AIG May Shift European HQ Out of Britain

US insurer AIG may move its European headquarters from London to another European Union country because of Britain’s vote to leave the EU, the head of the AIG’s European and UK operations said at an industry conference on Tuesday.

AIG joins a growing list of finance companies that have said they may have to shift operations to continental Europe to maintain links to customers after Brexit. Speaking at the same conference, trade minister Mark Garnier said the government was listening to the financial industry’s concerns over Brexit. “We will aim to limit uncertainty surrounding business,“ Garnier said.

“The government fully understands the implications of Brexit for the financial services industry,“ Garnier told insurance trade body ABI’s annual conference.

Banks, insurers and asset managers in Britain fear losing access to the EU’s single market, and a damaging “cliff edge“ effect of leaving the bloc if there are no transitional arrangements ahead of any new trading terms agreed with the EU.

Anthony Baldwin, CEO of AIG’s European and UK arms, said the group might decide in the coming year to move its European head office from London to an EU country after Brexit, though it would still maintain a big London hub.

 

Source: Economic Times

Date: 23/11/2016

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Emerging markets to sustain global insurance sector growth in 2017:Swiss Re

  • Moderate global economic growth is expected to support insurance sector growth over the next two years
  • Growth in global non-life insurance premiums are projected to be driven by the emerging markets
  • Pricing in commercial lines continues to deteriorate, but at a slower pace; demand for cyber risk solutions is increasing
  • Global life insurance premiums are forecast to grow by 4.8% in 2017 and 4.2% in 2018 in real terms
  • Emerging market life premiums will grow strongly, driven by demand for savings vehicles, particularly in emerging Asia

 

Zurich:

The global economy is expected to grow moderately over the next two years, supporting continued growth in insurance premium volumes, Swiss Re’s publication Global insurance review and outlook for 2017/18 shows.

Growth in global non-life premiums is forecast to fall slightly from 2.4% in 2016 in real terms to 2.2% in 2017, and accelerate to3.0% in 2018. In the life sector, global premiums are expected to grow by 4.8% in 2017 and 4.2% in 2018. The emerging markets, in particular emerging Asia, will be the main driver of premium growth in both the non-life and life sectors.

“The insurance industry faces headwinds, with moderate economic growth, and still ample capacity in the markets creating a challenging pricing environment,” says Kurt Karl, Swiss Re’s Chief Economist. “Nevertheless, premium volumes continue to grow, in both the advanced and emerging markets along with economic activity and an increase in the insurance penetration rate, particularly in emerging markets.”

Emerging markets to drive non-life sector growth

Non-life insurance sector premium volumes are expected to increase by 2.2% in real terms in 2017, after 2.4% in 2016, and by 3.0% in 2018. The emerging markets are expected to drive the improvement. Premium growth in the emerging markets is forecast to increase steadily from an estimated 5.3% in 2016 to 5.7% in 2017 and 6.7% in 2018.

The pricing environment in the global non-life sector remains challenging. Pricing in commercial lines continues to deteriorate across all regions, but at a slower pace. In contrast to many other commercial lines, however, rates in cyber insurance continue to harden but at a slowing pace and could level out soon. Increased awareness of the risks associated with cyber attacks and data breaches is boosting demand for related insurance solutions, and represents a significant growth opportunity for the non-life sector.

Demand for savings products in emerging markets to drive life premiums

In the life sector, premium growth is expected to be significantly stronger than in non-life. Global life premium volumes are forecast to grow by 5.4%, 4.8% and 4.2% in 2016, 2017 and 2018, respectively. Advanced market premiums are expected to grow by 2.1% in 2017 and 2018, but the major driver will again be the emerging markets, where stabilising economic growth, growing populations, urbanisation and a rising middle class underpin a positive outlook. Emerging market life premiums are forecast to grow by 14.9% in 2017 and by 10.9% in 2018, sustained by robust growth of savings products, particularly in emerging Asia. China will make a strong contribution with the government targeting an increase in insurance penetration to 5% by 2020, from 3% in 2014.

Source:  AIP News Bureau

Date: 22/11/2016

Soon, rail travel insurance may become mandatory

Railways is considering a proposal to make travel insurance mandatory by default for those booking tickets online, unless a passenger opts out of it.

The transporter was sitting over the proposal until it was hit by the Kanpur train tragedy on Sunday , which killed around 149 people and left hundreds injured.After massive response from insurance companies, Indian Railway Catering and Tourism Corporation (IRCTC), which has anchored the insurance scheme since its launch in September, has suggested to railways board to make the scheme mandatory , extend the coverage to the unreserved class and provide cover for valuables such as laptop and mobiles.If the IRCTC proposal is accepted, the insurance business in railways will be around Rs 3,500 crore, said an official. Of the 695 passengers on board the ill-fated Indore-Patna Express who booked on line tickets, only 128 had opted for the insurance, which costs just 92 paise. Of the 128 passengers, 78 were in the train at the time of the accident. IRCTC swung into action after the news of the accident and found that 8-10 insured passengers are safe while 7-8 are in hospital and were being provided cashless treatment from insurance companies.

Given that very few train passengers opt insurance, due to negligence or lack of awareness, railway authorities have given serious thought to the proposal. Under the scheme launched as a pilot project, the nominee of deceased will get Rs 10 lakh over and above other compensation announced. Those suffering permanent disability will get Rs 7.5 lakh each. Rs 2 lakh will be given for hospitalisation charges, Rs 10,000 for minor injury and Rs 5,000 for each luggage lostdamaged, for a maximum of two bags.

Source: The Times of India

Date: 23/11/2016

$50billion Could Flow from Insurers to ETFs

Insurers are expected to double their ETF wagers over the next 5 years, shows an analysis

The booming demand for hot exchange-traded funds has finally caught up with the staid, sleepy insurance industry.

US insurers are the latest group of investors to start buying ETFs en masse, with one of the fastest adoption rates among institutions. And they’re not done yet, according to JPMorgan Chase & Co’s Mark Snyder, who helps oversee funds for the industry. Insurance companies are holding an estimated $200 billion in cash and another $80 billion in equities that could be reallocated, he said, and by shifting some of their portfolios $25 billion to $50 billion could flow into ETFs.

“It’s pretty clear that it is an area of pretty dramatic growth,“ said Josh Penzner, head of BlackRock Inc’s iShares fixed-income and insurance sales. “Insurers, they’re not quick to change, however they’re really looking at their investment processes and looking at ways they can evolve.“

Insurance companies can invest premiums in funds while waiting to pay out claims. In recent years, they’ve suffered from low interest rates because their portfolios are mostly composed of bonds. In 2014, only 26% of the firms had their reserve assets in ETFs, according to a Greenwich Associates survey.

Now that’s changing, with insurers expected to double their ETF wagers over the next five years, according to an analysis by S&P Dow Jones Indices.

MULTIFACTOR DEMAND

The shift is another setback for traditional managers who have struggled to beat their benchmarks as ETF purveyors offer cheaper and more complex products. US insurers had $17.7 billion invested in hedge fund strategies at the end of 2015, and companies such as MetLife Inc have been scaling back.

They’re turning to ETF strategies like smart beta, which use computer models to augment passive holdings and promise to replicate everything a talented stock picker brings to the table except the emotions and fees. What’s more, demand for the newest smart beta product ­­ multifactor ETFs ­­ is strongest among insurers than any other investor class.

Source : Economic Times

Date : 21-11-2016

Indians outside can buy health, general insurance in forex

RBI said regulations under the Foreign Exchange Management (Insurance) Regulation, 2000, have been repealed after consultation with the government and superseded by the Foreign Exchange Management (Insurance) Regulations.

Indians living outside can buy health or general insurance in foreign currency irrespective of the currency for settlement claims, the Reserve Bank said today while laying down the revised general and health insurance manual. Though if the premium is paid in Indian rupee, the settlement will also be done in rupee terms, RBI said in a notification. RBI said regulations under the Foreign Exchange Management (Insurance) Regulation, 2000, have been repealed after consultation with the government and superseded by the Foreign Exchange Management (Insurance) Regulations. The revised notification has come into force with effect from December 29, 2015. A resident going abroad for taking up employment is also allowed to take health insurance policy by paying premium in the rupee. For these residents, claims will be settled under cashless international health insurance policies to hospitals providing treatment or through a third-party administrator (TPA). Besides, all general or health insurance policies are allowed to be placed in foreign exchange and no Reserve Bank permission will be required for issuance or renewal of any policy, it said. With regard to investments abroad, RBI has enabled such investment by insurers. Further, insurance companies will not be required to furnish quarterly report on settlement of claims of policies issued with permission of RBI.

 

Source-Money control

Date-18-11-2016

Millennials don’t want to be boss but specialists, finds survey

Conventional wisdom suggests that in their urgency to climb the corporate ladder, millennials aspire for careers where they can lead from the top and just make pots of money . In reality, this generation is keen to upgrade skills to become `specialists’, and focus on learning and development as well as make a positive contribution.

In asurvey of millennials -people born between 1982-1996 -HR consulting firm Manpower found they prioritise recognition and purpose, making a positive contribution, and working with a great team as their top career goals. A surprising finding of the study , which was shared exclusively with TOI, is `being the boss’ is a low priority for millennials.

Says A G Rao, group managing director, ManpowerGroup India, just 22% of millennials globally rank aspiring to le adership roles as a top career priority , while in India, it stands higher at 34%. This includes getting to the top of an organisation (14%), owning my own company (14%) and managing others (6%). All three ranked at the bottom of millennials’ list of career priorities in almost every country except Mexico.

The study of 1,000 millennials working across industries and cities in India was part of a global study of 19,000 millenni als and 1,500 hiring managers across 25 countries. It was conducted to understand their career choices and help hiring professionals and organisations for attracting and retaining talent.

“It is important to know what millennials want to make full use of their skills. That’s the reason that today organisations are increasingly emphasising on their wants and needs. They’re looking for jobs that give them a sense of purpose, allow them to do what they like and play to their strengths, and at the same time offer opportunities for growth.They want to do meaningful work and be part of something that will have a positive impact on the world,“ Rao said.

The reason they do not aspire to managing a team is because they feel there are limited leadership roles. Also, by upgrading their IT and technical skills, they are looking at long-term job security .For millennials, skills are a major driver for a job change, with 82% of millennials in India changing jobs for the same pay , but more training opportunities.

Further, the survey found that they are eager to learn individual skills, just not management. Up to 63% of Indian millennials want to develop technical, personal or ITtechnology skills in the next year (globally 68%), while just 37% want to improve people management or leadership skills (globally 32%).

 

Source:-The Economic Times-Mumbai

Date:-17th November,2016-Thursday

Merger proposal between HDFC Life & Max Life hits IRDAI hurdle

The ongoing exercise for the proposed merger of Max Life Insurance Company with HDFC Life has hit the regulatory hurdle as the Insurance Regulatory and Development Authority of India (Irdai) has expressed reservations about the deal structure.

In a notification to the stock exchanges, Max India on Saturday said that Irdai has expressed reservations in accepting the scheme of amalgamation in its current form.

“An application was filed by MLIC and HDFC Life seeking the in-principle approval of IRDAI for the above-mentioned scheme on 21 September 2016. IRDAI has expressed reservations to accept the scheme of amalgamation in its current form,” said Max on BSE.

“Max Life and HDFC Life believe that the scheme of arrangement as submitted to the Irdai is in compliance with all applicable laws and propose to represent and clarify the matter to Irdai,” it said.

According to Section 35 of the Insurance Act 1938, no life insurance business of an insurer can be transferred to any person, or transferred to or amalgamated with the life insurance business of any other insurer, except in accordance with a scheme prepared under this Section and approved by the Authority.

“Since Section 35 talks about merger of one life insurance company with another life insurance company, Irdai officials are interpreting it as a merger between one insurance business and another (non-insurance) business,” said an official involved in the merger deal.

“ The issue raised by Irda is just a basic technical disclosure requirement for more clarity on the deal to the regulator’s and the public. Irda has asked for clarification with regards to compliance with section 35 of the insurance act, which deals with amalgamation and transfer of life insurance business to any other company and the pertinent disclosures. Basically, Irdai wants to ensure that the merger is happening between two life insurance companies only , I.e HDFC Life and MAX Life. Since it is a three step merger process and Max Financial Services, which is an NBFC, is also involved in the scheme, Irda wants to ensure that at no stage any amalgamation is happening between Max Financial and any insurance company. So we have to clarify and disclose to Irdai that the non-insurance businesses , such as the telecom business, of MAX Financial Services will be first demerged into Max India and then only the life insurance business of Max Life will be effectively transferred completely to Max Financial Services and subsequently it will be merged with HDFC Life which will result in the automatic listing of the merged entity” a person involved in the merger process has been quoted on condition of anonymity by a section of  media.

This will not come in the way of the merger. The deal will go for a high court approval in the second week of December and the entire process is likely to be completed by March 2017,” he added.

The boards of HDFC Life and Max in August had signed a three way merger, which would create India’s largest private-sector insurer with total assets more than Rs1.1 trillion and lead to the eventual listing of HDFC Life on stock exchanges.

So far the companies have been able to secure the nod of minority shareholders on the proposal to pay a Rs 850 crore non-compete fee to Analjit Singh and other promoters of the Max group.

Source:- AIP News Bureau

Date:-12th November,2016