Prudential Profit $1.5 Billion

Insurer Prudential on Aug. 30 reported new business profit of $1.5 billion in the first six months of 2023, up 36% from the same period a year earlier. New business profit in mainland China slipped 16% to $171 million.

The company’s annualised contractual service margin, a measure of its core business introduced as part of the insurance industry’s new IFRS 17 accounting standards, grew 8%.

Prudential also outlined its new strategy. New CEO Anil Wadhwani, who joined in February, said the group will accelerate value creation by improving its operational and financial discipline, aiming to grow new business profit at a compound annual growth rate of 15% to 20% between 2022 and 2027. The group will invest around $1 billion to achieve his goals, mostly between 2023 and 2025. Investments will include upgrading technology for its agents and bancassurance systems.

Prudential’s London-listed shares closed up 1.5% at 10 pounds on Aug. 30.

Prudential 2023 Update

Prudential’s new CEO has inherited an old problem. Though boss Anil Wadhwani delivered a solid set of results on Wednesday, the insurer’s valuation lags stubbornly behind rival AIA. The pressure is on to prove that Prudential’s decision to shed its British and U.S. assets justifies the upheaval.

Prudential Decoupling - It’s more than a year since the Pru – not to be confused with the U.S. group of the same name - transformed itself. After chopping off its historic UK roots in 2019 and listing U.S.-based Jackson National Life two years later, Greater China is the company’s main market. Last year the region brought in 42% of the group’s new business profit – the metric insurers use to measure the value of new policies in today’s money. Wadhwani’s decision to lead the $35 billion company from Hong Kong underscores its focus.

The former Manulife executive says the streamlined Prudential hasn’t yet realised its full potential, and investors agree. Its Hong Kong and London-listed stock trades at just over 13 times expected earnings for 2023, per Visible Alpha. Larger rival AIA, listed in Hong Kong, is valued at around 18 times. Prudential’s market value is also less than its shareholders’ equity as measured on a European embedded value basis, while investors reward AIA with a premium to its equivalent balance sheet measure. Nor has the rejig closed the gap: Prudential’s Hong Kong shares are down roughly 40% since it started its breakup in 2018; over the same period, AIA stock is up 5%.

Strategy - Wadhwani’s stratgey is to fine-tune the engine rather than reinvent the wheel. He will aim to improve customer experience, distribution and the health business by investing around $1 billion in new technology and other resources, and has promised to lift new business profit at a compound rate of 15% to 20% between 2022 and 2027. But a greater focus on China has shifted from a trump card to a wild card. The group’s new business profit in the mainland slipped 16% to $171 million in the first half as Pru withdrew some products from the market.

True, China’s ageing population should ensure robust long-term demand for health and life insurance. Savings products also appeal to citizens keen to diversify away from volatile stocks and property. But a slowing domestic economy undermines that opportunity. Meanwhile, geopolitical risks and Beijing’s erratic policy swings have made international investors wary of China exposure.

Prudential Soars In Asia

Prudential PLC posted a 3.6% rise in first-half operating profit on Wednesday, as the Asia-focused insurer benefited from a rebound in Chinese investors buying insurance products in Hong Kong, its key revenue centre. The profit numbers, which Jefferies analysts said came in slightly above consensus, drove Prudential's shares up 3.1% at 0721 GMT, making it the best performer in the FTSE 100.

China Opens Up - As China ended its stringent zero COVID-19 policy late last year and gradually removed border restrictions, mainland visitors have started to buy insurance again in the Asian financial hub. Hong Kong insurance has long been a channel for Chinese buying assets abroad, with the policies providing more protection than what is available on the mainland, and attendant savings and investment products mostly denominated in dollars.

Prudential's annualised premium equivalent (APE) sales, a closely watched gauge of insurance sales, rose 37% to $3 billion on a stronger pickup in sales from Chinese mainland visitors to Hong Kong.

AIA - Hong Kong-based insurers including Prudential and AIA Group benefited from Chinese investors rushing to buy Hong Kong insurance, as well as making other U.S. dollar investments, as investor confidence in local markets languished.

AIA last week reported a 37% rise in the value of new business in the first half of this year, beating estimates, as sales rebounded in its key markets of mainland China and Hong Kong after the lifting of pandemic restrictions.

Prudential said APE sales in Hong Kong rose more than four times in the first half, and business generated from Chinese mainland visitors enjoyed a "significant increase" following the opening of the border.

The outlook for Asia-focused insurers in the near future, however, is set to be clouded by slowing growth momentum in the Chinese economy, which has resulted in a surge in the unemployment rate and is weighing on disposable income.

Profits - Adjusted operating profit of the London and Hong Kong dual-listed company was $1.46 billion for January-June, versus $1.41 billion in the same period a year earlier.

Prudential said it expects the strategy to generate 15%-20% compound annual growth in new business profit by 2027, and achieve double-digit compound annual growth in operating free surplus in the same period.

Indonesia Increase Insurance Minimum Capital Requirement

Indonesia’s insurance sector is expected to grow at a compound annual growth rate (CAGR) of 6.4% in the next few years to post IDR339.3 trillion (US$22 billion) in 2027, driven primarily by regulations relating to increased merger and acquisition (M&A) activities.

Increase Minimum Capital Requirement - Recent proposals have been made in the country to increase the minimum capital requirement (MCR) for insurance and reinsurance companies, which is expected to result in creased M&A for Indonesia. According to new research from GlobalData, the country is on pace to reach IDR264.8 trillion (US$17 billion) this year alone.

Earlier this May, Indonesia’s insurance regulator Otoritas Jasa Keuangan (OJK) proposed to increase the MCR of insurance companies from IDR150 billion (US$10.4 million) to IDR500 billion (US$34.6 million) in 2026; another further increase is pushed by 2028 to IDR1 trillion (US$69.2 million).

For reinsurers, the increases will range from the current US$20.8 million to US$69.2 million in 2026, up to a further US$138.5 million in 2028. Takaful and re-takaful operators are also recommended in the increase for the MCR.

Industry Impact - The new regulation is also expected to result in the transfer and closure of businesses for insurers with lower revenue due to an inadequate capital structure. Furthermore, such high capital requirements will also act as an entry barrier for small insurtech players that are looking to disrupt the market. This will take smaller players out of the competition and help larger players with higher capital strengthen their capabilities through consolidation.

Facing RBC issues - As of December 2022, the country’s sector includes 72 general insurers, 52 life insurers, seven reinsurers, 54 takaful – 29 life and 25 general – operators, and four re-takaful operators.

66 of these entries had a written premium of lower than IDR200 billion (US$13.8 million) in 2021 and are therefore at higher risk of not meeting the increased capital requirements. Thirty-three companies also stand at a crossroads with written premiums between IDR200 billion and IDR 500 billion, meaning that they may also struggle to meet the new standards.

Smaller and loss-making insurers may find it difficult to attract investors and may be forced to wind up businesses. With a weaker capital structure, these companies will also struggle to invest additional capital in technology and R&D activities, which will impact their business performance.

Even without the proposed new MCR standards, some insurers have faced the negative effects of failing to raise the required capital. In 2020, Wanaartha Life’s risk-based capital (RBC) ratio was negative, leading to the revocation of its license in 2022.

As of January, the RBC ratio of the Indonesian life insurance sector stands at 477.7%, while the general life insurance is at 321.8%; both are lower than the proposed MCR increase of 567%.

Despite posing short-term challenges like impeding R&D activities as well as lower technology spending, an increase in MCR will make insurers financially sound over the long run and improve consumer confidence, which will lead to higher local retention of premiums and reduced overseas ceding,” Kela said.

Indonesia Insurance Industry Outlook 2023

Indonesia Life & Non-Life Insurance Market is valued at USD 1.7 billion in the current year and is expected to grow at a CAGR of 7% in the forecasted period.

Stable Outlook - Indonesia's life and non-life insurance market is well-expanded and strengthened by solid capitalization, supporting a stable outlook assigned to the segment. The gross premium created (GPW) for credit insurance, the market's third-largest business line, increased by 86.2% to IDR 5.7 billion in 2020.

Property insurance - the biggest business segment, also posted solid GPW growth of 9.7% to IDR 20.9 trillion. However, motor insurance GPW recorded quiet growth of 0.3%. Improved underwriting discipline continued rate rises, lower catastrophe risks, and an improving commercial and personal auto market in the first half of 2020.

Furthermore, these factors have led to strong underwriting success in the Indonesian property and casualty insurance industry. Indonesia's insurance sector produces less than 1% of the country's gross domestic product (GDP). Its penetration and density rates are below the standard for the region.

Rooms For Growth - With gross insurance premiums at 1.99% of GDP versus 3.9% on average for Emerging Asia and insurance density to the tune of USD 82 per capita versus USD 207 for Emerging Asia, the industry has a lot of room for development. Some 152 insurance companies and 227 insurance intermediaries operating in the country, according to data from March 2022.

Life insurance - is the biggest segment, earning 40% of total gross insurance premiums in 2020. Next comes social insurance with a 39% share and non-life insurance and reinsurance with 19% of the total. Mandatory insurance accounted for 2.6% of overall premiums. Gross contributions from Sharia insurance were equivalent to 3.2% of total insurance income.

The InsurTech sector has seen much technological and investment growth over the past few years. Traditional insurance business lines, such as health, auto, and commercial, are being revolutionized by new digital-centric start-ups. New technologies, such as AI and IoT, have been re-architecting insurance data, the basis of the insurance industry.

Dispropotionate Growth - Executives have argued that the insurance sector tends to benefit disproportionately from economic expansion. If the development of the economy is 5.8-5.9%, then the insurance market should grow at 15%. Growth in the insurance market is greater than the growth of many other industries.

Overall insurance penetration in the country of 264 million people ranks among the lowest possible in the world at less than 2% (4.5 million Indonesians carry a policy). Half of Indonesia's population is under the age of 30, with the number of millennials (aged 17-35) in Indonesia presently at 79.5 million.

Balanced Growth - Outlook for the Indonesian insurance sector, both the life and non-life segments were balanced, with companies showing steady growth, strong margins, and adequate reinsurance protection. Additionally, the outlook claimed that risks in terms of assets owned were within an acceptable range and the sector was well regulated.

Industry Consolidation - The Indonesian life and non-insurance market is semi-consolidated. The market is led by some local and international players in the market. The market is economical, as the demand for life and non-life insurance highly increased post-COVID-19 pandemic due to increased awareness among people for insurance.

FI Life - Women Insurance

Fi Life has launched an online life insurance product with a price guarantee for women below the age of 55. The company, in a press release, states that the price difference will be refunded if comparison premiums are cheaper elsewhere for a given health and lifestyle profile.

Being an online-only insurance company allows Fi Life to reduce its operating costs – with agent commissions going up as high as 40% of premiums - which in turn is passed on to its customers. While the price guarantee is specifically for women within the approved age bracket, the company also states that it offers the highest sum assured of US$223,400 (RM1 million) for online insurance and the cheapest life insurance for men between the ages of 35-45.

Bank Negara Malaysia (BNM) released a paper on Licensing Framework for Digital Insurance and Takaful Operators (DITO) in January 2022. The purpose of the framework, as noted by BNM, was to attract new digital players with innovative solutions to address the protection gaps among the unserved and underserved segments of the population.

The mean wage for Malaysian males in 2021 was US$689 (RM3,085) versus US$663 (RM2,968) for females. The pay gap between males and females in both management and professional roles widened between 2019 and 2021. The gender pay gap for managers had widened from 4.57% in 2019 to 18.12% in 2021, while for professionals the gap rose from 13.98% to 16.72% between 2019 and 2021.

Universal Life versus Whole Life

Universal life insurance is also called adjustable life insurance because of the flexibility it offers. You have the ability to reduce or increase your death benefit and adjust your premiums (subject to certain limits) once there is money in the account.

How Universal Life Insurance Works - When you make a payment to your universal life insurance plan, part of it goes into an investment account, and any interest accrued is credited to your account. The interest you earn grows on a tax-deferred basis, increasing your cash value.

You can adjust the death benefit when needed, increasing it (often subject to a medical exam) if your circumstances change, or lowering it to reduce premiums. Alternatively, you can use your cash value to pay premiums as long as there is enough money in that account.6

Pros and Cons of Universal Life Insurance - The ability to adjust the face value of your coverage without surrendering your policy is an attractive feature of universal life coverage. As your financial circumstances or responsibilities change, you can increase, decrease—or even stop—premium payments.

Another perk is the ability to partially withdraw or borrow funds from the cash value. However, you have to keep track of withdrawals, because they reduce the cash value amount—if you withdraw too much, you may have little left in a time of need. If your premiums don’t cover the cost of insurance and you have no cash value, then your policy could lapse.

Another downside of universal life insurance is the interest rate, which is often dependent on market conditions. If the policy performs well, there are chances of potential growth in your savings fund. On the other hand, if it performs poorly, then the estimated returns aren’t earned—and that might increase your premiums.

Another Negative Feature: the fees. As with all permanent life insurance policies, surrender charges may be levied at the time of terminating your policy or withdrawing money from the account, especially in the early years

Key Differences - The biggest difference for policyholders between whole and universal life is the guarantees:

Whole life has a guaranteed death benefit, level premiums, and growing cash value. This growth in cash value comes from annual dividends that are credited to policies.

Universal life provides flexibility in lieu of guarantees. You can pay more or less each year for your policy (within limits), and this also will allow the cash value and death benefit to fluctuate. Rather than dividend payments, UL policies are credited based on interest rates. This can lead to a UL policy becoming underfunded, causing premiums to rise. If you can’t meet those payments, then the policy can terminate.

With whole life, you pay higher premiums for the guarantees you are given. An equivalent universal life policy will cost less but will also carry a certain degree of risk to policyholders.

Money From Larva Of Black Soldier Fly

In a village a little over an hour's drive from Nepal's capital of Kathmandu, six women wearing yellow rubber gloves and surgical masks work in a shed, gently squeezing the wet larvae of the black soldier fly into small plastic containers.

Another woman slices pears and wilted vegetables to feed the insects, known more commonly as BSF, that are held in two plastic cages equipped with thermal panels for artificial light and heat to maintain the required temperature inside the tin-roofed 800-square-foot shed.

The protein-rich insect eggs are dried and processed into feed for fish, chicken and pigs, and will sell at 70 Nepali rupees (about $0.55 cents) a kilo.

First Of Its Kind - Opened in March with a $110,000 grant provided by the Women's Bank, Finland, through the charity Federation of Women Entrepreneurs Association of Nepal, the fly farm is billed as the first of its kind in the Himalayan nation.

It is owned and operated by the women, all members of a "Sisters Group" in Bhardev, a small village with a population of about 2,500 people, 30 km (19 miles) south of the capital.

Nepal is among the world’s ten poorest countries, and people in villages are mainly subsistence farmers. The economic condition of women is especially vulnerable, with no extra source of income or employment other than on their tiny family farms.

The average salary of civil servants in Nepal is barely about $300 a month, so the money to be made from fly larvae is clearly a step forward from the village women.

They expect to be harvesting 3,500 kg of larvae in one production cycle, which ranges between 45 and 60 days.

100 Meter World best

American sprinter Sha’Carri Richardson wins the world 100-meter title, with a personal best 10.65 seconds at the 2023 World Athletics Championships.

Indonesia Online Lenders Mounting Debts

A June 2023 report from Otorista Jasa Keuangan (OJK), Indonesia’s financial services authority, revealed that the country’s online lenders have collectively accumulated 1.73 trillion rupiah (US$112.7 million) in non-performing loans as of that month. These refer to loans that are overdue for more than 90 days.

Outstanding Loans - The amount marked a 54.9% jump year on year. It also outpaced the growth of total outstanding loans disbursed by the country’s fintech lending platforms, which increased 18.9% year on year. An additional 3.45 trillion rupiah (US$224.8 million) of loans are 30 to 90 days overdue.

Together, the bad loans total 5.18 trillion rupiah (US$337.5 million). They also make up 9.8% of the 52.7 trillion rupiah (US$3.4 billion) in total outstanding loans. 

Young Age Group - Individual borrowers contribute 77.8% to the total non-performing loans, with corporate borrowers making up the rest. The 19-to-34 age group is the most problematic, with 2.68 trillion rupiah (US$174.7 million) in bad loans or approximately 52% of the total. Borrowers aged 35 to 54 years follow suit, with overdue payments reaching 1.71 trillion rupiah (US$111.5 million) or 33% of the total problematic loans.

The aggregate ratio of deliquency over 90 Days for fintech lending platforms stood at 3.29% as of June 2023 – an increase compared to the same period last year. In June 2022, the aggregate TWP90 for such platforms was 2.35%.

Currently, there are 102 online lenders that are registered and authorized under OJK.

That said, Indonesia’s fintech lending providers began recording net profits in January 2023. As of June, the lenders have collectively achieved 450.7 billion rupiah (US$29.4 million) in net profits.

Insurance Agent Forged Insurance Policies

A former insurance agent was arrested in Thailand on allegations he had embezzled money from 50 clients and issued fake motor insurance policies. Natthakit Ariyachotepipit, 44, was accused of forging insurance policies for the clients, leading them to believe they were from the insurer he was working for, The Nation reported. He was arrested in Ayutthaya’s Uthai district, having been wanted since October 01.

According to the Royal Thai Police’s Crime Suppression Division, a client found out that his insurance policy was falsified when he lodged a claim for damages following a car accident. This prompted the insurer to conduct an investigation, which revealed 49 other victims.

The suspect said that he had been working for the insurer for two years, and that he used the clients’ premiums for personal purposes, so he issued them forged policies. He instructed the clients to contact him whenever they needed to make a claim, and he would then take the vehicles to be repaired at a shop owned by his friend, on his own expense.

However, one client disregarded him and instead directly contacted the insurer to make a claim, causing the lies to unravel.

Qualcomm Internal Scam

Sanjiv Taneja (a former CEO of a startup company named Abreezio) is one of three men indicted last year after ripping off chipmaker Qualcomm for more than $150 million. He pleaded guilty last Thursday to one count of money laundering involving a $1.5 million transaction. The funds were related to the $150 million that Taneja and the other defendants conned out of Qualcomm.

The San Diego-based company was tricked into buying technology that already belonged to the company according to the San Diego Union-Tribune. The other two indicted were Karim Arabi and Ali Akbar Shokouhi. Arabi, while working for Qualcomm as the company's vice president of research and development, invented a way to evaluate micro-processors during the "design for test" phase that was faster than other methods. Under his employment contract, any intellectual property created by him while working for Qualcomm belonged to the company.

The Cover-up Plan - Taneja admitted in the plea agreement that he and his co-defendants decided they wanted to personally profit from the invention instead of turning it over to Qualcomm. So they came up with a plan to hide Arabi's involvement in Abreezio that tricked Qualcomm into believing that the startup owned the technology that technically belonged to the chipmaker.

Arabi was still a Qualcomm employee when the company was negotiating with the startup and was still there when Qualcomm agreed to buy it. Qualcomm wanted the startup so that it could acquire the technology that Arabi had created at Qualcomm; in other words, the chipmaker was buying its own technology. Qualcomm was told that the startup was funded by angel investors; these are wealthy individuals who help fund a small company in exchange for equity in the firm. Qualcomm agreed to pay $180 million for Abreezio with $150 million paid in cash upfront.

Qualcomm didn't know that its own employee had created the technology it bought because it was told that a Canadian graduate student working for the startup had invented it. The student was "played" by Arabi's younger sister and she was listed as the inventor on provisional patents even though her brother filed the patent applications using fake email accounts to hide his identity.

Fraud & Deceit - Acting U.S. Attorney Andrew R. Haden said, "Fraud and deceit undermine legitimate businesses and the marketplace, whether they victimize small businesses or multinational corporations and their shareholders. This office will seek justice against wrongdoers, big and small alike."

Qualcomm is a fabless chipmaker which means that while it designs its own chips, it doesn't own the facilities to manufacture them. Thus, the company relies on contract foundries like TSMC and Samsung Foundry and has used both of those companies to manufacture its Snapdragon line of application processors. Currently, TSMC builds Qualcomm's current flagship chipset, the Snapdragon 8 Gen 2.

Digital Insurance Via Malaysia

Some of the digital insurance products that are being offered in Malaysia include:

On-demand igital insurance: These are insurance products that can be purchased and activated anytime, anywhere, and for any duration through a mobile app or website. Some examples are Tune Protect, which offers travel, motor, personal accident and gadget insurance, and PolicyStreet, which offers life, health, pet, car and business insurance.

Peer-to-peer (P2P) insurance: These are insurance products that are based on a social network of policyholders who pool their premiums and share their risks. Some international examples are Germany’s Friendsurance, which offers car, home and liability insurance, and Canada’s Besure, which offers health, travel and gadget insurance. In Malaysia, TREVO Shield partnered Allianz General to launch car-sharing coverage for the P2P market.

Telematics insurance: These are insurance products that use data from sensors or devices to monitor the behavior or performance of the insured and adjust the premiums accordingly. Some examples are AXA FlexiDrive, which offers motor insurance based on driving habits, and Allianz Flight Care, which offers travel insurance based on flight delays or cancellations.

Microinsurance: These are insurance products that provide low-cost coverage for low-income or underserved segments of the population. Some examples are Axiata Digital, which offers life, health and personal accident insurance through mobile platforms, and GKash, which offers health and personal accident insurance through e-wallets.

These are but a sampling of what digital insurance products can offer protection for in Malaysia. Here are some of the standalone digital insurance products from both insurtechs and incumbents that can be purchased in Malaysia, that differ from run-of-the-mill life, health, and property coverage.

Family Mart Exit Thailand

Japanese convenience store chain FamilyMart will withdraw from Thailand after its franchise agreement with local retailer Central Group ended in late May, opening the door for rival 7-Eleven to tighten its grip on the market.

The company announced the withdrawal on Thursday. Its roughly 200 stores in the Southeast Asian country will be converted to the Tops Daily brand, a Central Group-owned small supermarket chain, over the rest of the year.

FamilyMart ranked fourth in Thailand's convenience store market as of September 2022. In first place is 7-Eleven with more than 13,000 locations, or about 80% of the market, operated by major Thai conglomerate Charoen Pokphand Group under a franchise agreement.

FamilyMart entered Thailand in 1992 through a joint venture, opening its first store there in 1993.

Versa Cash Fintech Disruption

Versa Cash - founded by a group of fintech entrepreneurs - was established three years ago as a digital wealth management app.Since its registration with the Securities Commission, Versa has two main offerings – Versa Cash (savings product) and Versa Invest (risk-based investing portfolio).

Launched in 2021, Versa Cash is the fintech’s flagship product, offering users returns on-par with fixed deposits (FD), coupled with the convenience of flexible withdrawals at any time. Versa Cash allows users to earn stable returns on their idle savings by tapping into money market funds, traditionally accessible to high-net-worth individuals.

User-Friendly - Through its suite of innovative and user-friendly wealth solutions, the digital wealth management service provider is making savings and investing easy and accessible for all Malaysians. Thecompany’s core strength lies in making complicated wealth products relatable to the younger generation, which represents almost 90% of its users.

User can start an account with us from as low as RM10. The minimum investment amount for Versa Cash is RM10, while it is RM100 for Versa Invest. In response to diverse market demands, Versa has also recently introduced Versa Cash-i, a syariah-compliant fund, enabling users to perform same-day withdrawals.

Service Fees- Versa’s key proposition is that its wealth offerings have no sales charges, compared with the typical 3% to 5% sales fee charged by agents. The key operational challenge Versa faced was the need to convince multiple parties in order to have a proper go-to-market plan.

Versa’s tie-up with AHAM Capital, one of the top three asset managers in the country with assets under management of almost RM80bil, provides the fintech with the access to the right wealth tools for its customers.

Since its launch two years ago, Versa has transacted almost RM500mil through its platform, with 90% of these flows coming from users below 40 years old.

WeWork Falls On Its Knees

For years, WeWork Inc. has been trying to deliver a turnaround story - from co-working startup transforms into a stable, profitable public company. WeWork was not saved, and the co-working company now says there’s “substantial doubt” it will even be able to stay in business.

Bleeding Cash - WeWork was bleeding cash, and customers of its office rentals are canceling their memberships in droves. Its shares fell 17% in premarket trading on Wednesday. WeWork’s stock has plunged 98% since the company went public in October 2021, wiping out nearly $9 billion in market value. The stock was trading at 16 cents early Wednesday. Its bonds are also at deeply distressed levels. The company’s 7.875% unsecured notes due in 2025 last changed hands for 33.5 cents on the dollar, according to data from Trace.

The Harder They Fall - Few companies have risen to such towering heights only to crash so badly. WeWork was built on the idealism of Neumann, who started the business in 2010 with the designer Miguel McKelvey. Their vision was to lease office space and then rent smaller parcels of it to customers.

The startup expanded slowly, then quickly, then at blinding speeds, fueled by a zero-interest-rate financial environment in which venture capitalists dumped truckloads of money into startups that showed impressive growth rather than profits. By 2019, WeWork was the biggest private occupier of office space in Manhattan and London, operated millions of square feet in dozens of countries and was valued at $47 billion, which made it one of the most prized startups in America.

Stop The Bleed - Neumann was ousted in late 2019, and after thousands of layoffs and a bailout from WeWork’s biggest investor SoftBank Group Corp. The company named Sandeep Mathrani as CEO in the hope of a turnaround. Mathrani took over in February 2020, promising to stanch the financial bleeding and restore order. Mathrani was dealt an unenviable hand. Almost immediately upon his arrival, offices worldwide shut down, as the Covid-19 virus sent people into sustained lockdown. Overnight, the idea of setting foot in a WeWork became outlandish, even terrifying, and occupancy dropped to 46%.

The recovery was slow, and it took more than two years until WeWork’s offices were as full as they had been in late 2019. During that time, Mathrani tried other ways to keep the business going. In 2021, he orchestrated a blank-check merger to take WeWork public, at the height of the frenzy for special purpose acquisition companies, or SPACs. He oversaw the creation of a tech tool that landlords could buy to use WeWork software in their own buildings and the development of more spontaneous, on-demand ways for customers to access WeWork offices.

Financial Re-engineering - WeWork seemed to achieve a milestone in March when it struck a deal with some of its biggest creditors and SoftBank to cut its debt load by around $1.5 billion and extend other maturities. But then in May, after three years on the job, Mathrani suddenly stepped down for a job at Sycamore Partners, leaving WeWork without a permanent replacement.

As the pandemic dragged on, WeWork insisted that the shift toward remote and hybrid work would actually favor the company rather than weaken its business. Employers would be more wary of signing long-term leases and would turn to WeWork’s flexible models instead, the company argued.

In Tuesday’s statement, the company said more customers were leaving and fewer new members were signing up than it had anticipated. That churn was cutting into its occupancy rate, which dropped in the second quarter compared to the previous one.

To avert disaster, WeWork said it will focus over the next 12 months on reducing rental costs, negotiating more favorable leases, increasing revenue and raising capital. On Tuesday, WeWork said three of its independent board members are being replaced by four new board members. It’s continuing to search for a permanent CEO.

Malaysia Life Insurance Update 2022

Malaysia’s life insurance industry has recorded a 5.3% rise in sum assured in force amounting to RM1.9 trillion last year versus RM1.8 trillion in 2021, said the Life Insurance Association of Malaysia (LIAM).

3.5% Premium Growth - In its 2022 annual report, total in force premium grew by 3.5% last year to RM44.1 billion from RM42.7 billion in 2021. The overall new business sum assured increased to RM497.7 billion in 2022, an increase of 8% from RM461.1 billion in 2021. However, the number of new policies issued fell slightly by 2.1% to 1.8 million compared with 1.9 million in 2021.

New Business Dropped 6.4% - New business total premium showed a drop of 6.4% last year, which amounted to RM12 billion compared with RM12.8 billion in 2021.

Claim Acclerated 12.7% - the industry recorded a 12.7% increase in claims payout amounting to RM13.4 billion versus RM11.9 billion in 2021, mainly due to higher claims in medical and disability that rose by 33.7% and 20.6%, respectively.

Additionally, he insurance industry also saw the laying out of a five-year roadmap and strategic plan to achieve desired targets set under the Financial Sector Blueprint (FSBP) 2022-2026 launched by Bank Negara Malaysia (BNM) last year.

The association will be working closely with BNM, the industry’s key stakeholders, and its 16 member companies to seek further guidance and support to ensure smooth implementation of respective initiatives to achieve the FSBP agenda.

Changing Landscape - LIAM will support a vibrant digital financial services landscape, we will review the regulations and proposed measures to enable end-to-end digitalisation of business processes such as the use of digital signature and digital nomination to provide a seamless policyholders’ experience.

Malaysia general Insurance Update 2023

The general insurance industry has recorded an increase in gross direct premiums of 10 per cent to RM19.4 billion for 2022 compared to 2021. However, underwriting profit contracted by 23 per cent to RM1.56 billion mainly due to losses in both motor as well as medical and health insurance lines of business.

Motor Insurance Losses - General Insurance Association of Malaysia (PIAM) said motor portfolio reverted to a loss after two years of profit during the pandemic with a reported 58 per cent rise in the number of accidents as of September 2022 compared to the corresponding period in 2021. Motor insurance observed a nine per cent growth in gross direct premiums to RM9.0 billion in 2022, it recorded an underwriting loss of RM3 million with net claims incurred ratio deteriorating to 65.3 per cent reverting towards pre-pandemic levels.

Following the full reopening of the economy in 2022, the economic outlook, however, is tempered by forecasted risks of global economic recession and other global headwinds, PIAM said. The association said that motor and fire lines of business remained as the top premium contributors. Motor maintained its position as the largest business line with 46 per cent share of total premium. 

Fire Insurance - Meanwhile, premium for fire in 2022 rose by six per cent to RM3.82 billion versus 2021 with underwriting margin improving to 39.1 per cent owing to improved claims experience.

Personal accident  - also saw a significant 43 per cent growth in premium year-on-year largely due to the Perlindungan Tenang Voucher (PTV) Program initiated by the Finance Ministry and Bank Negara Malaysia in collaboration with the general, life and takaful insurance industry.

The 2022 premiums for miscellaneous, and marine aviation and transit (MAT) classes of insurance also trended upwards by 10 per cent and eight per cent to RM2.7 billion and RM1.5 billion, respectively.

Medical and health insurance - (MHI) saw a one per cent rise in premium to RM976 million compared to 2021. However, MHI underwriting margin more than halved to five per cent in 2022 from 12.1 per cent in 2021 due to higher claims.

On insurance claims, PIAM said the general insurance industry settled closed to RM19 million daily on total insurance claims. The amount of daily claims payout is reverting to pre-pandemic trend in 2022 with a 23 per cent y-o-y rise versus 2021.

Over the past decade, motor daily claims payout represented the majority of total claims averaging at RM13 million per day (72 per cent of total payout). Motor daily claims payout rose to RM13 million a day last year following reductions in the previous three years. -

Malaysia Motor Insurance Update 2023

The motor insurance industry of Malaysia is set for notable gains over the next few years, growing to MYR13.4 billion (US$3 billion) in 2027 with a compound annual growth rate (CAGR) of 9.6% in terms of direct written premiums (DWP).

9.2% Growth - The sector has bounced back with an annual growth rate of 9.2% in 2022 following three straight years of decline from 2019 to 2021. Recovery was supported by an increase of vehicle sales, with the market growing by 41.6% in 2022 compared to a 3.9% downturn in 2021, as per figures from the Malaysian Automotive Association (MAA).

Another factor for this growth spurt was the country’s National Economic Recovery Plan in June 2020 that provided 100% sales tax exemption on the purchase of locally assembled vehicles and a 50% exemption on imported vehicles. This tax break was effective until June of last year; however, the registration period for the purchase of vehicles was further extended to March 2023 owing to the continued shortage of semiconductors. This, in turn, resulted in a year-to-date sales volume growth of 12.3% in May 2023.

The sector is forecast to record an annual growth of 7.6% this year, thanks to economic recovery and initiatives by the government to increase the sales of vehicles. The country’s economy is expected to expand by 4% this year and another 4.4% next year, which will further boost the automotive sector’s sales.

AI & Risk Exposure - Despite a growth in premiums, insurers in Malaysia will need to evaluate their risk exposure due to an increase in accident claims, increased frequency of natural calamities and rising inflation, which has significantly increased the cost of repairs. To mitigate the impact of increasing claims and reduce fraudulent claims, Malaysian insurers are adopting technologies, such as telematics and artificial intelligence (AI). AI is helping insurers to identify fake accident claims or claims that are inflated.

Astra Life Mulls Sales

Zurich Insurance Group AG and BNP Paribas SA's Cardif unit are among the potential bidders for PT Astra International's life insurance division. These insurance companies are reportedly evaluating possible offers for the Indonesian firm's life insurance business, aiming to increase their presence in the Southeast Asian economy.

No formal sales process for PT Asuransi Jiwa Astra (Astra Life) has commenced. The insurance companies may ultimately decide not to pursue a transaction, and there is a possibility of other buyers expressing interest.

Zurich Insurance, established in 1872, operates in over 200 countries and territories, as indicated on its website. In 2022, the company reported a business operating profit of $6.5 billion, reflecting a 12% increase compared to the previous year. Although its shares have declined approximately 2% this year, Zurich Insurance's market valuation stands at around $72 billion.

Cardif, which operates in more than 30 countries across Europe, Asia, and Latin America, recorded gross written premiums of €30 billion ($32 billion) in 2022, as stated on its website. The company's pre-tax net profit experienced a 1% increase, reaching approximately €1.4 billion last year.

PasarPolis Insurance Breakthrough

Indonesia’s PasarPolis is now able to underwrite its own products, making it one of Indonesia’s first full-stack insurtechs. This means PasarPolis will be able to offer new products and work with partners like Tokopedia, Gojek, Traveloka, Xiaomi and IKEA Indonesia to create custom insurance policies.

Underwriter - PasarPolis is able to underwrite insurance products because of its strategic partnership with Tap Insurance. Tap Insurance received a full license for insurance underwriting from OJK (Otoritas Jasa Keuangan, or the Financial Services Authority of Indonesia). The first products from the strategic partnership will include fire and vehicle insurance.

Founded in 2015, PasarPolis has raised over $59 million in total to date and is backed by investors like Gojek, Tokopedia, Traveloka, LeapFrog and SBI. Its policies include travel, home content, logistics, electronic devices, life and vehicle insurance.

PasarPolis currently has 60,000 registered agents in Indonesia, and partners with 50 insurance providers. It says it has served more than 80 million customers and issued 1 billion policies between 2019 and 2021, partnering with 40 companies to distribute products.

Distribution partners include Shopee, Tokopedia, Gojek and Xiaomi. Customers can add micro-insurance policies to their purchases from their platform for about 5,000 to 20,000 Indonesian rupiah (or 32 cents to $1.29 USD).

Data Analytics - PasarPolis is able to scale because it uses machine learning and data analytics to make the underwriting and claims process faster and more cost-effective. It says that 87% of noncredit insurance claims in 2022 were settled within 24 hours. PasarPolis’ tech includes algorithms that automate the claims approval process, based on data submitted by customers, like photos, chronology and date and time of events. The algorithm then filters information to PasarPolis’ faster “green” channel.

The company’s most recent launches include its Unified Claims Interface (POLI), which lets customers file multiple claims through different channels like email, WhatsApp, SMS and PasarPolis’ mobile app.

PasarPolis’ goal is to reduce the cost of insurance and increase penetration in Indonesia, where insurance penetration rate was only 4% as of 2022.

BCA Considering Options

Indonesia's Bank Central Asia (BCA), Southeast Asia's biggest bank by market value, is considering strategic options for its life insurance unit including a potential stake sale. The Jakarta-listed lender, which has a market value of $74 billion as of Monday, is working with an adviser on a strategic review of PT Asuransi Jiwa BCA, also known as BCA Life.

Other options under consideration include establishing a joint venture with a foreign partner or a bancassurance partnership where an insurer can sell its products and services in a lender's branches for a period of time. 

BCA Life had total assets worth 2.34 trillion rupiah ($156.08 million) as of December 2022. BCA Life started operations in 2014 and is the only unit under BCA that offers life insurance services. BCA Life, which has up to 200 employees, offers insurance products including savings and health.

A potential deal could see BCA joining a list of lenders and insurers in Asia seeking tie-ups for their insurance subsidiaries. These include India's Kotak Mahindra Bank that is in talks to sell a stake in its general insurance unit to Zurich Insurance Group and Japanese insurer Tokio Marine Holdings tapping investment banks to work on a sale of its Southeast Asia life insurance business.

Tokio Marine Considering Selling Southeast Asia Operation

Tokio Marine is reportedly considering a sale of its life insurance business in the Southeast Asia region. The sale, which could be valued at about US$1 billion, is reportedly part of the insurer’s plans to focus on its core operations.

Tokio Marine is working with an adviser to gauge buyer interest in its life insurance units in Indonesia, Malaysia, Singapore, and Thailand. While Tokio Marine prefers for the transaction to be wholesale, it’s also considering a piecemeal deal

The formal sale process can commence in the coming months. The assets can also be kept for a while longer, as considerations for the sale are still in its early stages.

Great Easstern Mulls Buying MetLife Malaysia

Singapore bases Great Eastern Holdings is in talks to buy MetLife Malaysian ventures in a deal that could value AmMetLife Insurance at up to US$300 million.

OCBC is conducting due diligence on AmMetLife Insurance and is seeking regulatory approval to clinch the deal. A transaction could value AmMetLife which the US company jointly owns with public listed AMMB Holdings at between US250 million to US$300 million.

In 2022 Zurich Insurance was vying for a majority stake in the insurance outfit.