMB billion), Ping An Property & Casualty Insurance (RMB 48.8 billion), and China Pacific Property Insurance (RMB 35.2 billion) remained the top three non-life insurers, with 67% market share in terms of premium income in the first half of These three insurers achieved premium growth of 11%, 20%, and 9% respectively. Chartis Insurance Company China Limited remained the top foreign non-life insurer, with premium income of RMB 0.57 billion in the first half of This is basically flat compared with the same period last year. Liberty Mutual s gross premium is 0.34 billion, up 43% compared with the same period last year, and took the second position. Groupama, ranking three, has a premium income of 0.33 billion, which is a 16 times increase. Market update New entrants Huaxin P&C Insurance Company based in Shenzhen, has been approved by CIRC with registered capital of RMB 0.5 billion. It is funded by Sino Life and Shenzhen Guoli Investment Development Ltd. Co. Soochow Life Insurance Company based in Suzhou, has been approved by CIRC with registered capital of RMB 2 billion. It is funded by major national investment companies and several large private companies in Suzhou. Xinan Auto Insurance Company based in Changchun, has been approved by CIRC with registered capital of RMB 0.5 billion. It is funded by 10 subsidiary companies of FAW Group which is the largest vehicle manufacturer in China. Expansion and capital injection The latest approvals for the opening of new provincial/city branches for both domestic and foreign companies are as follows: Around 70% of the foreign companies reported a positive increase. AIA remains in first position among foreign insurers with 5% increase in premium income at RMB 4.1 billion. Generali China Life, which ranked second, showed a 20% increase to RMB 2.3 billion. Sino US United MetLife took the third position among foreign insurers with 90% increase and stood at RMB 2.17 billion. AVIVA-COFCO and CITIC-Prudential both achieved RMB 1.9 billion in premium income in the first half of Life insurance companies ICBC-AXA Life Huatai Life Great Eastern Sino US United MetLife Non-life insurance companies Cathay P&C Branch Hebei Hubei Luzhou Fujian Branch Sichuan towerswatson.com 2

3 The following insurance companies have received approval from the CIRC to make capital injections in the 2 nd quarter of Accumulated registered capital is listed as follows: Insurance companies Registered capital (RMB billion) Tian An Life 1.0 Zheshang P&C 1.5 China Re P&C 8.5 Ancheng P&C 3.0 SunLife-Everbright 4.2 Sino US United MetLife 2.1 ICBC-AXA Life 2.2 Aeon Life 1.7 Corporate developments Sunshine asset management Co., Ltd has been approved by CIRC to officially open up with registered capital of RMB 0.1 billion. The company is based in Shenzhen. It is co-funded by Sunshine Group, Sunshine Life, Sunshine P&C and Standard Insurance Brokers Limited Company. Sunshine P&C has been approved by CIRC to issue subordinate bonds with term 15 years and no more than RMB 1 billion. Minsheng Tonghui Asset Management Co., Ltd has been approved by CIRC to officially open up with registered capital of RMB 0.1 billion. The company is based in Shanghai. It is funded by Minsheng Life. AVIVA-COFCO Yili Asset Management Co., Ltd has been approved by CIRC to officially open up with registered capital of RMB 0.1 billion. The company is based in Beijing. It is co-funded by AVIVA-COFCO Life, Sinatay Life, China Resources SZITIC Trust Co, Ltd. and one private equity company. AXA-Minmetals Life has been approved by CIRC to transfer shares and to change the company s name. China Minmetals Corporation and AXA transferred 36.5% and 23.5% of their holdings to Industrial and Commercial Bank of China (ICBC). The new company is named ICBC-AXA Life with AXA holding 27.5% of total shares and China Minmetals Corporation holding the remaining 12.5%. Haier Meiji Yasuda Life has been approved by CIRC to transfer shares and change the company s name. Haier Investment and Development Co. transferred a 51% stake of Haier Meiji Yasuda Life to Beijing Founder Electronics Co. Ltd. The new company is named Founder Meiji Yasuda Life Insurance Co. Ltd. and Haier Investment and Development Co. now holds 19.76% of total shares while Meiji Yasuda Life Insurance Company Ltd still holds 29.24% Taiping Insurance Group has signed a comprehensive cooperative agreement with Bank of Communications to explore ways to cooperate, including financing, fund business, investment banking, asset management, IT, client sharing etc.. Taikang and Alltrust P&C have been approved by CIRC to start cross-selling insurance products. Ping An Group has been approved by CIRC to issue convertible subordinate debt in A shares. The total amount is no more than RMB 26 billion. Ping An Life has been approved by CIRC to issue subordinate debt with term of 10 years and no more than RMB 9 billion. Ping An P&C has been approved by CIRC to launch a small amount of coverage products in rural areas in 19 provinces. These products are designed with features such as low premium, simple provision, small coverage etc. New China Life has been included into the Hang Seng China Enterprises Index and Hang Seng Mainland 100 index. New China Life has launched marketing applications for notebooks, smartphones and ipads, including product introduction, case study, product illustrations, and company introductions etc. CIRC has approved Insurance Australia Group s acquisition of 20% of Bohai insurance by issuing new shares. Bohai insurance s registered capital increased to RMB billion. China Life launched 5 insurance products which can be purchased in retail stores and activated by website, to iss text message or call. All 5 products are either travel accident insurances or traffic accident insurances which have simple provisions, low premium and higher coverage. China Life (Overseas) Limited has been approved by the People s Bank of China to enter the inter-bank bond market. It is the first insurance company registered in HK which can use RMB overseas to buy inter-bank bonds on the mainland. China Life is cooperating with a third party payment company Kuaqian in the field of website marketing. Anbang P&C has been approved by CIRC to move its headquarters from Beijing to Shenzhen. CIRC has approved Ancheng P&C to issue 0.5 billion shares including 0.1 billion shares of Chongqing city construction investment group Co., Ltd, 0.1 billion shares of Chongqing Yufu Asset Management Group Co., Ltd, 0.3 billion shares of International Financial Corporation. Regulatory update Listed insurance companies are allowed to issue convertible subordinate debt. To diversify financing channels, the CIRC has allowed listed insurance companies and groups to issue convertible subordinate bonds. Convertible subordinate bonds issued by insurance company are issued according to legal procedures with a term no shorter than 5 years and they rank after policy liability and other normal debt in the event the company falls into liquidation or bankruptcy. Copyright 2012 Towers Watson. All rights reserved. towerswatson.com 3

4 Convertible subordinate bonds are convertible to the issuing company s shares under predefined conditions. Convertible subordinate bonds can be recorded as ancillary capital before conversion according to CIRC s rules. CIRC releases bond investment regulation. To standardize bond investments, improve asset allocation and protect policyholders rights, the CIRC released bond investment regulation as follows, Insurance companies can determine the amount invested in government bonds or bonds with equivalent credit rating according to asset allocation regulations. Insurance companies can determine the amount invested in secured corporate bonds according to asset allocation regulations, ensuring that no greater than 50% of total assets are invested in unsecured corporate bonds issued by non-financial companies. Insurance companies can invest in corporate bonds from the same issuer provided no more than 20% of the issuer s net assets in the last accounting year and no more than 20% of the insurance company s net assets in last quarter in relate to one issuer s corporate bonds. If insurance companies mandate multiple professional investment institutions to make bond investments, the investment amount should be combined and the combined amount should fit within the requirements stipulated by the CIRC. CIRC releases equity and real-estate investment regulation. To further standardize equity and real-estate investments and improve the feasibility and effectiveness of investment policy, the CIRC has released the following equity and realestate investment regulation: An increase in the limit for unlisted equities and equitytype mutual funds from 5% of the company s total assets in the last quarter to 10%. Insurance companies permitted to invest up to 20% of their total assets in the last quarter in real estate, infrastructure bond investments and real estate related financial products, including no more than 15% of their total assets in the last quarter in real estate. CIRC adjusts delivery frequency of compulsory traffic accident liability insurance actuarial report. CIRC requires non-life companies to deliver compulsory traffic accident liability insurance actuarial reports every fiscal year instead of the previous requirement for half yearly reporting. CIRC standardizes non-life insurance business in reserve retrospective analysis. To strength supervision of reserving adequacy and improve the reserve valuations of non-life insurance companies, CIRC has standardized the reserve retrospective analysis. Further strengthening of the management of investment products of P&C companies To further standardize investment product business in nonlife companies, CIRC issued a related policy to strengthen the management of investment products of these companies. CIRC further standardizes insurance intermediary entrance. To further standardize the insurance intermediary market, the CIRC will only accept applications for new entrants from nationwide insurance agencies, insurance brokers and their branches and insurance agencies, insurance brokers and their branches with registered capital no less than RMB 50 million funded by insurance intermediary groups, auto manufacturing, sales and maintenance companies, banks and the postal companies, and insurance companies. Distribution Business written by insurance intermediaries (including insurance agency, insurance brokers and insurance assessment institutions) reached RMB 23.9 billion by the end of the second quarter of Insurance intermediaries operational income amounted to RMB 3.9 billion, up 29.7% compared with the corresponding period for By the end of the first half of 2012, the numbers of insurance agency, insurance brokers and insurance assessment institutions was 43,421 and 317 respectively. The total registered capital of insurance intermediaries increased to RMB 11.4 billion, up 19.9% compared with the first half of Insurance agency firms Insurance agency firms generated total premium income of RMB 15.4 billion in the first half of Life business accounted for 32% and non-life insurance the remaining 68%. The operational income from insurance agency firms reached RMB 2.4 billion in the first half of Life business contributed RMB 0.9 billion, and non-life insurance RMB 1.5 billion. Insurance brokers Premium income from insurance brokers reached RMB 8.5 billion in the first half of 2012.Life business contributed RMB 1.3 billion, non-life insurance RMB 6.9 billion and reinsurance business RMB 0.3 billion. Copyright 2012 Towers Watson. All rights reserved. towerswatson.com 4

5 Operational income from insurance brokers reached RMB 1.2 billion in the first half of Life contributed RMB 0.1 billion, non-life RMB 0.9 billion, reinsurance RMB 20 million and consulting business RMB 0.1 billion. Insurance Agency Insurance Brokers Insurance Assessment Premium Income Breakdown (RMB billion) Life Non-life Reinsurance Operational Income Breakdown (RMB billion) Insurance Agency Insurance Brokers Life Non-life others Insurance assessment institutions Insurance assessment institutions generated operational income of RMB 0.3 billion in the first of 2012, up 9.12% compared with Life business accounted for 1%, nonlife insurance accounted for 96%, and other business accounted for 3%. Products China Pacific Property Dalian branch has signed a waterway passage carrier s liability insurance with Dalian Jinshiwan yacht management company to provide RMB 10 million coverage in passengers safety. This is the first contract in this area for China Pacific Property. Tian Ping has launched insurances for waterlogged damage and spontaneous combustion risk. Currently Tian Ping is the only company that covers these two risks in its main clause. Dazhong Insurance has launched a flight delay insurance product. Paying 20 RMB, passengers will be able to receive coverage of all external risks that could cause flight delay. The passengers will get a compensation of 400 RMB for delays of more than 3 hours or 300 RMB for flight cancelation. Sino US United MetLife has launched a comprehensive, automatically accepted, accident medical product targeting people aged from 55 to 75 and can be extended to age 79 with renewal. This product mainly covers death, disability and burns caused by accidents. If caused by traffic vehicles, at least twice the benefit will be paid. Old Mutual-Guodian Life has been approved by CIRC to launch a variable annuity product. Sunshine Life has launched a participating endowment insurance with very flexible premium, payment period and sum assured. This product targets people from 30 days to 60 years old. Policy term is no less than 8 years. Payment period is from 3 to 30 years need to be shorter than policy term at most 5 years. The lowest annual premium is RMB 5,000. Sunshine Life has launched a product package comprised of endowment insurance and critical illness insurance as a rider in Tele marketing. Before the insured reaches age 18, 20 critical illnesses are covered and will be increased to 30 kinds of diseases after age 18. Policy term can be either 30 years or until age 70, targeting people from 30 days to 50 years old. The insured can receive a maturity benefit of 128% received premium. Sunshine Life has launched a product package comprised of endowment insurance and critical illness insurance, targeting professional females. The product covers 30 kinds of critical illnesses and 5 additional light diseases. If one or more covered light diseases occur, 20% of sum assured will be paid and 100% of sum assured for critical illnesses. Sunshine Life has launched a participating endowment insurance product. With 3, 5 or 10 year payment period, the insured can receive an annual survival benefit of 15% basic sum assured until age 80. The premium received will be paid back when insured dies or when policy reaches maturity. Sunshine Life has launched their first immediate annuity targeting people aged 18 to 55. The policy matures when the policy reaches 80 years old. Before age 80, a 20% survival annuity will be paid every year. All premium received will be paid at maturity if policyholder is still alive. If the insured dies before age 80, a payment will made that is equal to the sum of premium received and universal account. Sunshine Life has launched a participating insurance product targeting children from 30 days to 17 years old. Policy matures when the insured reaches age 80. Before age 80, the insured will receive a survival annuity of 20% sum assured. Survival annuity, dividends and top-up premiums will be automatically added into the universal account until age 80. The premium received will be paid back at maturity if policyholder is still alive. If they die before 80, the insured will receive a death benefit equal to the sum of all premiums received and fund balance in their universal account. Sunlife-Everbright has launched a children s cancer insurance product. This product has a maximum basic sum assured of RMB 500,000 and offers an additional protection for leukaemia with benefits adding up to 200% sum assured. New China Life has launched a participating whole life insurance product which includes an accelerate critical illness rider. This product covers 35 critical illnesses. It also offers additional 50% of sum assured as special benefit for cancer diseases, and provides a pension conversion option. Copyright 2012 Towers Watson. All rights reserved. towerswatson.com 5

6 AVIVA-COFCO Life has launched a critical illness insurance product that covers 38 kinds of critical illnesses and 10 common light diseases. Union Life has launched a children s insurance product. Before age 60, the insured will receive an annuity payment at the beginning of the third policy year until age 60, the annual payments is 5% sum assured except for 15% in the third year. 20 annuity payments are guaranteed between age 60 and 80. At age100, the insured will receive a lump sum of 300% sum assured. If the insured dies before age 18, all premiums received will be returned. If they die between age 18 and 60, basic sum assured and all premiums received will be paid as death benefit, and if they die from a traffic accident, 200% of basic sum assured will be paid as a death benefit. Union Life has launched a participating endowment insurance product. The insured will receive an annuity until age 99 starting from the end of the 21 st policy year and will receive a lump sum payment as a special survival benefit at the 20 th policy year and at age year guarantee annuity will be paid between age 65 and 84. If the insured dies between age 18 and 65, 300% of basic sum assured and premium received will be paid, with an extra 300% of basic sum assured for accidental death. Taikang Life has launched their first insurance product aligned with senior community service. The insured receives not only the basic insurance protection but is also guaranteed access to senior communities, which will be finished in This product targets the high net worth group and minimum premium is no less than RMB 2 million. There are about 50 policies sold so far. Samsung Air China Life has launched a participating whole life annuity. Before reaching age 60, the policyholder will receive 5% basic sum assured at the end of each policy year and an amount of 50% sum assured will be paid at the 60th birthday. Starting from age 60 until death, the policyholder will receive an annual payment of 15% sum assured. Personnel changes Wang Shuyong ( 王 树 勇 ) has been appointed the Chief Actuary of Samsung Air China Life. Gong Chunxia ( 宫 春 霞 ) has been appointed the Chief Actuary of Sino-French Life insurance company. Yao Dafeng ( 姚 大 锋 ) has been appointed the Chairman of the Board of Anbang Life. Jiang Meijun ( 姜 昧 军 ) has been appointed the General Manager of Anbang Life. Ma Ninghui ( 马 宁 辉 ) has been appointed the General Manager of Champion P&C. Li Yahua ( 李 亚 华 ) has been appointed the Chairman of the Board of Changjiang P&C. Shao Guoyong ( 邵 国 勇 ) has been appointed the General Manager of Changjiang P&C. Zhu Rendong ( 朱 仁 栋 ) has been appointed the Chief Actuary of Sunshine P&C. Ning Liming ( 宁 黎 明 ) has been appointed the Chairman of the Board of Sino US United MetLife. Yao Zhenhua ( 姚 振 华 ) has been appointed the Chairman of the Board of Foresea Life. Sun Weiguang ( 孙 伟 光 ) has been appointed the General Manager of Foresea Life. Xie Junfeng ( 谢 骏 峰 ) has been appointed the Chief Actuary of Ping An Life. Wang Bin ( 王 滨 ) has been appointed the Chairman of the Board of Taiping Insurance. Xu Yulong ( 徐 玉 龙 ) has been appointed the Chief Actuary of Guohua Life. Yang Mingsheng ( 杨 明 生 ) has been appointed the Chairman of the Board of China Life Group, China Life and China Life P&C. Zhang Feng ( 张 峰 ) has been appointed the Chairman of the Board Anbang P&C. Chen Zhengyin ( 陈 正 银 ) has been appointed the General Manager of Du-bang P&C. Chen Guozhu ( 陈 国 柱 ) has been appointed the General Manager of Shin Kong- NHA Life. Liu Junyi ( 刘 君 怡 ) has been appointed the Chief Actuary of Ping An Health. Du Changdi ( 杜 长 棣 ) has been appointed the Chairman of the Board of Chang An Property and Liability. Cao Zhan ( 曹 湛 ) has been appointed the General Manager of Aeon Life. Li Guojun ( 李 国 军 ) has been appointed the Chairman of the Board of Founder Meiji Yasuda Life. Shangguan Qing ( 上 官 清 ) has been appointed the Chairman of the Board of Hexie Health. Chen Yongzhong ( 陈 永 忠 ) has been appointed the General Manager of Hexie Health. Xu Lei ( 许 雷 ) has been appointed the Chairman of the Board of Champion P&C. Copyright 2012 Towers Watson. All rights reserved. towerswatson.com 6

7 Contact details Towers Watson s Risk Consulting and Software business in China is based in Shanghai and Beijing. Please contact Adrian Liu, Michael Ross and Wesley Cui for life insurance, Jenny Lai and Yao Wang for non-life insurance and Steve Kean for distribution consulting. Adrian Liu General Manager, Life Insurance Consulting, China Jenny Lai Director, Property and Casualty Insurance Consulting, China Steve Kean Director - Insurance and Wealth Management Consultancy, Asia Pacific Michael Ross Director, Life Insurance Consulting, Greater China Wesley Cui Director, Life Insurance Consulting, China Yao Wang Director, Property and Casualty Insurance Consulting, China Beijing 29/F Floor, Kerry Centre South Tower 1 Guang Hua Road Chaoyang District Beijing, , China Tel: (8610) Fax: (8610) Shanghai 11/F Floor, Kerry Centre 1515 West Nanjing Road Shanghai, , China Tel: (8621) Fax: (8621) s: adrian.liu@towerswatson.com jenny.lai@towerswatson.com steve.kean@towerswatson.com michael.ross@towerswatson.com wesley.cui@towerswatson.com yao.wang@towerswatson.com Towers Watson is present in seven locations in Greater China, including Beijing, Shanghai, Shenzhen, Guangzhou, Wuhan, Hong Kong and Taipei. The Chinese Insurance Market newsletter has been prepared by Towers Watson for general information purposes only and does not constitute professional advice. The information, opinions and projections contained in this Newsletter are derived from various sources and have not been independently verified by Towers Watson. If you require professional advice or require any further information please contact any of the above named individuals. Errors and omissions excepted. About Towers Watson Towers Watson is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. With 14,000 associates around the world, we offer solutions in the areas of employee benefits, talent management, rewards, and risk and capital management. towerswatson.com 7