Posts Tagged ‘insurer’
Old Mutual May Pay Special Dividend of $0.24 a Share, SBG’s Ketola Says
January 1, 2012
Old Mutual Plc (OML), the third-biggest
U.K. insurer, may pay a special dividend of at least 15 pence
per share and its shares could rise next year following the sale
of Nordic units, according to Risto Ketola, an analyst at
Standard Bank Group Ltd.’s SBG Securities.
“We argue for a 15 pence, or 2 rand, special dividend and
that remains our view,” Ketola said in an e-mailed response to
questions on Dec. 21. He commented following the sale of Old
Mutual’s Nordic unit to Skandia Liv for 2.1 billion pounds ($3.3
billion) and its disposal of the Finnish unit of Skandia Life
Assurance Co. Ltd. to Finland’s banking co-operative, the OP-
Pohjola Group, for an undisclosed amount.
Ketola increased his 12-month price target to 190 pence,
with the insurer having traded at 111 pence on Dec. 14, the day
before the Skandia Liv deal was announced. The shares rose 1.9
percent to 132.7 pence at 10:11 a.m. in London trading today.
Of seven analysts surveyed by Bloomberg, the mean estimate
for a special dividend was more than 17 pence, with the highest
forecast almost 27 pence. Old Mutual’s price could rise to 200
pence per share, according to the highest of the 12-month price
targets by seven analysts in data compiled by Bloomberg. The
mean price estimate is 162 pence, a level the insurer hasn’t
seen for four years.
Old Mutual will update the market on the special dividend
in a circular in February, spokesman William Baldwin-Charles
said by phone today, without disclosing details on the size of
the payout.
London Listing
Old Mutual, Africa’s largest insurer, moved its primary
listing to London in 1999 as part of a plan to expand globally.
In the past decade the 166-year old company opened businesses in
the U.K., the U.S., the Nordic region and Asia. Ventures in the
U.S. and the Nordic region have since been sold, while Asian
expansion has been curtailed. Julian Roberts, who was promoted
from chief financial officer to CEO in 2008, aims for the group
to pay off 1.5 billion pounds of debt and achieve a return on
equity of 15 percent at its units by the end of next year.
Analysts are divided on the size of the special dividend
because Old Mutual may have the opportunity to increase its debt
repayments following the sales announced this month. Morgan
Stanley (MS) analysts expect Old Mutual to increase repayments by a
further 500 million pounds to a total of 2 billion pounds while
Ketola said the insurer is likely to retain debt.
Debt Obligations
“We do not subscribe to the view that Old Mutual will
substantially pay down all of its debt,” Ketola wrote in a note
on Dec. 17. “We assume Mutual will retain debt of around 1.2
billion pounds which means only 500 million pounds of proceeds
from Nordic sale will be used to supplement the existing debt
reduction program. Of the remaining cash inflow we expect just
over half to be directed to a special dividend.”
Old Mutual will reassess its debt repayment plan, Baldwin-
Charles said today. Markets are “uncertain,” he added, echoing
institutions like Swiss Life Holding AG (SLHN) and Aviva Plc (AV/), the
U.K.’s second-biggest insurer by market value, which are
conserving capital.
A special dividend will help Old Mutual’s black
shareholders in South Africa pay down their own debt, according
to Ketola. The insurer financed the sale of a stake in the
company to a group of black investors in 2005 as part of the
country’s empowerment initiatives, which aim to make up for
discrimination suffered during the apartheid era. A decrease in
Old Mutual’s debt obligations outside South Africa and excess
cash may also prompt further action, analysts said.
Nedbank
Last year, Old Mutual tried and failed to sell its stake in
South African lender Nedbank Group Ltd. (NED) to the U.K.’s HSBC
Holdings Plc (HSBA) to reduce debt. While this may still be part of the
insurer’s strategy, “an alternative and now-viable option, and
one we found to be favored by the majority of South Africa
shareholders on our recent visit, is to dispose of the ex-South
Africa businesses and retain Nedbank,” Gordon Aitken, analyst
at RBC Capital Markets, wrote in a note on Dec. 15.
Old Mutual is the best-performing stock on the five-member
FTSE/JSE Africa Life Assurance Index this year, having risen 31
percent. It is the second-based performing share on London’s
eight-member FTSE 350 Life Insurance Index (F3LIFE) after St. James’s
Place Plc.
To contact the reporter on this story:
Renee Bonorchis in Johannesburg at
rbonorchis@bloomberg.net
To contact the editors responsible for this story:
Frank Connelly at fconnelly@bloomberg.net
Edward Evans at eevans3@bloomberg.net
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Posted in Life Assurance Information | 
Tags: asian expansion, debt, finnish unit, insurer, ketola, Life Assurance, Old, old mutual plc, pence, price target, price targets, standard bank group, william baldwin
Old Mutual Agrees to Sell Its Finnish Operations to Skandia Life Assurance
December 24, 2011
Old Mutual Plc (OML), the third-biggest
U.K. insurer, rose to its highest in Johannesburg since before
the 2008 global financial crisis after saying it will sell the
Finnish unit of Skandia Life Assurance Co. Ltd. to Finland’s
banking co-operative, the OP-Pohjola Group, to cut debt.
Old Mutual rose as much as 2.1 percent and closed 0.7
percent higher at 16.81 rand in Johannesburg, its highest close
since June 2008. In London, the stock added 0.8 percent to 130.4
pence as of 3:23 p.m.
“The transaction is part of Old Mutual’s commitment to
streamlining its business,” the London-based insurer said in a
statement today. The Finnish unit had gross assets of 1.3
billion euros ($1.7 billion) at the end of September, Old Mutual
said, without disclosing the sale price.
On Dec. 15 Old Mutual, founded in South Africa in 1845,
announced the sale of its Nordic unit to Skandia Liv for 2.1
billion pounds ($3.3 billion). The cash sale of Skandia
Insurance Co. Ltd. included Old Mutual’s long-term savings and
banking operations in Sweden, Denmark and Norway, while
excluding the Finnish business. Old Mutual, Africa’s biggest
insurer, bought Skandia AB in June 2006 for 56 billion kronor
($8 billion) to enter Scandinavia and bolster sales in the U.K.
“Skandia Finland is small, but if you add that to the
Nordic sale, it will now enhance the special dividend payable to
shareholders,” Patrice Rassou, head of equities at Sanlam
Investment Management in Cape Town, said in an e-mailed response
to questions. “Old Mutual (OML) is now definitely enhancing value,
and it’s hard to justify the large discount to embedded value.”
To contact the reporter on this story:
Renee Bonorchis in Johannesburg at
rbonorchis@bloomberg.net
To contact the editors responsible for this story:
Frank Connelly at
fconnelly@bloomberg.net;
Edward Evans at
eevans3@bloomberg.net
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Old Mutual Agrees to Sell Its Finnish Operations to Skandia Life Assurance
December 21, 2011
Old Mutual (OML) Plc, the third-biggest
U.K. insurer, rose to its highest in Johannesburg since before
the 2008 global financial crisis after saying it will sell the
Finnish unit of Skandia Life Assurance Co. Ltd. to Finland’s
banking co-operative, the OP-Pohjola Group, to cut debt.
Old Mutual rose as much as 1.4 percent and traded 1 percent
higher at 16.86 rand as of 11:03 a.m. in Johannesburg, its
highest intraday level since June 2008. In London, the stock
added 1.5 percent to 131.3 pence.
“The transaction is part of Old Mutual’s commitment to
streamlining its business,” the London-based insurer said in a
statement today. The Finnish unit had gross assets of 1.3
billion euros ($1.7 billion) at the end of September, Old Mutual
said, without disclosing the sale price.
On Dec. 15 Old Mutual, founded in South Africa in 1845,
announced the sale of its Nordic unit to Skandia Liv for 2.1
billion pounds ($3.3 billion). The cash sale of Skandia
Insurance Co. Ltd. included Old Mutual’s long-term savings and
banking operations in Sweden, Denmark and Norway, while
excluding the Finnish business. Old Mutual, Africa’s biggest
insurer, bought Skandia AB in June 2006 for 56 billion kronor
($8 billion) to enter Scandinavia and bolster sales in the U.K.
“Skandia Finland is small, but if you add that to the
Nordic sale, it will now enhance the special dividend payable to
shareholders,” Patrice Rassou, head of equities at Sanlam
Investment Management in Cape Town, said in an e-mailed response
to questions. “Old Mutual is now definitely enhancing value,
and it’s hard to justify the large discount to embedded value.”
To contact the reporter on this story:
Renee Bonorchis in Johannesburg at
rbonorchis@bloomberg.net
To contact the editors responsible for this story:
Frank Connelly at
fconnelly@bloomberg.net;
Edward Evans at
eevans3@bloomberg.net
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Non-life insurance firms suffer slump in overseas markets
December 18, 2011
Korea’s six non-life insurance companies saw their earnings in overseas markets drop by 52.2 percent on a year-on-year basis, due mainly to natural disasters and lax risk management.
Overseas operations of three companies have led the fall in net profit. They were Samsung Fire Marine, Korea Re and LIG Insurance, according to the Financial Supervisory Service.
Samsung Fire Marine’s overseas unit reported a net profit of $5.43 million during the April and September period, a drop of $3.91 million from $9.34 million over the same period in 2010.
Korean Re, which recorded a profit of $6.03 million between April and September last year, posted a net loss of $1.8 million during the same period of 2011.
LIG Insurance also reported a loss of $1.62 million this year, compared to $220,000 in profit a year earlier.
Their sharp drop in earnings was attributable to floods in Australia and an earthquake in New Zealand, the FSS said.
But regulator officials said it is necessary for the non-life insurance firms to continue making inroads into foreign markets, citing the saturated domestic market.
“Earnings of overseas units of Korea’s non-life insurance companies account for only 0.5 percent,” an FSS official said. “Further, relatively weak risk management in foreign markets caused the heavy drop in earnings.”
In coordination with the International Association of Insurance Supervisors, the FSS is providing the local companies with detailed information on overseas markets.
As an example, Samsung Fire, which holds about 30 percent of the Korean non-life insurance market, has been active in tapping the Chinese market over the past few years.
The advancement into China is part of the insurer’s globalization strategy.
The initiative was taken by CEO Chi Dae-sup, who took office in 2008 armed with a determination to make inroads into overseas markets.
He said at his inauguration that non-life insurance businesses cannot survive by focusing only on the domestic market.
The insurer’s initial strategy was to target Korean residents and resident employees working in cities such as Beijing, Shanghai and Tianjin.
As the business aimed at Koreans residing there proved to be successful, the insurer is considering marketing more generally.
Samsung Fire’s first overseas office was set up in 1978 in London, the world’s capital of the insurance industry. Seven years later the company opened an office in New York, followed by others in Tokyo, Ho Chi Minh City, Beijing and Jakarta.
By Kim Yon-se (kys@heraldm.com)
Posted in Life Assurance Information | Tags: financial supervisory service, floods in australia, globalization strategy, insurance, insurance businesses, insurer, international association of insurance supervisors, Life Assurance, life insurance companies, life insurance market, lig insurance, office, profit
Life insurance process bares all
December 17, 2011
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How does an insurer decide whom to accept for life-insurance coverage?
Insurers use the “underwriting” process: The applicant’s health history and current medical condition are evaluated by physicians, and the person’s hobbies and publicly available information, such as driving and criminal records, are assessed. The goal is to ascertain the level of risk that the applicant represents for the insurer. Based on these assessments, the insurer decides whether to insure the applicant and, if so, at what price.
The information can be gathered from a variety of sources. Most applications require that a paramedic examination, something like a regular check-up, be performed on the applicant at the insurer’s expense. The paramedic usually arranges to meet the applicant at work or at home and usually spends less than an hour. The paramedic will compile a medical history and conduct cursory screening, including collecting blood and urine samples, taking the person’s blood pressure and recording pulse, height and weight.
The applicant also is required to sign an authorization permitting the release of his or her medical records from physicians, clinics, hospitals and any other medical providers. These records will contain information about any critical conditions in the applicant’s past and current health status.
Driving records also are obtained and examined for any recent, dangerous infractions such as reckless driving, driving under the influence of alcohol or drugs, too many speeding tickets, and the like.
All this information can lead to different conclusions by different insurers. While one insurer may add charges — or even turn down the applicant altogether — because of a previous cancer or atrial fibrillation, another insurer may consider that applicant’s particular case low-risk enough that an extra charge isn’t needed.
Some medical conditions can be temporary. If an insurer requires an extra charge because of a certain health issue, it will in some cases reassess the situation after a year or two and possibly remove the charge if the condition has improved. This reassessment usually includes getting current medical records. In some cases the insured will have to pay the physician’s charge for providing those records. Some physicians waive their normal charge if the patient requests the records.
It’s important to note, however, that if a person’s health or other underwriting characteristics deteriorate after the policy has been issued, the insurer cannot come back and raise the rates down the road.
Sometimes an applicant’s personal physician will disagree with the underwriter about the seriousness of a given condition. But the personal physician is more concerned with current morbidity and can adjust his or her opinion and treatment in the future if the condition changes. The underwriter is concerned about long-range mortality and has one shot at getting it right because there is no going back for a re-rating after the policy has been issued. These two perspectives can lead to differing conclusions.
J. Brendan Ryan is a Cincinnati insurance agent. He can be contacted via email at
jbryanclu@aol.com
.
New China Life Insurance Jumps in Shanghai Debut as Asian Stocks Rise
December 17, 2011
New China Life Insurance Co. jumped
in its Shanghai trading debut after offering shares at a lower
valuation than its biggest rival and as Asian equity markets
rebounded from three days of losses.
Shares in the nation’s third-largest life insurer surged 14
percent from its initial public offering price to close at 26.44
yuan. The stock rose 2.7 percent to HK$26.40 in Hong Kong,
following a 9.8 percent slump in its debut in the city yesterday.
The Beijing-based insurer raised $1.9 billion this month after
pricing the shares near the bottom of a marketed range.
New China Life yesterday had the worst debut among Hong
Kong IPOs of at least $1 billion since June, according to data
compiled by Bloomberg. The MSCI Asia Pacific Index advanced 0.8
percent today as better-than-expected U.S. data signaled the
world’s biggest economy is strengthening.
“New China Life’s IPO price values it at a level cheaper
than China Life, which has the most similar business structure”
among the nation’s major insurers, said Qiu Peng, a Shanghai-
based investment manager at Western Securities Co., referring to
the companies’ focus on life insurance. Trading data show that
“some institutional investors are buying, as they probably
believe that insurers have been oversold.”
Lower Valuation
New China Life set its Shanghai IPO price at 23.25 yuan,
near the bottom of 23 yuan to 28 yuan range to investors,
offering the stock at about 1.2 times estimated 2011 embedded
value, according to Qiu. Its biggest rival China Life Insurance
Co. (601628) trades at about 1.5 times, he said.
China Life has fallen 21 percent in Shanghai this year
while Ping An Insurance (Group) Co., the nation’s second-largest
insurer, tumbled 36 percent, after premiums growth slowed as the
nation’s economic expansion cooled.
The benchmark Shanghai Composite Index (SHCOMP) climbed 2 percent
today after six days of declines, on speculation the government
will loosen credit curbs as decelerating growth in exports
threaten to deepen the economic slowdown.
New China Life is raising more equity after its expansion
in a market that has grown an average 30 percent a year during
the past three decades brought its solvency ratio, a gauge of
its ability to settle claims, below regulatory requirements. It
sold 358.4 million shares at HK$28.50 each in Hong Kong and
158.5 million shares at 23.25 yuan apiece in Shanghai.
Companies including Haitong Securities Co. canceled or
reduced first-time offerings in the past week as global economic
concerns sapped demand for equity.
–Zhang Dingmin. Editors: Linus Chua, Malcolm Scott
To contact the Bloomberg News staff for this story:
Zhang Dingmin in Beijing at
Dzhang14@bloomberg.net
To contact the editor responsible for this story:
Andreea Papuc at
apapuc1@bloomberg.net
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New China Life Insurance Seen Having Lackluster Shanghai Debut
December 16, 2011
SHANGHAI (Dow Jones)–New China Life Insurance Co. (601336.SH), the country’s fourth-largest life insurer by premiums, which raised US$1.89 billion in a recent share sale, looks set for a lackluster debut in Shanghai on Friday following its dismal first-day performance in Hong Kong.
The insurer completed its initial public offering in both Shanghai and Hong Kong last week. It was the world’s biggest since Chinese hydropower-station builder Sinohydro Group Ltd. (601669.SH) raised US$2.1 billion in an Shanghai IPO in September.
Its Hong Kong-listed H shares ended at HK$25.7 on their debut Thursday, down 9.8% …
Irish insurer deploys new BI system
December 2, 2011
December 01, 2011, 8:10 AM — Pensions and life assurance provider Irish Life is aiming to improve decision making with a new business intelligence platform.
Irish Life is using the Tableau Software system to graphically represent data across the organisation, improve decision-making and map patterns and trends in a clearer way. There are plans to roll out new BI dashboards to up to 300 users in early 2012, it said.
Working with Tableau Software partner MXI Computing Ltd, the dashboards are currently accessible to business executives, account managers and the CEO. The “primary focus of the tool is to improve the sales pipeline and customer service management, but also to better control business retention”, said Irish Life.
Gerry Hassett, CEO at Irish Life Retail, said: “We can see that the return on investment is already being delivered. We can now see what is happening on a day-to-day and week-to-week basis, which means we can develop our business accordingly and further enhance our competitive edge.”
Irish Life wanted the ability to produce the information clearly in dashboards, in PDF formats, and on the web and mobile devices. Mobile users will eventually be able to browse content, access favorite reports and quickly collaborate on their devices.
IBM recently warned of a major data analysis problem among big businesses, with many unable to interpret over 90% of their information, claimed Big Blue. The advent of BigData, cloud computing and mobile data access were complicating matters, it said.
New China Life Seeking Up to $2.3 Billion in Initial Offering
November 29, 2011
November 29, 2011, 12:36 AM EST
By Fox Hu and Zijing Wu
Nov. 29 (Bloomberg) — New China Life Insurance Co., the insurer backed by Zurich Financial Services AG, plans to raise as much as $2.3 billion in an initial public offering in Hong Kong and Shanghai, according to terms for the transaction.
The insurer is offering 358.4 million shares at HK$28.20 ($3.62) to HK$34.33 apiece in the Hong Kong portion of the IPO, the stock sale document shows. New China Life may sell 158.5 million shares in Shanghai, the company said this month. The Shanghai offering would raise 4.5 billion yuan ($698 million), based on the same pricing as the Hong Kong sale.
Companies are planning to sell as much as $7 billion of new shares in Hong Kong before the end of 2011, betting on a revival in investor appetite after the value of IPOs slumped almost 70 percent this year. Chow Tai Fook Jewellery Group Ltd., which is seeking to raise up to $2.8 billion, received bids for all the stock available to money managers in its first day of order taking yesterday, people with knowledge of the matter said.
New China Life plans to sell almost half of the Hong Kong portion of its IPO, or $780 million of stock, to so-called cornerstone investors including Great Eastern Holdings Ltd. and Malaysia’s sovereign wealth fund, people familiar with the matter said yesterday. The company plans to start trading in Hong Kong on Dec. 16, the terms show.
The insurer is seeking funds to bolster its capital, according to the terms, after shares in major Chinese rivals plunged on declining solvency ratios. China Life Insurance Co. and Ping An Insurance (Group) Co., the country’s two biggest insurers, have both fallen about 38 percent in Hong Kong trading this year.
PICC Rights Offer
Chen Wenhui, deputy chairman of the China Insurance Regulatory Commission, said this month that sources of “capital replenishment” for insurers are “limited” and that the country should allow companies in the industry to sell subordinated bonds. PICC Property and Casualty Co. today announced plans to raise 5 billion yuan through a rights offer.
Central Huijin Investment Ltd., a unit of China’s sovereign wealth fund, is New China Life’s biggest shareholder with a 38.8 percent stake. Zurich Insurance Co., a unit of Zurich Financial, is the third-biggest investor with a 15 percent holding, according to a Nov 11 filing from New China Life.
Companies have raised $15.9 billion this year via Hong Kong IPOs, compared with $49.1 billion for the same period last year, according to data compiled by Bloomberg. The most recent listing, HKT Trust, the telecommunications business of PCCW Ltd., rose to HK$4.55 as of 10:38 a.m., after debuting at HK$4.53.
BNP Paribas SA, China International Capital Corp., Deutsche Bank AG, Goldman Sachs Group Inc. and UBS AG are among banks arranging New China Life’s IPO.
–Editors: Mohammed Hadi, Philip Lagerkranser
To contact the reporters on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net; Zijing Wu in London at zwu17@bloomberg.net
To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net
Genworth Advances as Citigroup Says Solvency Not Threatened
November 29, 2011
November 28, 2011, 7:48 PM EST
By Andrew Frye
(Updates share price in the second paragraph.)
Nov. 28 (Bloomberg) — Genworth Financial Inc. posted the biggest gain in the Standard Poor’s 500 Index after Citigroup Inc. upgraded the insurer for the second time this month on the prospect that the company can withstand mortgage-related losses.
The insurer advanced 13 percent to $6.07 at 4:01 p.m. in New York. Colin Devine, a Citigroup analyst, raised his rating on Richmond, Virginia-based Genworth to “buy” from “neutral” in a note today. He had a “sell” rating from August 2009 until Nov. 11, according to data compiled by Bloomberg.
Genworth, the life insurer and mortgage guarantor, may use a public offering to sell as much as 40 percent of the Australian unit backing home loans, the company said Nov. 3. Losses on U.S. mortgage insurance contributed to Genworth’s stock slide of more than 50 percent this year and the bankruptcy of rival PMI Group Inc.
“The market appears to be overly discounting the possibility of bankruptcy risk for Genworth,” Devine wrote. “While the risk of continued mortgage insurance losses in the U.S., Canada and Australia remains high, as do earnings pressures on the domestic insurance businesses from low interest rates, we believe these factors are overly discounted into the current valuation and that insolvency is not a legitimate threat.”
–Editors: Dan Kraut, Rick Green
To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net
To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net