Insurers Outsource Fund Management

Insurance asset managers in Singapore are increasingly planning to outsource fund management to external experts, showed a study by Clearwater Analytics. The move comes amid growing demand for greater portfolio control and transparency, as insurers navigate more complex investment environments.

Among the 50 Singapore insurance asset managers surveyed, 63 per cent or nearly two-thirds said that they expect to shift more assets to external managers, while 26 per cent foresee a greater share being managed in-house. Only 11 per cent believe that the balance between internally and externally managed assets will remain unchanged.

All respondents surveyed have delegated some portion of their funds to external managers, with the percentage of externally managed funds ranging from 24 to 45 per cent. On average, Singapore insurance asset managers have 34 per cent of their funds managed externally.

Notably, the need for greater control over investment portfolios was the top reason cited by insurance asset managers in the Republic for the shift towards outsourcing fund management, said the study.

This was followed by the need for transparency and reporting. Other factors, such as increased visibility of investment portfolios, and the improved reputation and increased acceptance of using external managers, followed closely as reasons for this shift.
ith data-management challenges set to intensify, 84 per cent of the Singapore respondents plan to increase the diversification of their investments across a wider range of asset classes over the next three years, noted the study. In line with this, average private-market allocations are expected to grow from 20 per cent to 36 per cent of holdings in five years.

As firms seek managers with the required expertise to manage the asset classes they invest in, this should lead to an increase in the outsourcing of portfolio management. It will also result in more data in varied formats and an increasing difficulty in accessing information.

As these trends heighten operational pressures and reshape talent strategies, here were “significant skills and capability gaps” within investment management functions.

The study noted that the top strategies to combat these issues included recruiting people from a broader range of sectors or with a greater diversity of perspectives, hiring more specialists in risk-management roles and adding new tools or platforms to compensate for system deficiencies.

Transferring more risk-management analysis away from spreadsheets and other manual processes, as well as outsourcing more to third parties, were also among the top strategies for addressing these problems.

AIA Share Buyback

Hong Kong-based insurer AIA Group on Thursday (Mar 19) announced a new share buyback program of US$1.7 billion and achieved a record value of new business (VONB) in 2025, propelled by the resilient performance of all of its segments.

The firm reported a 15 per cent rise in VONB, which gauges expected profits from new premiums and is a key barometer for future growth, to US$5.52 billion on a constant currency basis for the year ended Dec 31, compared to US$4.71 billion in the year-ago period.

Hong Kong, one of AIA’s largest contributors in terms of profit, logged a 28 per cent increase in VONB for the year on the back of strong demand from both domestic customers and mainland Chinese visitors.

The firm also bore fruit from commencing operations in additional provinces of mainland China as it recorded double-digit VONB growth in the majority of the markets.

Mainland China, AIA’s second-largest market in terms of new sales, reported a 2 per cent hike in VONB. Besides those, AIA’s 18 markets in Asia include Thailand, Singapore, Malaysia, Indonesia, the Philippines and South Korea.

AIA Thailand logged a 13 per cent rise in VONB to US$993 million for 2025, riding on strong distribution and continued investment in digital tools. The segment also reported an operating profit before tax of US$1.21 billion, placing it as the third-most profitable region behind Hong Kong and mainland China.

AIA - 2025 Record Results

The largest pan-Asian life and health insurer, AIA Group, has reported record results in 2025 with double-digit growth across key financial metrics for new business value, earnings and cash generation.

The details are as follows (with growth rates shown on a constant exchange rate basis unless otherwise indicated):

New business performance and embedded value

• Value of new business (VONB) increased by 15% to $5,516m

• Operating ROEV of 15.8%, up by 90 basis points

• EV Equity of $79.7bn, up by 14% per share on an actual exchange rate basis

IFRS earnings

• Operating profit after tax (OPAT) of $7,136m, up 12% per share

• Confident in meeting or exceeding OPAT per share CAGR target of 9 to 11 % from 2023 to 2026

• Operating ROE of 15.5%, up 70 basis points

Free surplus generation and capital

• Underlying free surplus generation (UFSG) of $6,765m, up by 11% per share

• Net free surplus generation (net FSG) up by 14% per share to $4,451m after new business investment

• Shareholder capital ratio of 221% at 31 December 2025

Dividends and share buy-backs

• Final dividend increased by 10% to 144.08 Hong Kong cents (18.40 US cents) per share

• Total dividend of 193.08 Hong Kong cents per share, up 10 %

• New $1.7bn share buy-back.

The group has a presence in 18 markets – wholly-owned branches and subsidiaries in Mainland China, Hong Kong, Thailand, Singapore, Malaysia, Australia, Cambodia, Indonesia, Myanmar, New Zealand, the Philippines, South Korea, Sri Lanka, Taiwan (China), Vietnam, Brunei and Macau, and a 49% joint venture in India. In addition, AIA has a 24.99% shareholding in China Post Life Insurance.

Price Range For Private Healthcare Services

Malaysia’s insurance and takaful sector has introduced reference price ranges for common private healthcare services and expanded a multistakeholder committee on medical claims. The Life Insurance Association of Malaysia (LIAM), Malaysian Takaful Association (MTA), and General Insurance Association of Malaysia (PIAM) have jointly released a “Reference Guide on Price Ranges for Common Private Healthcare Services in Malaysia,” available on their respective websites from Jan. 22.

Industry publishes reference ranges for private healthcare costs
Drawing on insurance and takaful claims data for 2024, the guide sets out indicative price ranges commonly charged by private healthcare providers for frequently used services. According to the associations, it is intended as an informational resource to help consumers better understand typical treatment costs, discuss fees with providers, and plan for possible out-of-pocket expenses. 

The industry has emphasized that the ranges are not fixed, regulated, or recommended prices. Actual charges will continue to vary depending on the patient’s medical condition, treatment complexity, and individual provider practices. 

Committee extends role in medical claims governance
Alongside the publication of the pricing guide, industry participants have broadened the role of the Healthcare Partners Protocol & Solutions Committee (HPPSC), a multistakeholder forum previously known as the Grievance Mechanism Committee, to focus on medical claims protocols and operational issues in Malaysia’s private healthcare financing ecosystem. 

The HPPSC serves as a platform for insurers, takaful operators, third-party administrators, private hospitals, and medical professional bodies, with the Ministry of Health (MOH) and Bank Negara Malaysia (BNM) participating as observers. It is co-chaired by representatives from the Malaysian Medical Association (MMA) and LIAM, with support from PIAM and MTA. 

The committee’s mandate covers the co-development of claims protocols, review of systemic issues related to guarantee letter processes, and consideration of guidance intended to support fair treatment of policyholders and ethical patient management. Issues are channelled through medical organisations and industry associations and discussed with the aim of reaching commonly understood operating approaches.

Managing Longevity Risk

When we think about life insurance, we often focus on the policyholder's death. But what if life insurance companies have more to worry about than just untimely deaths? Increasing longevity is one of the primary challenges they now face. Life insurers have long relied on certain mortality assumptions, but in a world where people live longer than ever before, these assumptions no longer hold.

What Is Longevity Risk? - Longevity risk refers to the financial risk that arises when people live longer than expected, particularly in the context of insurance policies. The longer people live, the more money life insurers must pay out in benefits.

The Growing Longevity Trend - life expectancy worldwide has steadily increased over the past several decades. For example, in 2020, the average life expectancy was 78.8 years in USA, a significant jump from 69.7 years in 1950. This trend means that life insurers are now obligated to pay benefits for a longer period than originally predicted.

But it's not just life expectancy that's increasing. The number of people living well past 100 is also growing, creating an entirely new category of risk for insurers. The World Health Organization predicts that the number of people aged 100 years and older will increase tenfold by 2050.

The Solvency Dilemma - Solvency is a critical concept for any insurer, as it refers to the company's ability to meet its long-term obligations to policyholders. When life expectancy increases, insurers face a unique problem: they may not have enough capital reserved to pay for longer-than-expected lifespans.

Underestimating the Cost of Longevity - One of the things that stood out is the frequency of actuaries adjusting their mortality assumptions. During the initial stages of the company's operations, life expectancy models were based on data that didn’t factor in the recent improvements in healthcare, nutrition, and technology. Insurers were often caught off guard when a larger-than-expected number of policyholders reached their 90s or 100s. In hindsight, insurers realized that many long-term policies were not priced high enough to cover this risk.

Regulatory Implications - In addition to internal solvency concerns, life insurers must meet strict capital requirements set by regulators. According to the National Association of Insurance Commissioners (NAIC), insurers must hold reserves sufficient to cover expected payouts. With longevity risk increasing, insurers may need to boost their reserves, which could tie up capital that could otherwise be used for investment or business expansion.

Longevity Risk Management Strategies - While it’s clear that longevity risk poses a major solvency threat, insurers are developing strategies to mitigate this risk. Here are a few ways they're tackling the problem:

Adjusting Mortality Assumptions - Life insurers often rely on actuarial tables to predict the likelihood of policyholders reaching certain ages. By regularly adjusting these tables to account for rising life expectancies, insurers can better estimate their liabilities. According to the Society of Actuaries, updating these assumptions regularly is crucial for maintaining accurate risk assessments.

Diversification of Product Offerings - one of the most important strategies insurers implemented was diversifying its product portfolio. Insurers began offering products that addressed long-term care, critical illness, and annuity plans, which helped mitigate some of the risks associated with longevity. By offering products that span a range of lifespans, insurers can balance the higher risks of insuring elderly populations.

Reinsurance - Reinsuring part of the risk is another common strategy. Reinsurance allows insurers to share the financial risk of longevity with other companies. This not only helps with solvency but also reduces the impact of outlier events (e.g., a significant number of policyholders living exceptionally long lives). Reinsurance can be expensive, but it often offers an effective way to stabilize cash flow.

The Role of Technology in Longevity Risk - The role of data analytics and technology in managing longevity risk cannot be overstated. Advances in predictive modeling, artificial intelligence (AI), and big data have helped insurers better understand and forecast longevity trends.

Data and Predictive Analytics - By analyzing vast amounts of health data, insurers can predict lifespan with greater accuracy. For example, the University of Chicago recently released a study demonstrating how data-driven models could reduce the uncertainty associated with predicting life expectancy. The use of technology in underwriting and pricing life insurance is rapidly changing the landscape of the industry.

AI in Life Expectancy Predictions - AI algorithms have the ability to analyze patterns in data that would otherwise go unnoticed by traditional methods. For example, AI can identify genetic factors or environmental influences that may impact life expectancy. Insurers can use these insights to create more accurate, personalized insurance policies.

Balancing Longevity Risk and Profitability - So, what’s the solution to these challenges? How can life insurers manage longevity risk without compromising their financial stability? In my experience, sustainability and innovation are key. Insurers need to evolve with the times and adopt new technologies and risk management strategies that align with longer lifespans.

A Changing Mindset - While the increasing life expectancy may seem daunting, it’s important to note that life insurers can still thrive by adapting their business models. The key is forecasting future trends and preparing for long-term shifts in demographics. Companies that are proactive, rather than reactive, will continue to succeed in a rapidly changing environment.

Conclusion - Longevity risk solvency is a significant concern for life insurers in today’s world. As life expectancy rises, insurers must adjust their risk models and strategies to maintain financial stability. By updating mortality assumptions, diversifying product offerings, and embracing technology, insurers can mitigate the risks associated with longer life spans.