Insurers in Asia (excluding Japan) have recorded an embedded value of 34% for 2016, driven by 40% growth in value of new business (VNB) in 2015, according to a survey on 34 major Asian insurers conducted by global consulting and actuarial firm Milliman.
The Milliman 2016 Embedded Value Results: Asia (excl. Japan) report reveals that the region’s embedded value had a 15.3% year-on-year growth, from US$294 billion to US$339 billion. This was influenced by strong VNB growth in the region’s insurance industry, attributed to life insurance gross written premium (GWP) increasing by 28%, particularly in China, which posted 43% growth in GWP.
All Asian markets also recorded an increase in value of in-force business (VIF). South Korea had the largest VIF growth at 31%, mostly due to margin-driven growth. Meanwhile, Hong Kong also had strong VIF growth at 20%, driven by high life insurance sales for mainland Chinese customers.
“The China and Hong Kong markets were the main drivers of the VNB explosion in the region, both having mainland consumers to thank for these results,” said Paul Sinnott, principal and consulting actuary at Milliman. “Although we have some longer term concerns about the sustainability of profit margins in the region, recent yield curve rises are relieving some margin pressure in the short term.”
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