Welcome To Asia Pacific by iPMI Magazine Health and Medical Insurance Assistance News Magazine

Aon Benfield

Welcome to Asia Pacific A journey through the regionâ&#x20AC;&#x2122;s insurance and reinsurance markets

Risk. Reinsurance. Human Resources. 1

Introduction The Asia Pacific region is home to more than half the world’s population, with diverse societies, cultures, economies and regulatory regimes. As rapid economic development, population growth and urbanisation lead to increased insurance penetration, Asia Pacific represents a key area of growth in the global marketplace. In fact, Aon Benfield’s 2014 Insurance Risk Study listed five Asian markets in the top 10 of its Country Opportunity Index (COI), which identifies the world’s most promising property and casualty markets. They were chosen by analysts owing to their profitability, growth potential and relatively stable political environments. Singapore comes third in the list of 50 countries, immediately followed by Hong Kong, Malaysia and Indonesia. The new entrants to the top quartile are all in Asia Pacific: Hong Kong, China and Australia.

With many insurance and reinsurance companies already investing in this region and seeking to take advantage of the growth opportunities, an expert insight into these markets is crucial. Aon Benfield’s local teams have produced this guide as both an introduction to and exploration of sixteen key markets in Asia Pacific.

Markets

Topics • Demographics • Political & Terror Risk • Sovereign Rating and Outlook Korea (Republic of)

Pakistan

Japan

China

Hong Kong Taiwan India Thailand Vietnam Philippines Malaysia

• Major Risks • Top 5 Insurers • Non-life Insurance Penetration Rate • Industry Premiums Split by Line of Business • Industry Aggregate Premium and Trends

Brunei Singapore

• Capital Requirements

Indonesia

• Regulatory and Market Update Australia

• Foreign Ownership • Aon Benfield Outlook New Zealand

Data has been collated from major rating agencies, regulators, industry associations, IMF, World Bank, AXCO, Aon Risk Solutions, Aon Hewitt, and Aon Benfield. In addition, we have included our own views of each market’s major risks, regulatory & market updates, and market outlook. With a global fact base and broad access to local market practitioners, Aon Benfield is equipped to provide insight across a spectrum of lines, products, and geographies. Inpoint, the consulting division of Aon Benfield, helps insurers and reinsurers address these challenges, from sizing market opportunities to identifying distribution channel dynamics, assessing competitor behaviour, and understanding what it takes to compete and win. Our approach leverages Aon Benfield’s USD130 million annual investment in analytics, data and modelling to help our clients grow profitably.

Combined with Aon Benfield’s expertise and commitment to the region, we hope the guide will boost your understanding of the region and the available growth opportunities. Wherever available, or unless otherwise stated, premiums include numbers for non-life and personal accident & healthcare business written by non-life companies. Wherever Incurred Losses were not available, Loss Ratio was calculated on the basis of Paid Losses. Demographics refer to 2014 estimates (excluding Corporate Tax Rate as it is for the year 2014). 2013 GDP for Guam was not available, hence, excluded from the APAC insurance penetration calculation.

Gold Coast 4

Australia 5

Australia Top 5 Insurers

GDP – PPP (USD billions)

Industry Aggregate Premium 2009 to 2013

1,041.5

40000

GEP

Population (M)

Entity

23.5

QBE Insurance

GDP Per Capita – PPP (USD)

Insurance Australia

Group Ltd.

44,346

Suncorp Insurance

5yr Real GDP Growth (%)

Holdings Ltd.

4.3

Allianz Australia Ltd.

Unemployment Rate (%)

Wesfarmers Insurance Pty Ltd.

6.2

2013 GEP GEP

Gross Claims

UW result

(USD mn)

(AUD mn)

17,993.7

18,637.9

11,660.8

355.9

9,143.4

9,470.7

6,034.5

1,128.6

25000

8,036.9

8,324.6

6,276.8

580.5

20000

3,625.7

3,755.5

2,406.3

244.9

15000

1,618.1

1,676.0

1,066.6

158.0

2.3

30000

2009

2010

2011

Total Premium AUD million

Financial year ended in the 12 months to December 2013 Based on Gross Earned Premiums, including Non-life + PA & Healthcare Premiums

Inflation Rate (%)

35000

2012

2013

Total Premium USD million

Excluding PA & Healthcare premiums

2013 Insurance Penetration - Non-life GWP vs. GDP

*Corporate Tax Rate (%)

Foreign Ownership

Australia Prem: GDP = 2.3%; APAC Prem: GDP = 1.4%

There are no material restrictions on foreign ownership. Subject to regulatory approval, foreign companies may acquire any percentage of a domestic company’s equity or may establish wholly owned subsidiaries or branches.

30.0

*as for year 2014 Low

Industry Premiums Split by Lines of Business

High

Political Risk

Credit Rating and Outlook Lines of

Terror Risk S&P Fitch

Aon Hewitt People Risk

Moody's Easiest

Hardest

AM Best

2013 GWP

Inc losses

Loss

Comb

*Y/Y

Rating

Outlook

business

USD mn

AUD mn

ratio %

growth %

AAA

Stable

Property

10,897.4

11,288.0

5,622.0

46.7

70.2

8.8

Stable

Motor

12,854.3

13,315.0

9,185.0

71.1

86.3

6.4

Workers Comp

1,695.2

1,756.0

1,143.0

68.0

81.9

10.6

Liability

3,581.6

3,710.0

2,260.0

62.8

85.2

4.8

Miscellaneous

5,068.3

5,250.0

2,006.0

41.6

67.0

7.5

34,096.9

35,319.0

20,216.0

57.7

77.8

7.3

AAA Aaa

Stable

CRT-1

World Bank relative ease of doing business

Industrywide Non-Life

*Growth % is based on premiums in local currency Excluding PA & Healthcare premiums

Major Risks

Capital Requirements

Underwriting Risk

Regulatory Risk

Given the consolidation of the insurance market in Australia, and a highly competitive environment most insurers are heavily focused on underwriting and risk selection. Increasingly the market is utilising external data sources to help refine underwriting decisions, with many companies exploring the use of Big Data analytics in their processes.

Since LAGIC was introduced in 2013 the Australian market has quickly adapted to the horizontal as well as vertical requirement of the solvency regulation. A benign catastrophe period, coupled with a competitive reinsurance market has meant that most insurers have been able to adapt to the new solvency requirement without the need for significant additional capital. The result being that the Australian market appears to have developed an equitable working relationship with the regulation as it currently stands.

Minimum capital requirement of 5m AUD is effective from 1 July 2002. Prudential Standards GPS 110 specifies that a regulated institution must ensure that it has a capital base, at all times, in excess of its Prudential Capital Requirement (PCR) which is intended to take account of the full range of risks to which a regulated institution is exposed, including insurance risk, insurance concentration risk, asset risk, asset concentration risk, and operational risk.

Foreign investments in Australia above a certain size must be approved by the Foreign Investment Review Board (FIRB). For nonUS investors, approval is required for the acquisition of a domestic company with assets in excess of AUD 244mn.

Aon Benfield Outlook Growth in the insurance market is relatively stable and broadly in line with natural inflation. With regards to reinsurance, catastrophe limits are increasing at a low single digit rate each year. Following the 2010/11 events, the market moved away from proportional business, however as reinsurers are searching for growth, there is an increased appetite to move back into proportional solutions. Reducing premium rates are putting margins under pressure and forcing firms to have a clear focus on expense management going forward. For insurers, the biggest challenge is the static market and the pressure to grow. Compounded by the oversupply in the market this will see insurers having to revisit and (re)define their value proposition and their “reason for being”. The biggest challenge for reinsurers in Australia is to try and remain relevant to the well capitalised main reinsurance purchasers, as well as keeping their diversifying exposures in Australia aligned to the capacity they are deploying in the peak zone globally. There is a large emphasis on Big Data, and how to exploit data to better understand risk, better price / select risk and tailor products and distribution.

Regulatory and Market Update Australian Prudential Regulation Authority (APRA) released a package that harmonizes and enhances its current risk management requirements. The package includes the final cross-industry Prudential Standard CPS 220 Risk Management, a proposed prudential practice guide on risk management, and a response paper that addresses submissions received by APRA on the CPS 220 consultation package released in May 2013. APRA is also releasing an amended Prudential Standard CPS 510 Governance (CPS 510) to ensure that governance requirements related to risk management are aligned with those of CPS 220. The new Prudential Standard CPS 220 Risk Management (CPS 220) and amended Prudential Standard CPS 510 Governance (CPS 510) are to take effect from 1 January 2015. Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, Australian Prudential Regulatory Authority, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

Sultan Omar Ali Saifuddin Mosque in Bandar Seri Begawan 8

Brunei 9

Brunei Top 5 Insurers

GDP – PPP (USD billions)

Industry Aggregate Premium 2009 to 2013

23.2

2013 GWP

Population (M)

Entity

0.4

National Insurance Co. BHD

20.3

25.5

35.0

Audley Insurance Co. SDN BHD

15.1

18.9

26.0

Standard Insurance SDN BHD

8.9

11.2

15.4

6.1

7.6

10.5

4.4

5.5

7.6

GDP Per Capita – PPP (USD) 56,287

USD mn

BDN mn

Market Share %

Singapore Ltd. MBA Insurance Co. SDN BHD

3.8

Tokio Marine Insurance

5yr Real GDP Growth (%)

Excluding PA & Healthcare Premiums

Unemployment Rate (%)

2.7

2013 Insurance Penetration - Non-life GWP vs. GDP

Inflation Rate (%)

20.0

*as for year 2014

2013 GWP

Lines of High

Political Risk

Credit Rating and Outlook

Hardest

Loss

Comb

*Y/Y

ratio

growth

USD mn

BND mn

BND MN

Property

9.5

11.9

7.7

64.9

105.7

-0.1

2.4

3.0

0.1

3.2

8.5

1234.5

Rating

Outlook

S&P

—

Motor

11.2

14.1

4.2

29.5

48.4

15.4

Fitch

—

Workers Comp

8.9

11.1

2.8

24.8

65.5

15.3

Moody's

—

Liability

6.0

7.6

0.5

7.2

14.5

157.8

AM Best

CRT-4

0.3

0.4

0.0

-7.3

3.6

-9.4

Miscellaneous

14.0

17.6

1.0

5.8

16.6

-12.3

MAT

5.7

7.1

0.9

12.6

21.1

-15.9

58.1

72.7

17.1

23.6

44.6

10.5

Terror Risk Aon Hewitt People Risk

Paid claims

business

Construction

World Bank relative ease of doing business

& Engineering

Surety, bonds & credit

Industry-wide

Major Risks

Non-Life

2011

2012

2013

Total Premium USD million

Foreign ownership is not restricted or discriminated against under The Insurance Order 2006 and Insurance Regulations 2006.

Industry Premiums Split by Lines of Business

*Corporate Tax Rate (%)

Easiest

2010

Foreign Ownership

Brunei Prem: GDP = 0.4%; APAC Prem: GDP = 1.4%

0.5

Low

2009

Total Premium BND million

Incorporated foreign companies wishing to establish a place of business in Brunei are required to register under Section 299 of the Companies Act.

Aon Benfield Outlook The potential for any significant growth in Brunei is low due to a small economy, a heavy dependency on finite oil and gas reserves and a small number of insurers in the market. The contingency fee act has increased the number of motor third party bodily injury claims going to court, many of which are grossly inflated, deterring any foreign or new local firms from investing into the market. There is also a high level of direct commission at around 60%, and no culture of buying insurance aside from the compulsory motor insurance. Reinsurance is mostly done through the facultative market as there is very little appetite from treaty reinsurers.

*Growth % is based on premiums in local currency Excluding PA & Healthcare premiums

Litigation Risk

Capital Requirements

The Legal Profession (Contigency Fee) Act 1994 has incentivised law firms to encourage clients to go to court to seek compensation for motor vehicle or occupational injury accidents. A contentious motor liabilty case is more likely to go to court in Brunei than in any other country in South-East Asia, many of which at grossly inflated compensation demands.

The Insurance Order 2006 and Insurance Regulations 2006 require life and non-life insurers to keep the minimum paid-up capital of 8m BND with a minumum deposit set at 1m BND to be maintained with Monetary Authority of Brunei Darussalem. The capital requirements for Takaful operators are the same. Insurers established or incorporated outside Brunei who do not have local share capital are required to maintain in Brunei a surplus of assets over liabilities of an amount not less than the requirement for the minimum paidup capital of an insurer incorporated in Brunei.

Regulatory and Market Update

Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, the General Insurance Association of Brunei, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

In February 2014, the Brunei Insurance and Takaful Association (BITA) announced that the new guidelines covering the management of agents are to be introduced for the takaful sector. These will include the regulation of commission rates and the qualifications necessary for an agent to be authorised to sell takaful products. The proposed guidelines are subject to review and approval by the Monetary Authority of Brunei Darussalam (MABD). 11

The Great Wall of China 12

China 13

China Top 5 Insurers

GDP – PPP (USD billions)

Industry Aggregate Premium 2009 to 2013

14,625.2

2013 GWP

Population (M)

Entity

1,367.5

PICC Property & Casualty Co. Ltd.

GDP Per Capita – PPP (USD)

Ping An Property & Casualty Insurance Co.

10,695.0

China Pacific Property

5yr Real GDP Growth (%)

Insurance Co. Ltd.

10.2

China Life Property & Casualty Ins. Co. Ltd.

Unemployment Rate (%)

Loss

Comb

USD mn

CNY mn

Share %

ratio %

35,993.2

223,005.0

34.4

66.2

95.3

18,620.0

115,365.0

17.8

60.4

93.7

13,172.4

81,613.2

12.6

66.0

98.6

5,140.4

31,848.5

4.9

64.3

98.9

4,795.5

Insurance Co.

29,711.5

4.6

63.6

96.8

2013 Insurance Penetration - Non-life GWP vs. GDP China Prem: GDP = 1.1%; APAC Prem: GDP = 1.4%

*Corporate Tax Rate (%) 25.0

Industry Premiums Split by Lines of Business

*as for year 2014 Low

High

Political Risk

Lines of

Credit Rating and Outlook

Aon Hewitt People Risk

Easiest

Hardest

USD mn

CNY mn

ratio %

Property

9,887.6

62,413.7

28,632.4

45.9

17.9

996.7

6,291.6

2,557.3

40.7

-14.8

AA-

Stable

& Engineering

Fitch

A+

Stable

Motor

63,522.0

400,972.1

219,759.2

54.8

16.2

Moody's

Aa3

Stable

Liability

2,866.2

18,092.5

7,253.7

40.1

23.6

3,963.2

25,017.1

7,622.7

30.5

49.5

177.2

1,118.8

153.5

N/A

-82.1

3,018.2

19,051.7

6,930.1

36.4

0.3

84,431.2

532,957.5

272,908.8

51.2

15.4

PA & Health

3,167.7

20,052.5

7,681.2

38.3

24.6

Grand Total

87,607.9

553,010.0

280,590.0

50.7

15.7

AM Best

CRT-3

Construction

Surety, bonds & credit Miscellaneous

Industry-wide Non-Life

Regulatory Risk

Financial Risk

Some major changes to the regulation will be introduced in the coming twelve months. These include 1) Chinese Risk Orientated Solvency System (C-ROSS) which directly impacts insurers’ capital adequacy and alters insurers’ reinsurance purchasing decisions and behavior (currently in consultation period), 2) motor market detarrification, which potentially impacts the profitability of the entire market, and 3) Agriculture pool which may affect the nature of agriculture reinsurance cessions.

GDP growth rate is slowing down in light of of the government’s intention to bring structural changes to the economy. Reform of the financial sector, particularly regulating the “shadow banks”, is increasingly attracting more attention and debate.

*Growth % is based on premiums in local currency. Industry premiums split by lines of business refer to 2012.

Capital Requirements Minimum capital required is 200m CNY, fully paid up in cash. Additional 20m CNY registered capital is required for every new branch (at the province level) opened, with the total required capital amount capped at 500m CNY. Insurers are required to keep solvency ratio not lower than 100%. The ratio is calculated as the company’s actual capital divided by minimum capital. Actual capital is defined as the difference between the company’s admitted assets and admitted liabilities. Minimum capital is based on the greater amount computed using the two methods of a) 18% of the last year’s premium up to 100m CNY plus 16% of the last year’s premium in excess of 100m CNY, in both cases net of ceded reinsurance and business tax, or b) 26% of the average of the last three years’ incurred claims up to 70m CNY plus 23% of the average of the last three years’ incurred claims in excess of 70m CNY, in both cases net of reinsurance recoveries.

Regulatory and Market Update Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, China Insurance Regulatory Commission, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

*Y/Y growth

S&P

Major Risks

However, at the country level, catastrophe insurance for residential risk is still not in place. Data and modeling continue to improve for these two major perils.

Loss

business

MAT

China is one of the most exposed countries to natural catastrophe perils. Earthquake risk of insurers portfolio is mainly driven by growing exposures in and around the capital of Beijing. Tropical Cyclone exposures are driven by accumulations along the Eastern Coast from Shanghai to Guangdong, which are the manufacturing and trading centers of China. Catastrophe risk continues to be a focus of the Regulator and Industry. Catastrophe risk insurance is still in an embryonic stage. Pilot catastrophe schemes have been launched in Shenzhen, Yunnan and Ningbo, Zhejiang province.

Paid claims

Outlook

World Bank relative ease of doing business

Catastrophe Risk

2012 GWP

Rating

Terror Risk

110,000

600,000

100,000

550,000

90,000

500,000

80,000

450,000

70,000

400,000

60,000

350,000

50,000

300,000

40,000

2009

2010

2011

Total Premium CNY million

2012

2013

30,000

Total Premium USD million

Qualitative Supervisory Requirements, and Market Discipline Mechanism. CIRC announced that the C-ROSS transition period began the same day the final version was published. Beginning 1Q 2015, insurers need to file solvency reports following expiring solvency system and C-ROSS separately. Regulatory decisions during the transition period are still based on the expiring solvency system. The transition period is open-end. CIRC will decide the switching date later, depending on how the transition goes.

Inflation Rate (%) 3.0

650,000

250,000

China United Property

4.1

Market

China Insurance Regulatory Commission (CIRC) published the finalized version of China Risk Oriented Solvency System (C-ROSS) in February 2015. C-ROSS has three supervisory pillars – Quantitative Capital Requirements,

In August 2014, China’s State Council issued “Opinions of the State Council on Accelerating the Development of Modern Insurance Industry” which emphasizes the importance of the insurance industry, sets the goals for the industry’s development, and identified key areas that need to be developed. In the last 12 months, CIRC has taken various measures to liberalize restrictions on insurers’ investment and on M&A. Catastrophe insurance is being experimented in multiple places, and CIRC disclosed its 3-step road map of building China’s catastrophe insurance system. Reform of ratemaking of Commercial Motor line will start in six selected provinces/cities in May 2015.

Foreign Ownership If 25 percent or more of a Chinese insurance company’s shares are held by foreign entities, the company is deemed to be foreign funded and is regulated by the Regulations on the Administration of ForeignInvested Insurance Companies. Companies below the 25% threshold are deemed to be domestic and are regulated by the Regulations for the Administration of Insurance Companies. In order to be considered for a branch, joint venture, or subsidiary license, foreign insurers must satisfy the conditions that it has been in business for over 30 years, set representative office in mainland China for at least two years, and has total assets of at least 5b USD.

Aon Benfield Outlook The China insurance and reinsurance market potential remains significant given low insurance penetration, continued growth of the economy, and most importantly, a clearly stated government desire to see the market continue to grow and diversify in its product offering. From a line perspective, significant growth has been achieved in recent years in the non-life sector such as Agriculture, Liability, and Credit – mostly due to government incentives and guidance. Personal lines in China continue to be largely an untapped market, except Motor. Motor insurance is currently tariffed and generally provides for low volatility, high volume business, the majority of which is retained by insurers. As Motor accounts for over 70% of the GWP, the impending removal of this tariff will significantly impact the market. Specialty lines have generally performed better than Property and Engineering which continues to be a very competitive market. Leading insurers continue to differentiate themselves in a continually developing market and regulatory environment. The impact of C-ROSS remains unclear. However, C-ROSS marks a significant change in how regulatory capital is quantified in China and may result in significant changes in the local market in a positive manner. 15

Skyline of Hong Kong 16

Hong Kong 17

Hong Kong Top 5 Insurers

GDP – PPP (USD billions)

Industry Aggregate Premium 2009 to 2013

402.3

2013 GWP

Market

Loss

Comb

*Y/Y

USD mn

HKD mn

Share %

ratio %

growth %

Population (M)

Entity

7.3

AXA General

451.4

3,501.1

8.3

61.2

90.4

212.7

Zurich Insurance

337.2

2,615.0

6.2

42.6

86.1

14.9

Bupa

270.0

2,094.2

5.0

77.2

94.5

16.2

230.0

1,783.7

4.2

65.3

93.8

9.3

229.8

1,782.0

4.2

56.7

95.8

21.4

GDP Per Capita – PPP (USD) 55,026

BOC Insurance

5yr Real GDP Growth (%)

Group

5.6

China Taiping (HK)

6,000

40,000

5,000

35,000

4,000

30,000

3,000

25,000

2,000 1,000

20,000 2009

Unemployment Rate (%)

2010

2011

Total Premiums HKD million

3.1

2012

2013

Total Premiums USD million

2013 Insurance Penetration - Non-life GWP vs. GDP

Inflation Rate (%)

Hong Kong Prem: GDP = 2.0%; APAC Prem: GDP = 1.4%

Foreign Ownership

4.0 *Corporate Tax Rate (%)

There are no restrictions on foreign ownership. Foreign companies may acquire any percentage of the shares in an existing insurance company or establish branches or locally incorporated subsidiaries.

Industry Premiums Split by Lines of Business

16.5

*as for year 2014

Lines of

Low

business

High

Political Risk

Credit Rating and Outlook

Motor Aircraft

Aon Hewitt People Risk

Easiest

Hardest

2013 GWP

Inc. claims

Loss

Comb

*Y/Y

USD mn

HKD mn

ratio %

growth %

586.3

4,547.6

2,093.2

55.4

94.9

9.0

Any person who intends to acquire control of 15% or more of the voting power of a locally incorporated insurer must seek the regulator’s approval before making the acquisition.

2.8

22.1

7.6

85.4

115.1

9.4

Ships

241.8

1,875.2

840.1

70.0

96.3

5.0

Regulatory and Market Update

Stable

Goods in Transit

179.1

1,388.9

378.6

43.0

80.2

-4.7

AA+

Stable

Property

1,157.3

8,976.3

1,360.0

36.4

76.8

7.1

Moody's

Aa1

Stable

General Liability

1,419.6

11,010.5

4,732.0

61.9

92.3

15.6

AM Best

CRT-2

Pecuniary Loss

324.0

2,512.6

365.8

24.5

69.6

-11.8

23.3

180.9

108.2

64.9

75.6

3.8

In September 2014, Hong Kong Office of the Commissioner of Insurance (OCI) issued “Consultation on a Risk-based Capital Framework for the Insurance Industry of Hong Kong”. The proposed RBC regime will consist of three pillars: quantitative requirements, qualitative requirements, and disclosures and information transparency. The regime will be developed in four phases – development of framework and key approaches, development of detailed rules and conducting QIS, amendment of legislation, and implementation.

54.0

418.9

248.0

64.4

101.0

-1.3

3,988.3

30,933.0

10,133.5

52.5

87.6

7.4

1,400.8

10,864.6

5,623.9

64.8

88.8

4.3

5,389.1

41,797.6

15,757.4

56.3

88.1

6.6

Rating

Outlook

S&P

AAA

Fitch

Terror Risk

Non-Proportion-

World Bank relative ease of doing business

al Treaty Proportional Treaty

Major Risks

Industry-Wide Non-Life

Personal Accident &

Catastrophe Risk

Underwriting Risk

Regulatory Risk

Most local small & medium size insurers don’t have catastrophe reinsurance protection as Hong Kong is considered a low catastrophe market. The impending RBC change however should change the buying habit of insurers in order to meet the capital burdens imposed by regulatory requirements.

Insurers have mainly focussed on achieving top line growth at the expense of underwriting discipline, particularly on commercial risks. The competitive reinsurance market has enabled insurers to request for bigger capacity and wider coverage from reinsurers at lower costs.

Insurers are trying to prepare for the impending Independent Insurance Authority (IIA) and RBC changes which are due in 2015. However the market is still uncertain on how broad the regulation will be, and how the requirements will be phased into the market.

Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, Office of the Commissioner of Insurance, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

45,000

The Insurance Companies (Amendment) Bill 2014 was issued to the Legislative Council this year and is now being discussed at the Legislative Council. One of the changes envisioned in the bill is the establishment of the IIA. If the bill is approved, the IIA will take up regulatory responsibilities from the Office of the Commissioner of Insurance and the two broker trade bodies.

Healthcare Grand Total

*Growth % is based on premiums in local currency

Capital Requirements Minimum paid-up capital requirements are 10m HKD for a non-life company, 20m HKD for a non-life company writing the statutory class of business, 20m HKD for a compositive, and 2m HKD for a captive. Insurance companies must submit a three or five-year plan when they apply for authorisation. The applicant and the regulator agree how much capital they will need based on the business plan. This is normally much higher than the statutory minimum. An insurer shall maintain an excess of assets over liabilities of not less than a required solvency margin which is the greater of 1/5 of the relevant premium income up to 200m HKD plus 1/10 of the amount by which the relevant premium income exceeds 200m HKD, or 1/5 of the relevant claims outstanding up to 200m HKD, plus 1/10 of the amount by which the relevant claims outstanding exceeds 200m HKD, subject to the minimum paid-up capital requirements.

Aon Benfield Outlook Growth in the Hong Kong insurance market has varied by line of business, and has been driven by different forces across the industry. Poor results have driven growth in medical insurance; mega infrastructure projects have increased demand for Contractors All Risks (CAR) and Erection All Risks (EAR); and an increase in the number of vehicles sold and an increase in sum insured has created growth in the Motor insurance market. There is still some hesitation in the market around the objectives and proficiency of the IIA due to be established in 2015 and the process in which the new RBC requirements will be phased in. The increase in demand for new capital driven by the RBC solvency triggers could spur consolidation in the market, particularly among the small and medium size insurers. The government’s introduction of the Policy Holders Protection Fund (PHPF) and Health Protection Scheme (HPS) is seen as a positive move in the market and should lead to an increased insurance penetration rate.

Taj Mahal in Agra, Uttar Pradesh 20

India 21

India Top 5 Insurers

GDP – PPP (USD billions)

Industry Aggregate Premium 2009 to 2013

5,425.4

2013 GWP Entity

Population (M)

USD mn

New India

GDP Per Capita – PPP (USD)

United India Insurance

Assurance Co. Ltd.

Insurance Co. Ltd.

Insurance Co. Ltd. ICICI Lombard GIC Ltd.

6.3

ratio %

12,000

2,026.2

118,734.9

16.7

83.5

115.0

1,581.2

92,660.3

13.0

82.6

113.3

1,569.0

91,946.1

12.9

81.2

111.5

11,000

10,000

9,000

8,000

1,149.8

67,376.6

9.5

85.8

119.3

1,046.8

61,339.8

8.6

83.1

105.0

7,000

300,000

2009

2010

2011

Total Premium INR million

Inflation Rate (%)

2012

2013

6,000

Total Premium USD million

2013 Insurance Penetration - Non-life GWP vs. GDP

8.0

India Prem: GDP = 0.6%; APAC Prem: GDP = 1.4%

Regulatory and Market Update

*Corporate Tax Rate (%) 34.0

Industry Premiums Split by Lines of Business

*as for year 2014 Low

High

Political Risk

Lines of

Credit Rating and Outlook Rating

Terror Risk Aon Hewitt People Risk

Easiest

Hardest

Outlook

2013 GWP

Inc Losses

Loss

Comb

*Y/Y

business

USD mn

INR mn

ratio %

growth %

Property

1,247.2

73,087.0

28,460.2

59.6

64.8

23.9

436.6

25,586.5

5,492.5

39.8

28.2

8.8

Construction

S&P

BBB-

Stable

Fitch

BBB-

Stable

Motor

5,213.3

305,497.5

219,865.7

81.1

84.4

22.2

Moody's

Baa3

Stable

Liability

198.8

11,649.2

3,555.0

41.6

53.7

10.1

AM Best

CRT-4

1,564.8

91,696.2

37,713.7

69.4

65.9

20.2

539.2

31,594.2

10,367.1

60.3

68.8

3.5

9,199.8

539,110.6

305,454.2

74.0

76.5

19.8

World Bank relative ease of doing business

& Engineering

Miscellaneous MAT Industry-wide Non-Life

Major Risks

PA & Health

2,950.9

172,923.0

120,087.8

82.2

86.2

16.7

Grand Total

12,150.7

712,033.6

425,542.0

59.8

N/A

19.0

*Growth % is based on premiums in local currency

Catastrophe Risk

Underwriting Risk

Investment Risk

India is a country which has all natural catastrophe perils except for volcanic eruption. Typically there is a concentration of risks in the industrial belts which are susceptible to natural catastrophe events, particularly along the east coast which has a high cyclone risk.

As there is still a rush for top-line growth, original rates continue to drop despite many insurers claiming that the market has bottomed out. A few insurers are increasingly focussing on bottom-line growth, however they are still faced with pressures from their sales and marketing teams, who are working to targets. However, these insurers have a walk-away price or will turn down business if the client’s demands exceed their underwriting guidelines.

Apart from a small handful of insurers, the majority of the insurance firms have not made an underwriting profit for a number of years. Investment returns of around 9% have been the main source of profit for the market.

Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, Insurance Regulatory and Development Authority, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

13,000

400,000

Oriental

Unemployment Rate (%)

Share %

800,000

500,000

National

8.0

Comb

600,000

Ltd.

5yr Real GDP Growth (%)

Loss

700,000

1,259.7

4,307.0

INR mn

Market

Capital Requirements Minimum capital for direct insurance companies (life and non-life) of 1b INR and 2b INR for professional reinsurers. The “Required Solvency Margin” (RSM) shall be the maximum of the following amounts: a) 500m INR for direct non-life insurers, (1b INR for reinsurers), or b) a sum equivalent to 20% of net premium income, or c) a sum equivalent to 30% of net incurred claims.

Foreign Ownership Foreign ownership continues to be limited to a maximum of 26% in insurance companies. The Insurance Laws (Amendment) Bill 2008 containing proposals to raise the foreign ownership ceiling from 26% to 49% was expected to be made law in July by the new Indian government that came into power in mid-2014. However, due to some changes to the Bill (e.g. control of company to be retained by Indian management), it was sent for a further review and now is awaiting Parliamentary approval, which may come by mid-December.

In 2013, IRDA allowed banks to operate an insurance brokerage business and to sell products from multiple insurers in a bid to promote distribution. However, it has been reported in 2014 that the new model has not picked up as many banks have floated their own insurance subsidiaries or have tied up exclusively with one insurer. The IRDA has put off its plans for de-tariffing third-party Motor insurance, due to opposition from the public sector general insurers who fear they may be forced to take on most of the burden. Earlier in the year, the regulator increased the premium rates for private cars and two-wheelers by 9 to 20 percent, instead of its earlier proposed hikes of 26 to 137 percent. Third-party insurance, mandatory for every vehicle in India, is highly unprofitable claims ratio of around 140 percent and so, IRDA fixes tariffs to ensure that vehicles considered high-risk are not denied cover. On the investment side, insurance companies are now allowed to invest in new asset categories such as infrastructure debt funds, equity Exchange Traded Funds and Alternative Investment Funds. However, movement into these assets have been slow as the insurer’s fund sizes are smaller than those of other investors while the risks are higher.

Aon Benfield Outlook Despite a run of detarriffication policies in the market, double digit growth was still achieved driven mainly by Health and Motor lines. Motor third party liability is compulsory and the increase in premium is built into the tariff for this segment, all other Motor insurance has been detarrifed. Motor reinsurance is purchased mainly by private companies in the market with the public sector largely looking to run on a net basis. Original rates in the direct market continue to slide making the reinsurance purchase look increasingly expensive, regardless of the soft international market. The cost is creating challenges for companies to ensure they are buying sufficient protection, particularly among the Public Sector Undertakings (PSU). There is a real top line approach driving competition in the market, and with increasingly new entrants, this approach will soon start hurting balance sheets, especially when there is a correction in the market. There is a strong push to develop and utilise structured products to reduce costs and increase profitability. There are also current discussions taking place with the NDMA (National Disaster Management Authority) to develop a natural catastrophe relief product, which should increase industry awareness around the importance of catastrophe coverage.

Borobudur Temple in Yogyakarta, Java 24

Indonesia 25

Indonesia Top 5 Insurers

GDP – PPP (USD billions)

Industry Aggregate Premium 2009 to 2013

1,382.9

2013 GWP

Population (M)

Entity

251.5

*Y/Y

ratio

growth

331.6

3,927,957.0

9.1

35.8

98.0

4.1

318.2

3,768,773.0

8.7

41.3

83.0

12.6

Asuransi Astra Buana

258.2

3,057,894.0

7.1

48.0

105.0

8.8

Asuransi Central Asia

172.2

2,039,497.0

4.7

68.0

107.0

13.5

147.7

1,749,554.0

4.0

47.6

112.0

25.7

Asuransi Jasa

5,499.0

Indonesia

Asuransi Wahana Tata

Unemployment Rate (%)

Comb

ratio

IDR mn

GDP Per Capita – PPP (USD)

7.7

Loss

Share USD mn

Asuransi Sinar Mas

5yr Real GDP Growth (%)

Market

Excluding PA & Healthcare premiums

Inflation Rate (%)

2013 Insurance Penetration - Non-life GWP vs. GDP

6.3

Indonesia Prem: GDP = 0.3%; APAC Prem: GDP = 1.4%

Low

High

Political Risk

Credit Rating and Outlook

Aon Hewitt People Risk

Easiest

Hardest

2013 GWP

Inc Losses

Loss

*Y/Y

business

USD mn

IDR mn

ratio %

growth %

Property

998.6

11,828,507.0

1,496,268.1

35.3

9..5

117.5

1,391,862.0

247,222.9

39.6

3.6

Construction

Outlook

S&P

BB+

Stable

Motor

957.1

11,336,275.0

5,786,263.8

48.9

10.9

Fitch

BBB-

Stable

Miscellaneous

264.3

3,130,969.0

872,179.1

35.7

16.7

Moody's

Baa3

Stable

MAT

457.6

5,420,431.0

759,265.9

65.5

12.1

Others

852.2

10,094,554.0

N/A

3,647.3

43,202,598.0

N/A

AM Best

CRT-4

World Bank relative ease of doing business

& Engineering

Grand Total

*Growth % is based on premiums in local currency Excluding PA & Healthcare premiums

Major Risks

Capital Requirements

Catastrophe Risk

Regulatory Risk

Litigation Risk

Recent earthquake triggered volcanic eruption incidents in Indonesia have caused major economic loss, however due to low insurance penetration this has not necessarily translated into a material insurance loss. Flood has become the dominant risk factor particularly in the major cities including Jakarta. However flood is considered a man-made loss due to poor flood protection mechanism and infrastructure.

The financial regulatory system in Indonesia currently lags behind some of the more developed markets in the region. However with the recent establishment of the OJK (Otoritas Jasa Keuangan) a financial services supervisory institution, the new government is showing a commitment to bring revolutionary changes to enforce better governance and establish a sustainable and stable financial system in Indonesia

The establishment of the Corruption Eradication Body (KPK) ten years ago has gradually impacted reform to the law and litigation system in Indonesia. Social media is increasingly being utilised as a tool to bring direct supervision from the society to the litigation process in Indonesia.

35,000,000

3,200

30,000,000

2,800

25,000,000

2,400

20,000,000

2,000 2010

2011

2012

2013

Total Premiums USD million

Foreign Ownership

Rating

Terror Risk

3,600

Excluding PA & Healthcare premiums

*as for year 2014 Lines of

40,000,000

Total Premiums IDR million

Industry Premiums Split by Lines of Business

25.0

4,000

2009

6.1

*Corporate Tax Rate (%)

45,000,000

Insurance companies’ minimum capital has to increase to 100b IDR in 2014. The requirements for reinsurance companies are 200b IDR in 2014. Both insurers and reinsurers are required to maintain a minimum guarantee funds as policyholder protection in the event of bankruptcy. The requirement is the greater of 20% of paid-up capital or equity benchmark and 1% of net premium plus 0.25% of reinsurance premium.

Regulatory and Market Update Following the establishment of the ASEAN Economic Community in 2015, the OJK announced it will allow branches of foreign companies to be established in its market.

Foreign ownership in joint ventures are capped at 80%. This level is flexible, however, provided that the Indonesian partner’s aggregated paid-up capital is maintained. Then, the foreign insurer can increase its stake beyond 80%. This is a much higher level than in other countries in the region. Foreign ownership is still lower due to the highly competitive nature of the market.

Aon Benfield Outlook The insurance market in Indonesia is growing through the increase in the number of automobiles and scooters, micro financing schemes, large scale commercial projects, and infrastructure development. The impact on reinsurance is largely around Commercial lines, specifically the development of infrastructure and public utilities. The new government has assigned the infrastructure and public utilities sector as a key area of focus, after a lack of any significant investment for decades. Insurance rates have been growing to optimum levels since early 2014 with the introduction of the motor tariff which is expected to be maintained for at least the next three years. However it is expected that earthquake and flood rates are likely to be reviewed and changed in the near future due to the recent losses on these programs. There is over-supply in the reinsurance market as reinsurers look to support the local cedants and benefit from the growth in premiums from the new tariff. Main themes in the market are around consolidation with reinsurers looking to increase scale and establish more flag positions and multinationals looking to set-up joint ventures on the direct side. How the OJK-proposed regulatory change is to impact the reinsurance industry is to be observed. There is an increased emphasis on developing mobile technology as a distribution for retail products.

A bill dealing with increased foreign shareholder involvement through capital market transactions is anticipated to be brought before the parliament. Once approved, it will replace the Law of the Republic of Indonesia No 2/1992. OJK announced in March 2014 it plans to implement risk management standards for takaful in 2014, issued by the Islamic Financial Services Board. Effective since January 24th, 2014, OJK has set premium tariff rates for insurance and acquisition cost provision. This stipulation takes effect on motor vehicle and property insurance businesses, as well as special risks insurance covering flooding, earthquake, volcano eruption, and tsunami.

Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, Otoritas Jasa Keuangan, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

OJK planned to merge local reinsurers and to increase the amount of insurance business placed with domestic reinsurers. To date the merger has moved forward as planned.

Mount Fuji 28

Japan 29

Japan Top 5 Insurers

GDP – PPP (USD billions)

Industry Aggregate Premium 2009 to 2013

4,835.0 Population (M)

Entity

127.1

Tokio Marine &

GDP Per Capita – PPP (USD)

Co. Ltd.

38,053.0

Sompo Japan

5yr Real GDP Growth (%)

Mitsui Sumitomo

3.3

Insurance Co. Ltd.

Nichido Fire Insurance

Insurance Inc.

Aioi Nissay Dowa

Unemployment Rate (%)

Insurance Co. Ltd.

3.9

Nipponkoa Insurance Co Ltd.

Inflation Rate (%)

Loss

Comb

USD mn

JPY mn

ratio %

24,940.6

2,434,207.0

67.6

97.9

17,732.9

1,730,730.0

69.4

100.8

17,513.4

1,709,307.0

67.8

99.8

Political Risk

14,582.5

1,423,249.0

68.4

102.9

8,227.6

803,012.0

71.5

105.5

Credit Rating and Outlook

Aon Hewitt People Risk

Easiest

Hardest

2013 GWP Lines of

Rating

Outlook

S&P

AA-

Negative

Fitch

A+

Negative watch

Construction

Moody's

Stable

& Engineering

AM Best

CRT-1

Property

13,577.9

1,325,203.0

637,431.0

48.1

3.4

774.0

75,543.0

71,740.0

95.0

5.8

48,907.7

4,773,349.0

2,941,483.0

61.6

4.4

634.3

61,908.0

21,747.0

35.1

7.4

5,300.2

517,299.0

231,412.0

44.7

4.4

449.1

43,831.0

13,049.0

29.8

-2.3

Miscellaneous

7,946.6

775,589.1

167,626.0

21.6

1.9

MAT

3,091.8

301,756.9

152,933.0

50.7

6.8

80,681.6

7,874,524.0

4,237,421.0

53.8

4.1

PA & Health

7,113.8

694,306.0

357,599.0

51.5

-1.2

Grand Total

87,795.5

8,568,830.0

4,595,020.0

53.6

3.6

Industry-Wide

Investment Risk

Underwriting Risk

Japan is exposed to multiple catastrophic risks including earthquake and weather related events which are a significant challenge to insured’s and insurers alike. For insurers both frequency and severity must be carefully managed in accordance with heightened ERM governance requirements. Profitability is heavily dependent on frequency and severity of natural catastrophe losses in any given year.

Japanese insurers typically hold a relatively higher percentage of their assets in equity investments. While this has led to the strong rebound in financial strength over the past couple of years, it was also a major challenge during the Global Financial Crisis and remains a risk factor. A number of companies have active strategies to change the shift in their asset bases within their published mid-terms plans.

Some concern remains over the impact of the consumption tax rate increase to 8% and how it will affect both claims and acquisition costs.

Non-Life

*Growth % is based on premiums in local currency

Capital Requirements

2011

2012

2013

70,000

Total Premium USD million

There have been several mergers as internal reorganisation of Japanese non-life insurance groups continues. In September 2014, Sompo Japan and Nipponkoa were consolidated to create Sompo Japan Nipponkoa (SJNK). The AIG group subsidiaries, AIU and Fuji Fire, are scheduled to merge during 2016. In addition, the three major non-life insurance groups, Tokio Marine, MS&AD and SJNK have also recently acquired overseas insurance companies to help expand their international business operations. For instance, SJNK acquired Canopius in the UK in May 2014.

Foreign Ownership Foreign companies are allowed to establish wholly owned subsidiaries or branches in Japan or to acquire any percentage of a Japanese company’s equity.

Aon Benfield Outlook With a challenging growth environment in Japan for a number of years the merger activity of the mega insurance groups looks almost complete on the domestic front. Once all the mega-mergers are completed in 2015 the three largest insurance groups will have a combined market share of over 90%, with concentration being close to 100% in certain specialist lines. Published mid-term plans point to further M&A activity outside of Japan as insurers look to reduce exposure to the Japanese equity market and use the proceeds to build on the successful strategy of M&A driven growth outside of Japan in both life and non-life lines of business.

Regulatory and Market Update

Domestically, profitability has rebounded following the recent revision of Motor rates which has led to improved underwriting performance in the dominant Motor line of business. However, some concern remains over the impact of the consumption tax rate increase to 8% and how it will affect both claims and acquisition costs. Japan is exposed to multiple catastrophic risks include earthquake and weather related events. These remain a significant challenge to insured’s and insurers alike. Profitability of domestic insurance remains heavily dependent on frequency and severity of natural catastrophe losses in any given year.

On June 30, 2014, FSA has announced that it will conduct field tests covering all insurance companies, with the aim of introducing economic value-based solvency regime. The field tests include trial calculations of the economic value of insurance liabilities, etc. to comprehend to what practical

Reinsurance rates have reduced towards the pre-Tohoku levels follow a combination of softening market conditions and in some cases payback being achieved from the events of 2011. Baring a significant shock the softening market looks set to continue.

The minimum capital requirement for both the stock insurance company and the mutual insurance association is 1b JPY. Foreign branches are required to deposit normally minimum 200m JPY in cash or securities and must hold assets in Japan in equivalence to the total of their underwriting reserves and outstanding loss reserves.

Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, Financial Services Agency, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

*Y/Y growth

credit

Catastrophe Risk

Loss ratio

JPY mn

Surety, bonds, &

Major Risks

Inc Losses JPY mn

Liability

2010

After the reports are collected and put together, a summary of the tests, including general tendencies and any issues identified in the process, will be made public in May 2015 (target timing).

USD mn

Workers Comp

World Bank relative ease of doing business

2009

Total Premium JPY million

extent insurance companies are dealing with the calculation of insurance liabilities on an economic value basis. Findings obtained in the tests, including any practical issues, will be taken into consideration for the introduction of the economic value-based solvency regime.

business

Motor

80,000

7,900,000 7,800,000

Industry Premiums Split by Lines of Business

Terror Risk

90,000

8,000,000

*as for year 2014 High

8,200,000 8,100,000

Japan Prem: GDP = 1.8%; APAC Prem: GDP = 1.4%

Low

100,000

8,300,000

2013 Insurance Penetration - Non-life GWP vs. GDP

35.6

8,500,000 8,400,000

2.8 *Corporate Tax Rate (%)

110,000

8,600,000

2013 GWP

Boats at Haeundae in Busan 32

Korea (Republic of) 33

Korea (Republic of) Industry Aggregate Premium 2009 to 2012

Top 5 Insurers

GDP – PPP (USD billions) 1,755.0

2013 GWP

Population (M)

Entity

50.4

Samsung Fire & Marine

GDP Per Capita – PPP (USD)

Hyundai Marine & Fire

Insurance Co. Ltd.

Market

Loss

Comb

USD mn

KRW mn

Share %

ratio %

11,941.6

13,074,350.5

25.8

86.0

7,371.0

8,070,202.0

16.0

6,985.1

7,625,793.2

6,051.5

6,625,521.1

Insurance Co. Ltd.

34,795.0

Dongbu Insurance

5yr Real GDP Growth (%)

Co. Ltd.

5.3

LIG Insurance Co. Ltd.

Unemployment Rate (%)

Meritz Fire & Marine

3,389.1

Insurance Co. Ltd.

3.1

3,710,560.5

70,000,000

70,000

104.1

60,000,000

60,000

85.5

103.8

50,000,000

50,000

15.1

84.4

101.5

40,000,000

40,000

13.1

86.7

105.3

7.3

81.5

102.7

30,000 2009

2010

Premiums KRW million Excluding PA Total & Healthcare premiums

2011

2012

Total Premiums USD million

2013 comprises 9 months due to changes in accounting year

Inflation Rate (%)

2012 Insurance Penetration - Non-life GWP vs. GDP

1.8 *Corporate Tax Rate (%) 24.2

*as for year 2014

Korea Prem: GDP = 5.3%; APAC Prem: GDP = 1.4%

Foreign Ownership

Industry Premiums Split by Lines of Business

Foreign insurers are allowed to establish branches or wholly owned subsidiaries in Korea or to buy any percentage of a domestic company’s equity.

2013 GWP

Lines of

Low

High

Political Risk

Credit Rating and Outlook

Paid Claims

Inc Losses

Loss

business

USD mn

KRW mn

ratio %

Property

220.0

240,819.0

123,707.0

105,707.0

43.9

8,895.7

9,739,457.0

6,733,323.0

8,080,331.0

87.7

1,026.4

1,123,763.0

1,307,715.0

728,762.0

77.0

35,517.7

38,886,637.0

7,824,706.0

32,188,187.0

82.9

549.3

601,420.0

435,913.0

689,434.0

117.3

46,209.0

50,592,096.0

16,426,364.0

41,792,421.0

83.9

Motor

Rating

Outlook

S&P

A+

Positive

Fitch

AA-

Stable

Miscellaneous

Moody's

Aa3

Stable

MAT

AM Best

CRT-2

Terror Risk Aon Hewitt People Risk

Easiest

Hardest

World Bank relative ease of doing business

Surety, bonds, & credit

Industry-Wide Non-Life

*Growth % is based on premiums in local currency Excluding PA & Healthcare premiums 2013 comprises 9 months due to changes in accounting year

Capital Requirements

Major Risks

Minimum capital requirements have been set by line of business.

Catastrophe Risk

Underwriting Risk

Regulatory Risk

In view of softening Cat reinsurance pricing for the last 2 years (expected to run through to 2015), the market would be severely affected if Korea goes through another typhoon of similar intensity as Typhoon Maemi. Four typhoons have passed Korea this typhoon season causing some minor losses on crop in the Jeju area.

A large bulk of Korean insurance business emanates from long term insurance products. Long term insurance products need a high interest rate and a profitable investment market in order to provide a return to their investors. Neither of these has been present for the last four years in Korea, resulting in insurers with significant cash holdings shifting their focus by underwriting overseas risks.

The Financial Supervisory Service (FSS) has softened its stance on disallowing direct meetings between local insurers and overseas reinsurers in the market, following strong recommendations from the international market. The FSS has now verbally allowed overseas reinsurers to meet with local insurers provided they are accompanied by a registered broker. There is still some uncertainty around the correct procedure and enforcement of this regulation.

Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, Financial Services Commission, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

30,000,000

For insurance companies, minimum capital requirements depend on the complexity of their business portfolio. The minimum capital for a mono-line insurer writing only engineering or title insurance is 5b KRW. The minimum capital for a multiline insurer is the sum total of the capital requirements applicable to each of its authorized business lines, subject to a maximum of 30b KRW. For application of a reinsurance license, the minimum capital is at 30b KRW.

Foreign insurers must hold an investment grade rating from an international rating agency.

Aon Benfield Outlook There are currently no major changes occurring in the Korean market as direct rates remain flat and stable. There is excess capacity in the market and despite high loss ratios, reinsurance rates have not seen much increases. Most primary companies are focussed on increasing their market share in long-term A&H policy, as the majority of their portfolio is driven by this class of business. A large proportion of the A&H portfolios are reinsured through quota share directly with Korean Re and very little Excess of Loss (XOL) coverage is purchased. The development of new products has focussed on increasing coverage as opposed to investment products due to the low interest rate environment. Alternative capital is beginning to gain some real traction, causing insurers to think about consolidation in order to increase scale and competitive advantage. KB Financial Group has recently signed a contract with LIG to take control of the controlling stake of LIG insurance, stating the need for diversification as the main driver for the investment. Following a change in the Insurance Business Law, the common fiscal year-end for the insurance industry has been changed from 31 March to 31 December, effective from 2013. Most major reinsurance programme renewal dates have been changed to 1 January.

The RBC ratio is based on available capital divided by the required capital. The ratio which has to be maintained by all insurers is to be more than 100%.

Regulatory and Market Update In November 2013, the FSS announced the revised Reinsurance Best Practices Guidelines. Key revisions include: a) Prohibition of different reinsurance ceding commission to the same risk without reasonable justifications as the premium rate calculation principle is violated under the Insurance Business Law. b) Reinsurance brokers to provide domestic cedants with information on its business relationships, if any, under the relevant reinsurance contract. c) An exception is allowed for small-sized domestic branches of foreign insurers on the need to establish and maintain a risk management committee if the head office audits matters relating to risks and appropriateness of reinsurance strategies. 35

Hindu statue in Batu Caves temple in Kuala Lumpur 36

Malaysia 37

Malaysia Top 5 Insurers

GDP – PPP (USD billions)

Industry Aggregate Premium 2009 to 2013

561.5

2013 GWP

Population (M)

Entity

30.1

Allianz General

GDP Per Capita – PPP (USD)

Bhd

18,639.0

AmGeneral Insurance

Comb

Share %

ratio %

639.6

1,975.4

12.2

60.2

87.6

5,000

512.6

1,583.4

9.8

60.7

N/A 12,000

5yr Real GDP Growth (%)

MSIG Insurance (MY)

7.3

Bhd

4,000

461.6

1,425.7

8.8

57.4

77.0

Etiga Insurance Bhd

424.4

1,310.9

8.1

55.5

91.7

Lonpac Insurance Bhd

332.5

1,027.0

6.3

45.5

68.8

10,000

8,000

2009

2010

Total Premium MYR million

Inflation Rate (%)

2013 Insurance Penetration - Non-life GWP vs. GDP

3.3 *Corporate Tax Rate (%) 25.0

Industry Premiums Split by Lines of Business

*as for year 2014 Low

High

Political Risk

Lines of

Credit Rating and Outlook Rating

Outlook

S&P

A-

Stable

Fitch

A-

Negative

Moody's

Positive

AM Best

CRT-3

Terror Risk Aon Hewitt People Risk

Easiest

Hardest

World Bank relative ease of doing business

The impending market liberalisation expected in 2016 is a cause for concern among carriers as the additional competition expected from new market entrants would lead to a softening market. The regulator’s drive for financial liberalisation and detarrification has put an increased focus on profitability.

1) Phase I: Harmonising Assets & Liabilities requirements; and 2) Phase II: Strengthening Capital Buffer.

Loss

Comb

*Y/Y

MYR mn

ratio %

Ratio %

growth %

Property

886.6

2,793.4

395.5

29.5

54.0

8.6

204.5

644.7

62.0

40.9

55.9

5.6

Foreign Ownership

2,387.9

7,524.2

4,773.9

72.7

102.9

7.8

Workers Comp

74.0

233.3

25.5

12.2

48.1

13.5

Liability

157.4

495.8

68.4

26.9

58.1

-0.1

16.8

53.0

-0.4

-1.3

21.0

1.9

Miscellaneous

232.1

731.4

199.4

52.0

94.5

12.2

MAT

482.2

1,519.3

111.9

31.1

52.7

-0.3

4,441.6

13,995.1

5,636.1

60.6

90.0

6.6

Foreign investment of up to 70% is permitted in insurance companies and Takaful operators. On a case-by-case basis, 100% foreign equity for insurance companies can be considered. If a foreign company plans to enter negotiations for 5+% of a Malaysian conventional insurer / Takaful operator, it must receive consent and approvals from the central bank, Malaysian minister of finance, government of BNM as a director general of Takaful, and the Foreign Investment Committee for proposed acquisitions of 15+% voting rights or with valuation of 10m MYR. A foreign insurer who acquires 33+% of a conventional insurer / Takaful operator or holds 33-50% of the voting shares of conventional insurer / Takaful operator and acquires or plans to acquire 2+% of voting shares of the company, must extend an MGO for the remaining shares.

PA & Health

684.3

2,156.3

704.5

37.5

72.4

5.2

Grand Total

5,125.9

16,151.3

6,340.6

39.3

–

6.4

Construction & Engineering Motor

*Growth % is based on premiums in local currency Non-life premiums exclude General Takaful business

Capital Requirements Minimum paid-up capital for insurers / reinsurers since 1996 and Takaful operators since 2004 is 100m MYR . For a life or general insurer operating as a Labuan company, the requirements are at least 7.5m MYR or its equivalent in any foreign currency in the company’s first year of operation. In subsequent years, the requirement is the greater of 7.5m MYR and 20 percent of net premium income. For a reinsurer operating as a Labuan company, the requirement is at least 10m MYR in the first year, and the greater of 10m MYR and the sum of 20 percent non-life net premiums and 3 percent of actuarial valuation of life liabilities in subsequent years.

Regulatory and Market Update

Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, Bank Negara Malaysia, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

Total Premium USD million

Inc Losses

Non-Life

Malaysia has been experiencing favourable claim experience in most lines, except for Motor. An insurance pool (MMIP) for high-risk drivers was created that equally shares premium and losses among all licensed general and Takaful operators, putting added pressure on insurers’ operating results.

3,000

MYR mn

Industry-Wide

Regulatory Risk

2013

USD mn

& credit

Underwriting Risk

2012

business

Surety, bonds,

Major Risks

2013 GWP

2011

Labuan Financial Services Authority released a consultation paper on Insurance Capital Adequacy Framework. The Consultation Paper had explained Labuan FSA’s policy intention and plans to transition from the current Margin of Solvency (MOS) requirements to the risk based capital regime, in two phases:

Malaysia Prem: GDP = 1.6%; APAC Prem: GDP = 1.4%

6,000

16,000

14,000

Bhd

3.0

Loss

MYR mn

16,000

Insurance Co. (MY)

Unemployment Rate (%)

Market

USD mn

Labuan International Business and Financial Centre (Labuan IBFC) announced its commitment to uphold its legal framework in line with internationally agreed standards and best practices.

Bank Negara of Malaysia issued a policy document on the duties of an appointed actuary, and the Bank’s expectation of the roles and responsibilities of the Board and the Nominating Committee in respect of the appointed actuary.

Since 2009, locally incorporated foreign-owned insurance companies / Takaful operators can establish branches without restriction throughout Malaysia as well as enter into bancassurance arrangements. Greater flexibility with regards to hiring expatriates has also been employed, which has contributed to industry development and local talent / training improvement.

Aon Benfield Outlook Population growth, GDP growth, large scale government infrastructure projects and increasing FDI are driving insurance penetration in the Malaysian market. The reinsurance market remains relatively stable with excess capacity in the market. There is uncertainty around the prospect of detariffication in 2016 and the impact this would have on current market participants. Direct companies are concerned about profitability and cost management and with the anticipated rate decreases, many expect consolidation to take place with more multinational companies entering the market. Pricing adequacy, segmentation, product innovation and capital efficiency are key differentiators with firms fighting to gain market share. Malaysia is generally considered a noncatastrophe country with the exception of flood; therefore the impact detarrification would have on reinsurance rates would depend on the underlying portfolios underwriting philosophy and risk appetite. There is an increasing interest in structured solutions and depth of actuarial services from insurance firms in the market, with talent development and localisation of management also high on the agenda. 39

Mitre Peak in Fiordland National Park, South Island 40

New Zealand 41

New Zealand Top 5 Insurers

GDP – PPP (USD billions)

Industry Aggregate Premium 2009 to 2013

143.2

2012 GWP

Market

Loss

Comb

Population (M)

Entity

USD mn

NZD mn

Share %

ratio %

4.5

IAG New Zealand

1,472.8

1,817.8

40.1

N/A

913.0

1,126.9

24.9

55.0

92.0

4,000

351.3

433.5

9.6

57.7

92.6

3,500

Vero Insurance

GDP Per Capita – PPP (USD)

Lumley General

31,692.0

Insurance (NZ)

5yr Real GDP Growth (%)

Tower Insurance

171.0

211.1

4.7

67.4

100.6

4.1

AIG Insurance NZ

133.7

165.0

3.6

N/A

5,000

4,500

3,000

2,500

Unemployment Rate (%)

2,000

2013 Insurance Penetration - Non-life GWP vs. GDP

5.2

New Zealand Prem: GDP = 2.2%; APAC Prem: GDP = 1.4%

Inflation Rate (%) 2.2

2013 GWP

Low

High

Political Risk

Credit Rating and Outlook Rating

Outlook

S&P

Stable

Fitch

Positive

Moody's

Aaa

Stable

AM Best

CRT-2

Terror Risk Aon Hewitt People Risk

Easiest

Hardest

World Bank relative ease of doing business

Inc Losses

Loss

*Y/Y

Lines of business

USD mn

NZD mn

ratio %

growth %

Property

2,172.9

2,649.6

2,290.7

90.3

11.2

Motor

1,178.6

1,437.2

929.9

66.4

4.8

Liability

321.6

392.1

139.5

37.5

18.6

Surety, bonds, & credit

5.5

6.8

0.4

6.0

13.6

Miscellaneous

94.0

114.7

49.2

45.8

7.1

MAT

113.8

138.8

49.5

36.0

0.6

3,886.4

4,739.1

3,459.2

75.8

9.3

Industry-Wide Non-Life

PA & Health

159.2

194.2

96.3

48.1

1.2

Grand Total

54,045.6

4,933.3

3,555.5

72.1

8.9

*Growth % is based on premiums in local currency

Major Risks

Regulatory and Market Update

Catastrophe Risk

Regulatory Risk

Catastrophe protection is the core purchase of New Zealand insurers due to the high insurance penetration and exposure to earthquake peril. More frequently occurring perils such as storm or flood are generally net exposures for insurers, especially as Cat XOL retentions increased after the Canterbury earthquake sequence and there is increasing demand for covers to protect the volatility in earnings.

Along with other new compliance requirements such as anti-money laundering, regulation continues to increase costs for insurers as the RBNZ clarify and improve the current regulations.

2011

2012

2013

Total Premium USD million

Capital Requirements

*Corporate Tax Rate (%) *as for year 2014

2010

Total Premium NZD million

Industry Premiums Split by Lines of Business

28.0

2009

The Reserve Bank recently issued a consultation paper entitled: Insurance Solvency Standards: Guarantees. This consultation paper contains an exposure draft of proposed changes to the solvency standards for insurance businesses in respect of the solvency treatment of guarantees. The intent of the proposal is to ensure that the level of credit risk mitigation received by licensed insurers from the use of guarantees is appropriate. It is intended that the proposed changes be implemented following a transition period. This is the second consultation paper on guarantees. In addition, another consultation paper was issued by RBNZ, on its proposed policy in respect of financial reinsurance. The paper is titled “Insurance Solvency Standards: Financial Reinsurance” and is meant for life standards. The Reserve Bank will consider the appropriateness of similar changes to the nonlife standards in due course.

An insurer must at all times maintain actual solvency capital in excess of minimum solvency capital (MSC) to the extent laid down by the solvency standard. Actual solvency capital is the difference between capital (as defined) and deductions from capital (as defined). Solvency capital for a licensed foreign insurer in New Zealand is the excess of the branch’s assets over its liabilities. The minimum amount of the MSC is 1m NZD for a captive and 3m NZD for any other type of insurer. An insurer’s MSC is the sum of the capital charges appropriate for its insurance risk, catastrophe risk, asset risk, and reinsurance recovery risk.

Foreign Ownership Foreign companies may acquire any percentage of a domestic insurer’s equity or may establish wholly owned subsidiaries or branches, subject to prudential approval. Foreign companies which are allowed to operate as branches should obtain a credit rating from an international rating agency.

Aon Benfield Outlook The New Zealand economy has performed well compared to many other OECD countries due to growth in the export sector, construction activity in Canterbury, a strong housing market (despite RBNZ lending reforms), and increased government spending on large infrastructure projects – however the rate of growth is expected to reduce largely due to falling dairy prices. There is increased competition in the insurance market among local carriers but also from new ‘challenger brands’, binders and offshore markets across all lines. With little change in the use of pro rata or XOL capacity, similar to global trends, supply outstrips demand for reinsurance capacity in New Zealand. Corporate rates are softening significantly as commercial lines in general see increased competition. Personal lines pricing is reaching its peak and the recent acquisition of Wesfarmers/Lumley by IAG is likely to lead to pricing rationalization with a dominant insurer. A review of the EQC Act was initiated in 2013 and could result in material changes to the cover EQC and insurers provide for natural perils in New Zealand. The increasing use of digital technology and social media by insurers to differentiate within personal lines is likely to lead to greater online sales distribution.

The Reserve Bank of New Zealand is planning to collect insurance data beginning in the middle of 2015, to better monitor and assess the financial performance, position and compliance of all New Zealand licensed insurers. The objective is to obtain critical data on a regular basis from licensed insurers, with the creation of a standardized and informative data for the industry. Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, Financial Markets Authority, The Reserve Bank, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

Badshahi Mosque in Lahore 44

Pakistan 45

Pakistan Top 5 Insurers

GDP – PPP (USD billions)

Industry Aggregate Premium 2009 to 2013

601.9

2013 GWP

Population (M)

Entity

186.3

EFU General

GDP Per Capita – PPP (USD)

Insurance Ltd.

3,231.0

Adamjee Insur-

5yr Real GDP Growth (%)

Jubilee General

5.1

Insurance Co. Ltd.

Comb

*Y/Y

ratio

growth

650

60,000

600

141.6

13,882.1

28.5

53.7

92.7

12.3

55,000

550

80.7

7,905.3

16.2

63.3

97.9

-3.5

50,000

500

45,000

67.0

6,569.3

13.5

61.1

93.5

9.3

450

20.8

2,035.3

4.2

71.9

90.2

10.2

40,000

400

19.3

1,886.8

3.9

26.4

73.9

87.5

Security General Insurance Co. Ltd.

35,000

2009

2010

Total Premium PKR million

Inflation Rate (%) 2013 Insurance Penetration - Non-life GWP vs. GDP

8.8

34.0 Low

High

Political Risk

Rating

Outlook

S&P

B-

Stable

Fitch

Caa1

Negative

Terror Risk Aon Hewitt People Risk

Moody's Easiest

Hardest

AM Best

2013 GWP

Lines of

Credit Rating and Outlook

CRT-5

business

USD mn

PKR mn

Property

194.4

19,754.8

Motor

159.0

16,163.0

Liability

5.9

598.6

Miscellaneous

117.8

11,972.6

MAT

82.5

8,380.8

559.6

56,869.9

PA & Health

29.5

2,993.2

Grand Total

589.0

59,863.0

Industry-Wide Non-Life

World Bank relative ease of doing business

Major Risks

*Growth % is based on premiums in local currency

Regulatory and Market Update

Catastrophe Risk

Underwriting Risk

Flooding caused by the monsoon rains has been the most frequent natural catastrophe event over the last few years. Some of the larger insurers have been purchasing catastrophe reinsurances covers; however the lack of any sophisticated pricing tools or adequate risk assessment in the market has made estimating the maximum probable loss very difficult.

The insurance industry have been consistently reporting combined ratios above 100% since 2006. Expenses growth has outpaced nominal growth in GWP due to limited economies of scale. Intense competition in the market and low demand has put pressure on premium pricing resulting in margin pressure and losses across the core underwriting function.

Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, the Securities and Exchange Commission of Pakistan, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

2012

2013

350

Total Premium USD million

The minimum capital requirement is 300m PKR for non-life companies and general Takaful operators. Each insurer shall make and maintain a deposit with the State Bank of Pakistan a specified minimum amount either in cash or approved securities, or a hybrid. Currently this specified amount is the higher of 10m PKR and 10% of the insurer’s paid up capital or, such amount as may be prescribed by the regulator SECP.

Industry Premiums Split by Lines of Business

*as for year 2014

2011

Capital Requirements

Pakistan Prem: GDP = 0.2%; APAC Prem: GDP = 1.4%

*Corporate Tax Rate (%)

65,000

PKR mn

IGI Insurance Ltd.

6.9

Loss

Share USD mn

ance Co. Ltd.

Unemployment Rate (%)

Market

In May 2014, SECP began to allow conventional companies to begin to underwrite takaful products after obtaining authorisation as “Window Takaful Operator” under the Takaful Rules 2012. In February 2014, Micro Insurance Rules 2014 was approved by SECP policy board as it aims to serve the low-income population, with the introduction of small ticket-sized micro insurance products to protect crops, livestock, health, life, and domestic households. In the same month, SECP published a report prepared by the Insurance Industry Reform Committee that discusses on the proposed roadmap of reform and development in insurance industry in Pakistan.

Non-life insurers are required to have admissible assets in excess of their liabilities of an amount greater than or equal to the minimum solvency requirement. The minimum solvency requirement is the greatest of the following: 50m PKR in excess of liabilities, 20% of the net premium, subject to a maximum deduction of 50% reinsurance share, and 20% of the sum of unexpired risks plus outstanding claims.

Foreign Ownership 100% foreign equity in the insurance business is allowed, subject to certain conditions. The most important condition is the minimum capital brought in by foreign companies i.e., foreign companies must have minimum capital of USD 4mn, but no less than USD 2mn may come from abroad.

Aon Benfield Outlook Growth in the insurance market is driven by foreign direct investment (FDI), infrastructure construction and an increased use of bancassurance as an effective distribution channel. The industry is faced with several challenges most notably original pricing, effective law and order enforcement and frequent energy outages. Covers for large scale construction and operational projects are placed outside the country on a facultative or fronting basis. Intense competition has ensured rates have remained stable, if slightly down in 2014. The increased FDI and infrastructure development should lead to economic growth and an increase in aggregates and exposures leading to an increase in the volatility of losses, which in turn should lead to an increase in reinsurance prices in the mid-term. As insurance firms search for growth and develop new initiatives, such as Takaful windows, the roles brokers play has been widening, to provide support and expertise on innovation and product development.

SECP proposed draft amendments in February 2014 to rectify the issue of outstanding insurance premium, faced by the insurance industry. Currently, the figures for the premium receivable by the insurers show huge outstanding amounts with high potential of default, which is also posing a large systemic threat, especially to the solvency of the insurers and generally to the financial strength of the insurance industry. In January 2014, SECP announced amendment on the Code of Corporate Governance, which was made taking into account the lessons learnt from the practical issues and considerations relevant to the listed companies and to ensure that it reflects changing governance concerns, practices and economic circumstances and best international practices. 47

World heritage rice terraces in Batad, northern Luzon, Infugao province 48

Philippines 49

Philippines Top 5 Insurers

GDP – PPP (USD billions)

Industry Aggregate Premium 2009 to 2013

493.4

2013 GWP

Population (M)

Entity

99.4

Malayan Insurance Co. Prudential Guarantee &

GDP Per Capita – PPP (USD)

Assurance, Inc.

Market

*Y/Y

USD mn

PHP mn

Share %

Growth %

174.1

7,388.3

12.6

9.0

136.8

5,807.5

9.9

15.5

4,962.0

BPI/IMS Insurance Corp.

120.3

5,105.3

8.7

10.2

5yr Real GDP Growth (%)

Pioneer Insurance & Surety Corp.

113.1

4,799.6

8.2

9.1

8.0

Charter Ping An

82.8

3,513.9

6.0

21.4

6.9

55,000

1,300

50,000

1,100

45,000

900

40,000

700

35,000

500 2010

2011

Total Premiums PHP million

2012

2013

Total Premiums USD million

Excluding PA & Healthcare premiums.

2013 Insurance Penetration - Non-life GWP vs. GDP

Inflation Rate (%)

1,500

2009

Excluding PA & Healthcare premiums

Unemployment Rate (%)

60,000

Phillipines Prem: GDP = 0.5%; APAC Prem: GDP = 1.4%

4.4 Industry Premiums Split by Lines of Business

*Corporate Tax Rate (%) 30.0

*as for year 2014

Lines of business

Low

High

Political Risk

Credit Rating and Outlook Rating

Outlook

S&P

BBB

Stable

Fitch

BBB-

Stable

Moody's

Baa2

Stable

AM Best

CRT-4

Terror Risk Aon Hewitt People Risk

Easiest

Hardest

USD mn 2013 GWP

PHP mn

*Y/Y Growth %

Property

518.9

22,026.3

15.0%

Marine, Aviation & Transit

151.5

6,429.5

12.2%

Motor

386.3

16,396.8

6.9%

Foreign Ownership

Others

326.5

13,858.3

-3.9%

Foreign ownership is permitted, of up to 100% ownership.

1,383.2

58,710.9

7.5%

Aon Benfield Outlook

Industry-Wide Non-Life

*Growth % is based on premiums in local currency Excluding PA & Healthcare premiums.

World Bank relative ease of doing business Capital Requirements New net worth requirements for current insurers are 250m PHP by 30 June 2013, 550m PHP by 30 June 2016, 900m PHP by 30 June 2019, and 1.3b PHP by 30 June 2022.

Major Risks

For new non-life insurers planning to engage in business in Philippines, the minimum paid-up capital of 1b PHP applies.

Catastrophe Risk

Underwriting Risk

All insurance companies writing fire and allied perils insurance are required to secure catastrophe excess of loss reinsurance cover of at least 5% of their aggregate net retained insured values against earthquake, typhoon and flood in either Zone A or B, whichever is higher. However, given the frequency of natural catastrophes in Philippines, insurance companies will need to integrate catastrophe risk management into their underwriting processes to safeguard their capital position.

The insurance market in the Philippines is extremely fragmented and competitive, and certain undercapitalised insurance companies may need more capital to withstand potential impacts from unprofitable insurance operations.

The Philippine regulator is supporting the call to reduce taxes on nonlife insurers to make the companies more competitive and put them on the same playing field with their life industry counterpart. Life insurers in the Philippines enjoy a premium tax rate of only 2% while non-life insurance companies are being taxed 25%-27%. The Philippine Insurers and Reinsurers Association, the country’s non-life insurance association, has proposed to bring down the premium tax rate to 2% to be at par with the tax rate of life insurance companies.

For insurers engaging in solely reinsurance business, the capitalisation is at a minimum of 3b PHP paid in cash, where at least 50 percent is paid up capital and the remaining portion of at least 400m PHP from contributed surplus. RBC requirements were introduced in 2006 and are complementary to the minimum capital requirements. The RBC requirements include capital required for fixed income securities, equities, credit risk, loss reserves and net written premiums.

Regulatory and Market Update

The insurance penetration rate in the Philippines is relatively low at 1.5% with the Non-Life insurance penetration rate even lower at 0.4%. Growth in Property and Engineering lines is driven by infrastructure projects from both the government and private sector. Continued increase in consumer spending has also led to growth in the Marine and Motor lines. Due to the recent spate of catastrophe losses in the Philippines, prices of catastrophe XL programmes have increased by 30% on average. High taxes are still a major concern for non-life insurers, with the combination of the different taxes averaging around 26% of premium. PIRA has proposed to lower the tax to a flat premium rate of 12%; however any change is still some time away. Market consolidation is expected to be the next big theme in the market because of increased capitalisation/net equity requirements being phased in over the next few years. This should lead to fewer players in the market discouraging excessive price competition and releasing pressure on original rates. The government is currently exploring launching an earthquake pool similar to the TCIP a mandatory scheme in Turkey. If a mandatory catastrophe pool is formed, the Philippines might just have the concentration of insurable risk required to issue its first catastrophe bond. There has been an increased amount of multiyear deals concluded recently, mostly involving the lower layers of property XL programs.

As insurers begin to go through stricter capital requirements in Philippines, the insurance regulator has commented that credit ratings will play a bigger role for the insurance market. Through the credit ratings, the insurance market will understand the financial strength and stability of each risk carrier better and help improve the stability of the market. A mandatory risk insurance pool is reportedly being considered by the Philippine government to be set up to help local government units to respond better to natural catastrophes. Further to this development, Philippines national reinsurer announced that it is also considering starting a mandatory catastrophe insurance pool for households and small and medium enterprises to manage risks and insure themselves against climate change. Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, the Insurance Commission, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

Panorama of Singapore from Marina Bay 52

Singapore 53

Singapore Top 5 Insurers (SIF basis)

GDP – PPP (USD billions) 366.9

Industry Aggregate Premium 2009 to 2013

2013 GWP

Population (M)

Entity

5.5

AIG Asia Pacific

GDP Per Capita – PPP (USD)

AXA Insurance

Insurance Pte Ltd.

(SG) Pte Ltd

67,035.0

MSIG Insurance

5yr Real GDP Growth (%)

(SG) Pte Ltd

Market

Loss

Comb

*Y/Y

USD mn

SGD mn

Share %

ratio %

growth %

369.7

462.7

12.4

48.5

90.6

-0.9

333.7

417.6

11.2

56.2

90.9

16.4

260.5

326.0

8.7

41.7

76.4

6.5

7.7

NTUC Income

239.4

299.5

8.0

59.9

90.1

-3.3

Unemployment Rate (%)

First Capital

231.9

290.2

7.8

81.9

81.7

-1.6

Inflation Rate (%)

2013 Insurance Penetration - Non-life GWP vs. GDP

2.3

Singapore Prem: GDP = 1.0%; APAC Prem: GDP = 1.4%

3,000

2,500

2,000

*as for year 2014

Political Risk

Credit Rating and Outlook Rating

Outlook

S&P

AAA

Stable

Fitch

AAA

Stable

Moody's

Aaa

Stable

AM Best

CRT-1

Terror Risk Aon Hewitt People Risk

Hardest

2013 GWP

Lines of

High

World Bank relative ease of doing business

Major Risks

Inc Losses

Loss

*Y/Y

business

USD mn

SGD mn

ratio %

growth %

Property

332.1

415.6

138.9

33.4

2.5

107.1

134.0

74.4

55.5

20.9

Motor

973.5

1,218.2

760.7

62.5

-2.1

Workers Comp

298.8

373.8

257.6

68.9

8.7

Liability

195.0

244.0

10.7

4.4

6.6

Surety, bonds, & credit

193.9

242.7

88.1

63.3

12.2

Miscellaneous

97.0

121.3

54.2

44.7

0.3

MAT

304.5

381.0

161.7

42.4

-2.3

2,501.9

3,130.6

1,546.3

49.4

2.3

Construction & Engineering

Industry-Wide Non-Life

PA & Health

485.6

607.6

291.1

47.9

7.4

Grand Total

2,987.4

3,738.1

1,837.4

49.2

3.1

*Growth % is based on premiums in local currency

Catastrophe Risk Singapore is located in a seismically stable zone, free from serious earthquakes. Tsunami is the main potential natural catastrophe risk. The possibility of severe damage exists considering the low-lying nature of the ground and high concentration of values.

2010

2011

2012

2013

Total Premium USD million

Regulatory and Market Update

Industry Premiums Split by Lines of Business (SIF basis)

17.0

2009

Total Premium SGD million

*Corporate Tax Rate (%)

Easiest

3,500

1,500

2.0

Low

4,000

Capital Requirements The paid up capital requirement for direct insurers concerned with investment-linked policies only or short-term Accident and Health policies only is 5m SGD. For any other type of direct insurer the requirement is 10m SGD. For reinsurers, the requirement is 25m SGD.

Monetary Authority of Singapore (MAS) released a consultation paper on “Review on Risk-Based Capital Framework for Insurers in Singapore (“RBC 2 Review”) – Second Consultation”. This consultation paper sets out more specific proposals, following the first consultation in June 2012. The consultation paper also contains the detailed technical specifications which will allow insurers to conduct a full scope Quantitative Impact Study (“QIS”) to fully understand the impact of RBC 2.

Foreign Ownership Foreign ownership is permitted in the form of wholly owned subsidiaries or branches. There are no restrictions on the level of foreign ownership. The Singapore government offers tax incentives for regional insurers to establish operational headquarters in Singapore.

Aon Benfield Outlook The insurance market in Singapore has shown modest growth across most lines of business in the last year. Competition in the market in some classes has held premium rates down. The need for greater treaty capacity in some cases impacts the balance of the treaties. With new insurers entering the market, existing insurers are focussed on trying to maintain market share. The new RBC 2 regulation being implemented by the MAS, has a focus on catastrophe risk with an ‘Own Risk Self-Assessment’ element incorporated. This has encouraged most insurers to impose event limits on their programs to gain a better understanding of their “worst case” loss scenario. There has been an increased emphasis on catastrophe modelling and exposure management, with a Singapore specific earthquake models being developed by Impact Forecasting on existing vendor models. Singapore continues to increase its importance as a regional reinsurance hub, with new reinsurance capacity entering the market in 2013/14.

These amounts apply to both domestic and foreign companies. For a captive insurer, the minimum capital requirement is 0.4m SGD.

Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, Monetary Authority of Singapore, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

The capital adequacy requirement of a registered insurer shall at all times be such that the financial resources of the insurer are not less than whichever is the higher of: 1) The sum of the aggregate of the total risk requirement of all insurance funds established and maintained by the insurer under the Act, and where the insurer is incorporated in Singapore, the total risk requirement arising from the assets and liabilities of the insurer that do not belong to any insurance fund established and maintained under the Act, or 2) A minimum amount of 5m SGD. 55

Hillside teahouses in Jiufen 56

Taiwan 57

Taiwan Top 5 Insurers

GDP – PPP (USD billions)

Industry Aggregate Premium 2009 to 2013

973.3

2013 GWP

Population (M)

Entity

23.4

Fubon Insurance

GDP Per Capita – PPP (USD)

Cathay Century

Co. Ltd.

Insurance Co. Ltd.

41,540.0

Shinkong

5yr Real GDP Growth (%)

Insurance Co. Ltd.

5.9

MSIG Mingtai Insurance Co. Ltd.

Unemployment Rate (%)

Market

Loss

Comb

*Y/Y

USD mn

TWD mn

Share %

ratio %

growth %

960.7

28,599.6

21.8

56.5

94.0

3.4

573.6

17,077.3

13.0

56.7

91.7

Newa Insurance

444.5

13,231.8

10.1

53.4

91.0

3.9

353.8

10,531.7

8.0

52.7

93.3

-5.6

322.5

9,602.2

7.3

51.9

88.2

7.0

Co. Ltd.

Inflation Rate (%)

5,000

130,000

4,500

125,000

4,000

120,000

3,500

115,000

3,000

110,000

2,500

8.7

Tokio Marine

4.2

135,000

105,000

2009

2010

Total Premium TWD million

2011

2012

2013

2,000

Total Premium USD million

Regulatory and Market Update

1.4

2013 Insurance Penetration - Non-life GWP vs. GDP

*Corporate Tax Rate (%)

Taiwan Prem: GDP = 0.9%; APAC Prem: GDP = 1.4%

17.0

*as for year 2014 Low

Industry Premiums Split by Lines of Business

High

Political Risk

Credit Rating and Outlook Rating

Outlook

S&P

AA-

Stable

Fitch

A+

Stable

Moody's

Aa3

Stable

AM Best

CRT-2

Terror Risk Aon Hewitt People Risk

Easiest

Hardest

2013 GWP

Lines of

World Bank relative ease of doing business

Major Risks

Paid Claims

Loss

*Y/Y

business

USD mn

TWD mn

ratio %

growth %

Property

805.1

23,969.5

6,314.2

26.3

-1.2

161.7

4,815.3

1,997.1

41.5

-4.2

In addition to strengthening exit mechanisms for the industry, the draft amendment encourages insurance firms to invest in public infrastructure projects, improves the quality of appointed actuary reports, and allows banks to engage in the insurance brokerage or agency business.

Motor

2,253.8

67,098.2

42,208.6

62.9

7.8

Foreign Ownership

Liability

299.4

8,912.1

3,056.0

34.3

3.9

Surety, bonds, & credit

34.2

1,019.4

384.8

37.8

-5.1

Miscellaneous

63.4

1,887.6

546.8

29.0

1.4

MAT

299.3

8,911.2

4,911.9

55.1

-9.5

3,917.0

116,613.1

59,419.3

51.0

3.3

PA & Health

496.4

14,778.7

6,406.9

43.4

5.2

Grand Total

4,413.5

131,391.8

65,826.2

50.1

3.5

Construction & Engineering

Industry-Wide Non-Life

Underwriting Risk

Regulatory Risk

Investment Risk

The development of general and high tech industries in concentrated commercial areas has led to highly volatile underwriting risks for commercial and industrial property insurers.

An amendment to the Insurance Act that targets insurers’ minimum risk-based capital ratio has been approved by a government authority. The new regulation means that insurance companies with a RBC ratio lower than 50% would be acquired by the government.

Due to the lack of long-term investment instruments in the domestic market, long-term liabilities’ share of total liabilities is persistently higher than longterm assets’ share of total assets, leading to a duration mismatch. The assumed interest rates of life insurance policies in earlier periods are still higher than current investment return rate, resulting in a negative interest rate spread.

In September 2014 The Executive Yuan, i.e. Taiwan’s cabinet, approved a draft amendment to the Insurance Act that would allow the government to take over ailing insurers as soon as their capital drops to a specific level. The amendment, which adopts standards from international practices, was drafted by the Financial Supervisory Commission after troubled carriers Global Life Insurance Co. and Singfor Life Insurance Co. were placed under government receivership on August 12. Also, if the amendment clears the Legislature, distressed insurers would no longer be bailed out using public funds.

*Growth % is based on premiums in local currency

Capital Requirements The minimum capital requirements in establishing an insurance company is 2b TWD. The capital requirement is on cash basis only. A bond equal to 15% of the total amount of its paid in capital or paid in fund must be posted with the national treasury. Branches of foreign companies require paid-up capital of not less than 1b TWD, and need to maintain minimum working capital of 50m TWD. Article 143-4 of the insurance law covers solvency calculated as a percentage of risk-based capital. It states that a company’s ratio of total adjusted net capital to risk based capital shall not be lower than 200%. Risk-based capital is defined as such capital that is calculated based on the risks that an insurance company may incur from the actual operation of insurance business. The scope of such risks includes asset risks, credit risks, underwriting risks, asset-liability matching risks, and other risks.

Branches of foreign companies require paid-up capital of not less than 1b TWD, and need to maintain minimum working capital of 50m TWD. In addition, the parent company must have met certain qualitative requirements. Such branches are also required to post a bond with the national treasury.

Aon Benfield Outlook Growth in the Taiwan insurance market is driven by economic expansion and manufacturing, particularly in the electrical engineering industry. The largest growth has focussed on the major lines; Motor, Commercial Property and Marine. The local insurance market relies heavily on reinsurance capacity both through facultative and treaty placements, particularly on Commercial Property. There is a high level of retention and therefore reducing demand for reinsurance for Motor due to the limited level of natural peril cover on the policies. Price competition is the biggest challenge facing the direct market, with commercial property rates reducing by around 10% in Q2 2014 renewals. Despite the regulator implementing a number of price stabilisation policies, such as reforming the natural perils reference rate and setting a ceiling for commissions on Motor policies, the excess capacity in the market and the softening facultative market is resulting in some price reductions. Without large scale losses heavily impacting the market, and a pull back from financial markets players entering the market, reinsurance rates are expected to remain soft. The regulator is currently discussing the use of Offshore Insurance Units (OIU) to attract overseas carriers into Taiwan to write foreign exposures and to encourage local insurance companies to write overseas inwards business. There has been an increasing interest in developing Life reinsurance products, with a recent study on how structured solutions can be exploited as a form of capital release.

Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, the Financial Supervisory Commission, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

Damnoensaduak Floating Market 60

Thailand 61

Thailand Top 5 Insurers

GDP – PPP (USD billions)

Industry Aggregate Premium 2009 to 2013

701.1

2013 GWP

Population (M)

Entity

68.6

Viriyah Insurance

GDP Per Capita – PPP (USD)

Dhipaya

Co. Ltd.

10,227.0

Insurance Public

5yr Real GDP Growth (%)

Bangkok

5.6

Insurance Public

Unemployment Rate (%)

Syn Mun Kong

0.7

Insurance Public

Inflation Rate (%)

Muang Thai

2.3

Insurance Public

220,000

7,000

21.4

190,000

6,000

89.2

13.6

160,000

5,000

54.4

88.6

21.1

130,000

4,000

N/A

11.4

Market

Loss

Comb

*Y/Y

USD mn

THB mn

Share %

ratio %

growth %

1,106.0

33,983.1

16.7

N/A

768.7

23,15,057.8

11.6

54.2

490.1

15,057.8

7.4

288.4

8,862.7

4.4

Co. Ltd.

282.0

8,663.5

4.3

N/A

21.0

2013 Insurance Penetration - Non-life GWP vs. GDP

Low

Thailand Prem: GDP = 1.7%; APAC Prem: GDP = 1.4%

High

Political Risk

2010

2011

2012

2013

3,000

Total Premium USD million

Regulatory and Market Update Thailand has allowed foreign companies to launch IPOs in the country as well as dual offerings of equities in Thailand and other countries in an effort to develop the country’s capital market. The new regulations come into effect in August 2014. A primary offering will enable foreign companies to list shares for the public on the Stock Exchange of Thailand, while a dual listing enables them to launch an IPO in Thailand and other countries simultaneously or in a proximate period.

*Corporate Tax Rate (%) *as for year 2014

2009

Total Premium THB million

Co. Ltd.

20.0

100,000

Credit Rating and Outlook

Foreign Ownership Rating

Outlook

S&P

BBB+

Stable

Fitch

BBB+

Stable

Moody's

Baa1

Stable

AM Best

CRT-3

Terror Risk Aon Hewitt People Risk

Easiest

Hardest

Industry Premiums Split by Lines of Business Inc Losses

Loss

*Y/Y

business

USD mn

THB mn

ratio %

growth %

Property

1,197.8

36,803.7

N/A

19.5

99.7

3,063.3

395.3

59.7

5.1

Motor

3,854.0

118,418.0

60,994.0

58.5

14.0

Liability

57.1

1,753.7

190.0

28.9

10.3

Miscellaneous

237.2

7,288.2

1,378.5

39.4

-2.3

MAT

205.7

6,319.1

808.3

26.1

-2.3

5,651.4

173,645.9

52,793.1

42.9

13.4

PA & Health

956.1

29,375.6

7,744.6

41.5

11.6

Grand Total

6,607.5

203,021.5

60,537.7

42.7

13.1

Construction & Engineering

World Bank relative ease of doing business

Major Risks

Industry-Wide Non-Life

Catastrophe Risk

Regulatory Risk

Investment Risk

Flood is the major natural hazard exposure in Thailand, with large areas of the country subject to regular flooding as a result of the monsoon rains. Thailand experienced its worst flooding in 2011, which caused about THB1.4tr economic loss and resulted in the fifth costliest insured loss event since 1980. Following the 2011 floods, many insurers and reinsurers have withdrawn, increased their premiums or refused to renew contracts.

The OIC is imposing a number of important requirements on the industry to increase disciplined risk management and to keep in line with global trends. The new requirements address risk management issues through stress testing, RBC 2, creation of a compliance unit, and ERM frameworks. New minimum capital requirements have been introduced which are to be implemented by 2017 this will result in insurers needing to increase their capital levels through consolidation or acquisition in order to meet the requirements.

The industry places a large portion of their investments in to equity, which is more volatile than fixed income. With the economic environment showing signs of weakening given the recent political instability, it is expected investment returns will be impacted.

2013 GWP

Lines of

*Growth % is based on premiums in local currency

Capital Requirements

Foreign ownership is allowed. The law limits foreign ownership to 25% but some foreign companies have overcome this restriction through the use of nominees. When deemed “appropriate”, the regulator (OIC) may permit up to 49% foreign ownership. However, in November 2012, Finance Minister Kittiratt Na-Ranong said that the government has ruled out any liberalisation of the banking and insurance sectors for at least the next five years, adding that any liberalisation of the financial sector will be outlined by the central bank.

Aon Benfield Outlook GDP growth was the main driver for growth in the Thailand insurance industry; however the recent political instability has curtailed the momentum, with the economy now showing signs of recession. The political uncertainty has had a larger impact on infrastructure and mega project related sectors which in turn has reduced the demand for insurance. The direct premium rates have been falling, having almost reached pre-2011 flood levels. The excess capacity in the market together with signs of a recessionary cycle continuing has meant that reinsurance rates will soften, assuming there is no catastrophic event within the year. Margin squeezes are on the forefront of insurers’ minds, as they look to diversify into new product lines or look to make strategic acquisitions to increase scale. There has been an increased appetite to explore Agriculture, Livestock and Trade Credit products; however there is currently insufficient data for reinsurers to support on such initiatives. In an attempt to reduce the administrative cost, some insurance companies are looking to set up automatic facultative facilities to support certain business group.

Non-life insurers in Thailand are required to hold a minimum capital requirement of 30m THB in accordance to Non- Life Insurance Act 1992. This is subsequently revised to 300m THB for companies established after 1997. RBC has been fully implemented, from 1 September 2011, with an initial minimum Capital Adequacy Ratio (CAR) of 125%. With effect from 1 January 2013, the minimum CAR is increased to 140%. The Capital Adequacy Ratio measures the adequacy of the capital available to the insurer to support the total capital required under various circumstances.

Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, Office of the Insurance Commission, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

Terraced fields in Mu Cang Chai district, Yen Bai province 64

Vietnam 65

Vietnam Top 5 Insurers

GDP – PPP (USD billions)

Industry Aggregate Premium 2009 to 2013

385.8

2013 DWP

Population (M)

Entity

90.6

Bao Viet Ins.

GDP Per Capita – PPP (USD)

PetroVietnam Ins.

Market

Loss

*Y/Y

USD mn

VND mn

Share %

ratio %

growth %

271.0

5,673,151.0

23.2

54.2

5.4

Corp.

Corp. (PVI)

4,256.0

Bao Minh

5yr Real GDP Growth (%)

Ins. Corp.

7.5

243.6

5,099,967.0

20.9

22.8

9.5

109.9

2,299,838.0

9.4

56.2

0.6

94.8

1,984,460.0

8.1

45.1

0.7

Petrolimex Joint-stock Ins.

Unemployment Rate (%)

Corp. (PJICO)

4.4

munication JSC

1,300

25,000,000

1,100

20,000,000

900

15,000,000

700

10,000,000

Telecom-

Inflation Rate (%)

30,000,000

70.6

1,478,438.0

6.0

38.2

-9.8

2009

2010

Total Premium VND million

2011

2012

2013

500

Total Premium USD million

Ins Corp. (PTI)

6.3

Regulatory and Market Update

*Corporate Tax Rate (%)

2013 Insurance Penetration - Non-life GWP vs. GDP

22.0

Vietnam Prem: GDP = 0.8%; APAC Prem: GDP = 1.4%

Circular 232/2012/TT-BTC issued by Ministry of Finance in 2012 took effect from 1 January 2014 with updates on accounting methods and principles for some insurance companies.

*as for year 2014

Foreign Ownership

Low

Industry Premiums Split by Lines of Business

High

Political Risk

Credit Rating and Outlook 2013 DWP

Paid claims

Loss

Rating

Outlook

Lines of business

USD mn

VND mn

ratio %

S&P

BB-

Stable

Property

99.1

2,073,867.0

1,451,698.0

70.0

Fitch

B+

Stable

Construction &

255.1

5,340,256.0

1,429,443.0

26.8

Moody's

Stable

AM Best

CRT-5

Motor

327.2

6,849,960.0

3,237,388.0

47.3

Liability

29.3

612,501.0

78,522.0

12.8

Surety, bonds, & credit

3.1

63,866.0

33,220.0

52.0

MAT

211.3

4,422,748.0

2,318,045.0

52.4

Industry-Wide Non-Life

925.0

19,363,198.0

8,548,316.0

44.2

PA & Health

243.2

5,091,792.0

2,162,930.0

42.5

Grand Total

1,168.2

24,454,990.0

10,711,246.0

43.8

Terror Risk Aon Hewitt People Risk

Easiest

Hardest

World Bank relative ease of doing business

Major Risks

Catastrophe Risk

Underwriting Risk

Financial Risk

Vietnam is generally not viewed as a catastrophe prone country despite the high frequency of typhoon passing through the country. The major natural peril in the country is usually flood caused by typhoons and tropical storms.

Increased competition in the market has led to falling original rates and wider coverage over the years. Without a tariff in place, most of the risks in the market are seen to be severely under-priced, and there is greater priority for risk selection and technical underwriting to increase underwriting profitability.

The increased volatility in the currency market can significantly impact the returns on some of the treaties that are written in foreign currencies.

Engineering

Restrictions placed on foreign-invested insurers are being removed in accordance with commitments assumed under bilateral trade agreements and with the WTO.

Aon Benfield Outlook GDP growth has been around 7 percent for the past few years, with GDP per capita increasing exponentially, leading to an encouraging improvement in insurance penetration rates over the years. The majority of growth has been in the P&C and A&H lines. Although the macro outlook could be promising, heavy competition in the industry is placing downwards pressure on insurance rates for most classes of business. Without a fixed tariff, especially for natural catastrophe risks, and a lack of consolidation in the market, underwriting profit for various insurers could be severely strained in the coming years. For excess of loss reinsurance, increasing capacity from international reinsurers and softening market conditions globally has created downward pressure on reinsurance rates. However this would be partially balanced by the large single risk losses in recent years and also losses from the social unrest events which happened in May 2014. Vietnam is generally considered to have low natural catastrophe exposures; however there has been increasing appetite for natural catastrophe models particularly in Ho Chi Minh City to address some of the potentially devastating unmodelled perils such as a major flood event.

Capital Requirements Decree 46-2007-ND-CP sets the legal capital of non-life insurance businesses at 300b VND and the legal capital of insurance brokers at 4b VND. Decree 123/2011/ND-CP of December 2011 supplemented on other capital requirements as follow:1) a branch of a foreign non-life insurance business: 200b VND. 2) reinsurance businesses: 400b VND, for non-life reinsurance or health reinsurance business or non-life reinsurance and health reinsurance business and 1.1tr VND, for life, non-life and health reinsurance business. Cicrcular 125/2012/TT-BTC issued in July 2012 has further supplemented on the capital requirements as follow: Insurers writing aviation or satellite insurances is required to have an additional 50b VND. Legal capital for every branch or representative office open is to be increased by 10b VND.

Data Source: IMF, World Bank, AXCO, S&P, Fitch, Moody’s, A.M. Best, the Association of Vietnamese Insurers, the Ministry of Finance, Aon Risk Solutions, Aon Hewitt, and Aon Benfield.

Contacts Malcolm Steingold, CEO APAC malcolm.steingold@aonbenfield.com +61 2 9650 0379

Katsuya Tanimizu, CEO Japan katsuya.tanimizu@aonbenfield.com +81 3 4589 4260

George Attard, Head of Aon Benfield Analytics, APAC george.attard@aonbenfield.com +65 6239 8739

David Vernon, Executive Chairman Japan david.vernon@aonbenfield.com +44 20 7522 3905

Andrew Hare, Principal, Inpoint andrew.hare@inpoint.com +65 6512 0263

Vinod Krishnan, CEO Asia vinod.krishnan@aonbenfield.com +65 6512 0210

Robert De Souza, CEO Australia and New Zealand robert.desouza@aonbenfield.com +61 2 9650 0444

Stephen Warwick, CEO Greater China stephen.warwick@aonbenfield.com +852 2862 4228

Front Cover Image: Golden Kinnari statue at the Temple of the Emerald Buddha (Wat Phra Kaew) in Bangkok, Thailand

This summary is produced solely for brevity and convenience. This summary does not constitute advice of any kind. You should obtain and consider all information relating to the insurance industry before making a decision based on any information in this document. While Aon has exercised all reasonable care in the preparation of the information contained in this document, it does not, either expressly or impliedly, warrant that such information is error or omission free, complete or current. To the extent permitted by law, Aon, its officers, employees and agents will not accept responsibility for any loss, damage or other liability arising in connection with such information. Aon reserves its right to amend this document at any time although it is under no obligation to do so. Neither the issue of this document, nor any of the information presented in it, should be regarded as a commitment or representation on the part of Aon (or any other person) to enter into a contractual arrangement. www.aonbenfield.com Copyright Aon Benfield Inc. 2015 | #ab16015032015

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