Information about the global insurance industry is very important, which is of great help to us to broaden our insurance horizons, timely understand insurance trends, better grasp the situation and policy trends, and judge insurance development trends. In the future, we will regularly share the "Insurance Industry Public Opinion Monitoring" published by the China Insurance Society. The analysis is very detailed and comprehensive and valuable. The following contents of
are from: China Insurance Society, "Insurance Industry Public Opinion Monitoring" No. 12, 2020.
1. International Observation
(I) Carlyle and T&D completed the acquisition of a majority stake in Fortitude Group, a subsidiary of AIG.
Carlyle Group and T&D Holdings have recently announced that they have completed the entire process of acquiring 76.6% of the equity of Fortitude Group, a subsidiary of AIG. Fortitude Group Holdings owns FortitudeRe. This transaction was announced in November 2019, but it must be approved by relevant regulatory authorities before it can be completed. After the transaction, Fortitude Group Holdings' equity structure is as follows: Carlyle and the newly established Carlyle Management Fund hold 71.5%, T&D holds 25%, and AIG holds 3.5%. In this transaction, AIG earned approximately $2.2 billion, including $1.8 billion in sales proceeds and additional consideration paid under the terms of the acquisition agreement. Headquartered in Bermuda, Fortitude Re is a major integrated reinsurance company under AIG, with extensive experience in the fields of estate life insurance , annuity insurance and property/accidental injury insurance. AIG hopes to strengthen asset and liability management by selling a majority stake in Fortitude Group Holdings. Carlyle hopes to build a general platform through this strategic investment to provide innovative solutions to the insurance industry. T&D Holdings, headquartered in Japan, has total assets of 1652 billion yen as of March 31, 2020. It hopes to form a synergy with Japan's domestic life insurance business through this acquisition.
(II) The British government formulates a $10 billion trade credit reinsurance plan
The British government recently announced a temporary reinsurance plan with a total amount of 10 billion pounds ($12.5 billion). The British Ministry of Finance said that due to the impact of the new crown epidemic, the UK's trade credit insurance product fee rate has risen, and companies are unable to bear the relevant premium fees, but export credit insurance insured about 350 billion pounds (US$436 billion) per year for 630,000 companies in the UK. The interim plan is designed to support UK B2B trade by supporting trade credit insurance business, preventing the risks posed by customers’ defaults or payment delays. Under this temporary plan arrangement, the government will act as the final reinsurer of trade credit insurance and share with the insurance company the risk of losses caused by credit defaults. Under this plan, insurance companies bear 10% of the compensation and government bear 90% of the compensation. The UK Treasury said the plan is currently valid for 9 months, dating back to April 1, 2020 and lasts until December 31, 2020, and is likely to be extended. UK insurance companies must formally state whether to participate in the scheme by June 15. The plan will cover domestic and overseas trade with a payment period of up to two years. The plan is expected to cover 90% of B2B trade credit insurance transactions for registered businesses in the UK. The Ministry of Finance also said that the UK's Export Financing Department will also provide export credit insurance to provide insurance services to related companies that are unable to participate in the plan. Before the UK launched this plan, countries such as Canada, Germany, France, the Netherlands were also developing similar government support plans.
(III) Lloyd's announcement of the new board of directors
Lloyd's recent official announcement of the list of directors of its newly established board of directors, and the new board of directors is formed by the merger of the Principles Council and the Franchise Committee. The Lloyd Council of Principles and the Franchise Committee have been repetitive in certain areas, and there will be situations in which specific matters cannot determine the decision-making body. Last May, Lloyd proposed to incorporate its franchise committee into the Lloyd Council to improve operational efficiency. In November last year, Lloyd's official announcement of the merger plan for the two agencies. Lloyd's stated that the plan has been fully communicated and recognized with Lloyd's Marketing Association (LMA), Lloyd's Social Members Association (ALM), and Lloyd's Senior Member Group (HPG).The new council consists of six nominees, six market-elected members and three senior executives. The new council members were elected in April this year.
(IV) Japan's insurance regulatory authorities approved Tokyo's offshore acquisition of renewable energy
insurance company GCube Japan's insurance regulatory authorities have recently officially approved Tokyo's offshore HCC Insurance Holdings Company (TMHCC), a subsidiary of Tokyo's offshore, to acquire GCube. The transaction was officially announced in March this year. TMHCC was founded in 1974 and is headquartered in Houston, USA. It was acquired by Tokyo Maritime in 2015. It is engaged in insurance business in 180 countries. It is an international insurance group under Tokyo Maritime specializing in property insurance, health insurance and accident insurance. TMHCC has actively deployed in the renewable energy risk field in the past decade and made a number of major investments. The acquisition will enable its business to surpass traditional markets and enter key renewable energy markets in Asia such as Taiwan, China and Japan.
GCube was founded in 1987 and is an insurance company focusing on renewable energy risks such as wind, solar, and hydropower. GCube provides insurance services for more than 100GW of projects under construction or operation in 40 countries or regions around the world.
(V) The three major Japanese property insurance companies still achieved profitability in the 2019 fiscal year
According to the 2019 fiscal year data ended on March 31, the three major Japanese property insurance companies, Mitsui Sumitomo , Maritime, Loss Insurance Holdings and Tokyo Maritime, performed smoothly. 2019 was a year when had more natural disasters and . Sumitomo Mitsui, Loss Holdings and Tokyo Sea paid more than US$10 billion in losses caused by natural disasters such as the Haibeth Typhoon, but overall, the comprehensive cost rate of the domestic business of the three companies is still below 100%.
Among the three major insurance companies, Sumitomo Mitsui's offshore net profit fell 25.8% to 143 billion yen (approximately US$1.33 billion), but its overseas division's pre-tax profit increased to 50.7 billion yen, a year-on-year increase of 28.1 billion yen. Loss Holdings' net profit fell 16.4% to 122.5 billion yen ($1.14 billion), but its overseas business also boosted significantly, with overseas business premiums and profits rising sharply. Tokyo Offshore performed better than the other two companies, achieving a net profit of 260 billion yen ($2.41 billion), down just 5.4% from the previous year.
(VI) Michigan The government requires state auto insurance companies to refund or exempt premiums
Michigan Gretchen Whitmer and the state's Department of Insurance and Financial Services (DIFS) have recently ordered all auto insurance companies in the state to refund or exempt premiums to make up for the impact of reduced driving activities during the COVID-19 pandemic.
According to the DIFS directive, insurance companies must submit documents before June 10, 2020, detailing specific measures such as the amount of refund or exemption of premiums, how the amount is determined, and how consumers will obtain it. The order also requires insurance companies to communicate appropriately with customers regarding refunds and exemptions, and provide additional options for policyholders who are accustomed to driving for a long time. But the order does not specify the minimum amount the insurer must refund customers.
(VII) Indonesia's insurance regulatory agency allows online marketing of investment-based life insurance products
Indonesia's financial services administration (OJK) recently relaxed relevant regulations on investment-based insurance products and allowed them to conduct online marketing. In April this year, the Indonesian Life Insurance Association (AAJI) submitted a request to the Indonesian Financial Services Administration, mainly including: First, allowing life insurance companies to sell investment-based life insurance products online; second, allowing communication technology to replace face-to-face talks between marketers and potential customers; third, allowing electronic signatures to replace original signatures.
Indonesian Financial Services Administration stated that when the policyholder signs the insurance reminder, he can use an electronic signature to replace the original signature. This signature means that the policyholder's benefits, costs and risks for the life insurance product have been fully explained and understood. At the same time, the bureau stated that online sales of investment-based life insurance products must meet the following requirements: (1) Insurance companies must establish a fully and effective information system to meet the principles of confidentiality, integrity, availability and authenticity, and ensure that data can be audited and tracked. (2) The information system technology supplier and the head of the risk control department of a life insurance company must declare that the information system used is sufficient and effective.(3) The insurance company must state in writing the operating standards and procedures that support online marketing, and the standards and procedures must be accompanied by the approval statement of the proposed insured and documents recorded in the form of video and audio.
2. Expert opinion
Ceres: Insurance and other financial regulators should face the "systemic risks" of climate change
US Environmental Responsibility Economic Alliance (Ceres) recently released a report pointing out that climate change risks are a systemic risk. Call on all U.S. financial regulators to take more measures to respond.
The United States Responsible Economic Alliance was established in the United States in 1989. Its members mainly come from major investment groups and environmental organizations in the United States. The focus of the work is to encourage the business community to adopt more environmentally friendly and novel technologies and management methods to fulfill the company's responsibilities to the environment. The Environmental Responsible Economic Alliance proposed the "Environmental Responsible Economic Alliance Principles" in 1992, which is used to encourage companies that accept it to regard them as a standard for improving environmental governance. The report pointed out that frequent extreme weather events will lead to more and more economic losses, and the insurance industry is particularly vulnerable to it. On the one hand, this comes from various claims brought about by climate change, and on the other hand, it comes from the financial market risks faced by the use of insurance funds. The report has made more than 50 recommendations for the Federal Reserve, the U.S. Securities and Exchange Commission, and state insurance regulators. The main suggestions for insurance regulators include: (1) Acknowledge that climate change poses a significant risk to the insurance industry and take coordinated actions to deal with risks; (2) Evaluate the current ability of insurers to respond to climate change risks; (3) Ask insurance companies to conduct climate change risk stress tests, (4) Ask insurance companies to include climate change in their risk management and solvency assessment processes; (5) Ask insurance companies to hedge climate change exposure through their investments; (6) Ask insurance companies to develop new products to address new technologies that have emerged in response to climate change risks; (7) Ask insurance companies to disclose climate change-related information.
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