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Global Industry Trends - Insurance - September 2015


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Global Industry Trends is a snapshot report, which helps its readers identify key trends shaping the industry. All the major activities in the industry are analyzed and summarized in a concise manner — making it easier for readers to comprehend them in the least time.

Global Industry Trends in focused toward executives, who are required to be aware about their industry, but do not have time to track it on a regular basis.

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Global Industry Trends - Insurance - September 2015

  1. 1. Insurance September 2015 GLOBALINDUSTRYTRENDS
  2. 2. GLOBAL INDUSTRY TRENDS — INSURANCE 1 About Global Industry Trends Global Industry Trends is a snapshot report, which helps its readers identify key trends shaping the industry. All the major activities in the industry are analyzed and summarized in a concise manner — making it easier for readers to comprehend them in the least time. Global Industry Trends in focused toward executives, who are required to be aware about their industry, but do not have time to track it on a regular basis.
  3. 3. GLOBAL INDUSTRY TRENDS — INSURANCE 2 Trends in Global Insurance Industry Increase in Mergers and Acquisitions across the globe Japanese life insurer Sumitomo Life Insurance Company is acquiring US–based insurer and provider of annuities and other financial products — Symetra Financial Corporation. The deal — worth US$3.8 billion — is expected to help Sumitomo expand its operations into the US, and insulate itself from the potential fall in insurance premiums, caused by aging Japanese population. As per the deal, Symetra shareholders will receive US$32 a share in cash, and a special dividend of US$0.50 a share. Richmond, Virginia–based middle market insurance agency Hilb Group has acquired Wilmington, North Carolina–based independent insurance agency JWB Insurance Group, for an undisclosed amount. JWB Insurance Group is The Hilb Group’s seventh acquisition in 2015, and a part of its plan to expand across the East Coast in the US.
  4. 4. GLOBAL INDUSTRY TRENDS — INSURANCE 3 X.L. America Inc. is acquiring Florida–based property and casualty insurer Allied International Holdings Inc., and insurer of the outdoor entertainment industry — T.H.E. Insurance Co. While Allied provides property and casualty insurance coverage for the amusement and entertainment industry, T.H.E. Insurance Co. provides insurance in the field of workers’ compensation, inland marine, and auto-liability. The acquisitions will help X.L. expand its reach in the niche insurance businesses. Florida–based workers’ compensation outsourcing services firm Patriot National Inc. is acquiring New Jersey-based property and liability program administrator R.C.A. Insurance Group (RCA). RCA provides preferred insurance programs to the hospitality industry. The acquisition is expected to help Patriot National strengthen its position in the hospitality space and provide product offerings in niche industry segments. Post–acquisition, RCA will become part of Trigen Insurance Solutions — Patriot National’s operating subsidiary, working on broader commercial insurance lines.
  5. 5. GLOBAL INDUSTRY TRENDS — INSURANCE 4 Florida–based AssuredPartners Inc. has acquired Missouri– based Insurance & Benefits Group LLC (IBG). IBG provides property and casualty services such as surety bonds placement, workers’ compensation, inland and ocean marine, and environmental liability. UK–based financial services provider Jelf Group PLC has acquired Hertfordshire, UK–based general insurance broker Libra Insurance Services Limited for an undisclosed amount. The acquisition — funded by an existing loan facility with Barclays — aligns with Jelf Group’s strategy of growth through organic initiatives and selected acquisitions. Chicago, US–based commercial insurance agency, Union Insurance Group has acquired Rockville, Maryland–based insurance agency The McLaughlin Company, for an undisclosed amount. Union Insurance Group specializes in property and casualty, as well as professional liability insurers for labor organizations.
  6. 6. GLOBAL INDUSTRY TRENDS — INSURANCE 5 London, UK–based underwriting agency Nexus Underwriting Management has bought another London– based specialist managing general agency (MGA) EBA Insurance Services for an undisclosed sum. EBA’s MGA business lines include architects and engineers’ professional indemnity, as well as general professional indemnity. The acquisition is expected to help Nexus Underwriting Management grow its MGA business across Europe. Companies banking on changes in Indian FDI norms Indian financial services company HDFC is selling 9% stake in its insurance business HDFC Life to Its British joint venture partner Standard Life for approximately INR17 billion. The sale will help Standard Life increase its stake in the joint venture from 26% to 35%, as the Indian government has increase Foreign Direct investment (FDI) limits in domestic insurance sector from 26% to 49%. Post the sale, HDFC’s stake in the joint venture would come down to 61.65%.
  7. 7. GLOBAL INDUSTRY TRENDS — INSURANCE 6 Canadian insurer Sun Life Financial Inc. is planning to raise its stake in its Indian joint venture with Aditya Birla Group — Birla Sun Life Insurance. The insurer is planning to raise its stake from 26% to 49%, after the government’s regulatory changes. Sun Life is bullish about India and other Asian countries — which contributed approximately 13% of its operating earnings in the second quarter of 2015. It has also announced three acquisition deals in 2015. UK–based Aviva Plc. Is also planning to increase its stake in its Indian joint–venture — Aviva India — from 26% to 49% after the regulatory changes. Aviva currently holds the joint venture with Indian company Dabur Invest Corp (DIC), having the 74% stake. Similarly, Japan–based Tokio Marine Holdings Inc. is planning to increase its stake to 49% in its Indian joint venture — Edelweiss Tokio Life Insurance. The company has a joint venture with Edelweiss Financial Services, where it presently has 26% stake. The joint venture has a network of 60 branches across 50 major cities in India with more than 10,000 personal financial advisors.
  8. 8. GLOBAL INDUSTRY TRENDS — INSURANCE 7 Regulatory changes across countries The government of China is expanding the ambit of its medical insurance to cover all critical illnesses for its population. In order to improve the healthcare system of the country, the government is bringing half of all the medical costs of individuals under insurance. The move is expected to reduce the healthcare burden on the citizens. The Insurance Regulatory and Development Authority of India (IRDAI) is planning to digitize all insurance policies across India. Once implemented, policyholders will have to pay an additional fee to have a physical copy of their insurance policy. At present only 2% of all the policies sold in India are in digitized format, and IRDAI expects the whole process to take approximately three years. In the US, the California Supreme Court has given a decision that policyholders can assign their rights under liability insurance policies, after the loss or injury has occurred and potential liability exists. The decision was given in the case Fluor Corp. vs. Superior Court, and overturned the decision in Henkel Corp. vs. Harford Accident & Indemnity Co. (2003), which held that post–loss transfers were invalid unless the insurer gave consent.
  9. 9. GLOBAL INDUSTRY TRENDS — INSURANCE 8 After the June 2014 legislation in Ohio, US, which allowed businesses to form captive insurance companies, the state has come up with the first ‘protected cell’ captive insurance company — Imprise Financial PCC Inc. Captive insurance companies are opened by businesses for their own commercial insurance needs, and are regulated by the Ohio Department of Insurance. The protected cell captive insurance structure eliminates the market–entry barriers for such self–insurance programs. Insurers divesting their stake Wells Fargo & Co. is planning to divest its crop insurance business, and has launched an auction for the same. The company is reviewing strategic options for its Rural Community Insurance Services (RCIS) subsidiary, including a sale. The move is due to increased regulatory pressure on the US banks to improve their balance sheets and reduce risks. Belgium–based insurance company Ageas is selling its Hong Kong Life insurance business to Chinese asset- management firm JD Capital for EUR1.23 billion (US$1.4 billion). Ageas is realigning its strategy in the Asia, and has plans to focus on joint ventures and partnership in
  10. 10. GLOBAL INDUSTRY TRENDS — INSURANCE 9 emerging countries such as India, Malaysia, China, Philippines, Thailand and Vietnam. The company is expected to complete the sale in the first half of 2016. Companies going for expansion Insurance risk assessment services and decision analytics provider Verisk Insurance Solutions has launched a new analysis app — ISO ClaimSearch mobile application. The mobile app provides the insurers with a productivity tool to access property and casualty insurance databases on a real–time. It further helps the insurers to investigate and adjust claims more efficiently, as well as conduct inquiries to facilitate faster claims handling. Berkshire Hathaway’s subsidiary Geico Corporation has increased its car insurance premium rates in Illinois by an average of 7.7%. The rates have been increased for new policies, effective August 2014, and renewals effective October 2013. The company has taken the step to cover its costs. Geico’s loss ratio has also increased to 84% in the second quarter of 2015, from 76% a year before.
  11. 11. GLOBAL INDUSTRY TRENDS — INSURANCE 10 Organizations Mentioned in the Report Aditya Birla Group Ageas Allied International Holdings Inc. AssuredPartners Inc. Aviva Plc. Berkshire Hathaway Birla Sun Life Insurance Dabur Invest Corp EBA Insurance Services Edelweiss Financial Services Edelweiss Tokio Life Insurance Geico Corporation HDFC HDFC Life Hilb Group Imprise Financial PCC Inc Insurance & Benefits Group LLC JD Capital Jelf Group PLC JWB Insurance Group Libra Insurance Services Limited Nexus Underwriting Management Patriot National Inc. R.C.A. Insurance Group Standard Life Sumitomo Life Insurance Company Sun Life Financial Inc. Symetra Financial Corporation T.H.E. Insurance Co. The McLaughlin Company Tokio Marine Holdings Inc. Trigen Insurance Solutions Union Insurance Group Verisk Insurance Solutions Wells Fargo & Co. X.L. America Inc.
  12. 12. GLOBAL INDUSTRY TRENDS — INSURANCE 11 Get a copy of Global Industry Trends — Insurance in your inbox every month. Visit: industry-trends-insurance/ Disclaimer No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Indalytics Advisors Private Limited. The information contained in this report is of a general nature and is not intended to address any particular individual or entity’s circumstances. Although proper care has been taken to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. The publisher should not be held liable for any discrepancy in the information. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Publication Volume: GIT-15-INS-09 Publication Date – September 2015 © 2015 Indalytics Advisors Private Limited For further information, please contact