M&A deals to further consolidate

Thailand insurance premium growth sluggish in 2021

THAILAND

Insurers were shielded from higher losses by sound capitalisation

Fitch Ratings revealed that the Thailand insurance premiums will continue to experience slow growth in 2021, pressured by a weakened economy with higher household debt, coupled with the impact on distribution channels from social distancing measures and lockdowns in the third quarter.

Insurers were shielded from higher losses and downside risks by their sound capitalisation, well above the minimum regulatory requirement, Fitch said. The Office of Insurance Commission also provided additional liquidity support via capital-related waivers, for the insurers with weaker credit profiles and high COVID-19 claim volume.

The ratings firm said that the premium growth over the medium term continues to be driven by low penetration, an ageing population, higher medical costs, and taxreduction benefits.

Positive momentum

“We expect the risk on higher COVID-19 claim volume to be manageable, as pandemicrelated policies are relatively small in proportion to total market premium, including a positive momentum from the rise in the vaccination rate. Furthermore, we expect the premium via online channels to have significant growth, after the insurers implemented in full the digital platform in their business, which is accelerated by the pandemic and change in consumer behaviour,”

Large customer base, diversity in products and economies of scale will help the leading insurers retain their market share in 2021

M&A deals to further consolidate Singapore’s life insurance industry

SINGAPORE

Singapore’s life insurance industry is due for further consolidation in 2021 despite the top 10 insurers already accounting for 95% of the market share in 2020, the global analytics firm, GlobalData, said.

From 2017, the top 10 insurers increased their combined market share from 88% to 95% in 2020. This leaves 11 insurers to compete for the remaining 5%.

According to Swarup Kumar Sahoo, senior insurance analyst at GlobalData, recent mergers and acquisitions of some top insurers in Singapore will improve their market share this year.

“The merger of Singapore Life with Aviva will increase the market share of the combined entity to 9% in 2021. Similarly, the acquisition of AXA Insurance by HSBC will increase the market share of the combined entity to 3.6% and improve HSBC’s ranking from the 11th largest life insurer in 2020 to seventh-largest insurer in 2021,” Sahoo said.

Top 5 insurers

Sahoo added that the ranking of the top five life insurers in Singapore remained unchanged since 2016 with the Great Eastern Life and Prudential Assurance being the top two insurers in 2020.

Great Eastern Life is the largest player with a 25.5% market share in 2020. It was the only insurer amongst the top

Decreasing profitability due to market consolidation may prompt the smaller insurers to increase premium rate in the short term

five life insurers to register growth in market share which increased from 21.2% in 2019 to 25.5% in 2020. Its gross written premiums (GWP) grew by 42% in 2020 after facing a decline of 7% and 9% in the years 2018 and 2019, respectively.

Prudential Assurance is the secondlargest insurer with a 16.9% market share in 2020. The company’s market share declined from 18.6% in 2019 to 16.9% in 2020. However, in terms of GWP, the company registered a higher growth of 8% in 2020, as compared to 7% growth in 2019.

“Large customer base, diversity in products and economies of scale will help the leading insurers retain their market share in 2021. Decreasing profitability due to market consolidation may prompt the smaller insurers to increase premium rate in the short term,” Sahoo concluded.

Great Eastern Life had a 25.5% market share in 2020 (Photo from GreatEasternLife.com)