What's new in the market - 20 Sep 2019

| 20 Sep 2019

Another what's new article to give you a quick highlight of some of the latest industry news and developments.

Bank Negara Malaysia issues policy document on Sharia Governance

Bank Negara Malaysia has issued the policy document on Shariah Governance for Islamic financial institutions today.

This policy document aims to further strengthen the effectiveness of Shariah governance implementation and reinforce a closer integration of Shariah considerations in the business and risk strategies of the Islamic financial institutions.

The policy document takes effect from 1 April 2020. Download the policy document on Sharia Governance here.

Response to feedback received has been issued concurrently with this policy document covering key comments and feedback received during the consultation period.


Malaysia: Insurance and takaful sector remains resilient

The insurance and takaful sector continued to demonstrate resilience in the first six months of this year even under simulated scenarios of severe multi-year macroeconomic and financial shocks, notes the central bank, Bank Negara Malaysia (BNM) in its Financial Stability Review for the first half of this year.

The sector recorded an aggregate capital adequacy ratio (CAR) of 230% at end-June 2019, well above the regulatory minimum and higher than insurers and takaful operators’ (ITOs) internal target capital levels.

Capital held against insurance and takaful risk – which continued to form the largest component (43%) of total capital required – remained broadly unchanged, reflecting the relatively stable overall product mix.

Higher profitability

Overall profitability for the insurance and takaful sector in the first half of 2019 improved compared to the corresponding period last year. This was largely supported by the life insurance and family takaful segment on the back of unrealised gains from bond holdings and higher growth in net premiums.

New business premiums in the life insurance and family takaful sector recorded significantly stronger growth due to improved sales of non-participating endowment policies via bancassurance arrangements, and higher contributions from medical and health takaful products for the lower income segment.

The implementation of the Balanced Scorecard (BSC) framework, which entered its second year of implementation, has seen measurable improvements in the quality of advice provided by agents as reflected in the markedly higher number of agents meeting the 90% first-year and 80% second-year persistency rates. This is expected to further support the sustainability of premium growth going forward.

Despite sustained renewals, growth in new premiums for investment-linked policies, on the other hand, was largely flat amid weaker equity markets and the diversification of some ITOs into other product lines.

In response to revised regulatory requirements on investment-linked products, including the Minimum Allocation Rate (MAR) which came into effect on 1 July 2019, ITOs are in the process of implementing changes to their product designs and business strategies. While delivering better value to policyholders, these adjustments could potentially affect new business growth and profitability of investment-linked products in the near term.


Indonesia: AIA invests in Gojek

PT AIA Financial (“AIA Indonesia”), a member of AIA Group Limited, and Gojek, Southeast Asia’s leading mobile on-demand services and payments platform, have entered into a strategic partnership alongside an investment from AIA Indonesia as part of Gojek’s ongoing Series F funding round.

The company statement did not mention how much money AIA was investing in Gojek or how big a stake it would acquire.

As part of the partnership, AIA Indonesia will become a key pillar of Gojek’s financial services strategy, by providing life and health insurance services and wellness propositions to its users, drivers, and merchants across Indonesia.

Gojek and AIA will work together to design and develop a wellness proposition, leveraging AIA Group’s wellness programmes and the Gojek ecosystem, to help encourage Indonesians to lead healthier, longer, better lives.

Gojek, which was launched in 2011 as a ride-hailing, has evolved into a multi-service platform downloaded by more than 155 million users across Southeast Asia. Gojek connects consumers to millions of drivers, merchants, and service providers daily.

The Indonesian company raised about US$1 billion earlier this year and is valued at up to US$10 billion, according to media reports.


Vietnam: Prudential & Shinhan Bank sign bancassurance partnership

Prudential Vietnam (PVA) and Shinhan Bank Vietnam have established a long-term strategic bancassurance partnership.

The partnership will combine the Shinhan Bank’s modern banking services and PVA’s insurance solutions to provide the bank’s customers with one-stop access for their health, protection and savings needs.

The alliance with Shinhan Bank extends PVA’s bancassurance network to seven partners, comprising both regional and local banks.

At the signing ceremony, Mr Shin Dong Min, CEO of Shinhan Bank in Vietnam, shared: “Bancassurance is one of the key strategies of Shinhan Bank and an important channel to expand the insurance market in Vietnam, in general. As the leading Korean bank, we aim to provide the best financial solutions to customers and bancassurance is the key to protect customers and their family, as well as to invest for the future.”

PVA's CEO Clive Baker said: “As a pioneer in bancassurance in Vietnam, we are delighted to partner with Shinhan Bank to deliver valuable and holistic benefits with quality services to Vietnamese customers, as we have done for the past 20 years.”


Sompo Asia CEO announces leadership appointments and regional initiatives

Mr Daniel Neo, Regional CEO of Sompo Holdings Asia, headquartered in Singapore, announced new leadership appointments and regional initiatives across Asia Pacific, focusing on company strategy, travel and digital.

Speaking from the Sompo Holdings head office in Tokyo, along with members from his senior leadership team, Daniel emphasised the regional aspirations of being number 1 in Travel insurance and Top 5 in Motor insurance in ASEAN, as well as reaching a USD100m profit by 2023.

He said: “Sompo is still a fairly new brand outside Japan for direct consumers. Therefore, we are focused on driving our brand awareness, building a strong retail platform throughout Asia, and continuing to provide solutions to our stakeholders.”

As a member of the Sompo Holdings group, the 14 markets under Sompo Asia Pacific contributed 5% to the group’s global gross written premiums in the year of 2018.

Newly appointed this year, Chayanna Siripirom – CEO of Sompo Insurance Thailand, Pui Phusangmook – CEO of Sompo Insurance Singapore, and Yasuhiro Sasanuma – regional Chief Operating Officer joined the expanded APAC leadership team under Mr Neo, who was also announced as the new regional CEO this April.

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