Global Industry Trends - Insurance - September 2015

Insurance
September
2015
GLOBALINDUSTRYTRENDS

GLOBAL INDUSTRY TRENDS — INSURANCE
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About Global Industry Trends
Global Industry Trends is a snapshot report, which helps its
readers identify key trends shaping the industry. All the
major activities in the industry are analyzed and
summarized in a concise manner — making it easier for
readers to comprehend them in the least time.
Global Industry Trends in focused toward executives, who
are required to be aware about their industry, but do not
have time to track it on a regular basis.

Trends in Global Insurance Industry
Increase in Mergers and Acquisitions across
the globe
Japanese life insurer Sumitomo Life Insurance Company is
acquiring US–based insurer and provider of annuities and
other financial products — Symetra Financial Corporation.
The deal — worth US$3.8 billion — is expected to help
Sumitomo expand its operations into the US, and insulate
itself from the potential fall in insurance premiums, caused
by aging Japanese population. As per the deal, Symetra
shareholders will receive US$32 a share in cash, and a
special dividend of US$0.50 a share.
Richmond, Virginia–based middle market insurance
agency Hilb Group has acquired Wilmington, North
Carolina–based independent insurance agency JWB
Insurance Group, for an undisclosed amount. JWB
Insurance Group is The Hilb Group’s seventh acquisition in
2015, and a part of its plan to expand across the East Coast
in the US.

X.L. America Inc. is acquiring Florida–based property and
casualty insurer Allied International Holdings Inc., and
insurer of the outdoor entertainment industry — T.H.E.
Insurance Co. While Allied provides property and casualty
insurance coverage for the amusement and
entertainment industry, T.H.E. Insurance Co. provides
insurance in the field of workers’ compensation, inland
marine, and auto-liability. The acquisitions will help X.L.
expand its reach in the niche insurance businesses.
Florida–based workers’ compensation outsourcing services
firm Patriot National Inc. is acquiring New Jersey-based
property and liability program administrator R.C.A.
Insurance Group (RCA). RCA provides preferred insurance
programs to the hospitality industry. The acquisition is
expected to help Patriot National strengthen its position in
the hospitality space and provide product offerings in
niche industry segments. Post–acquisition, RCA will
become part of Trigen Insurance Solutions — Patriot
National’s operating subsidiary, working on broader
commercial insurance lines.

Florida–based AssuredPartners Inc. has acquired Missouri–
based Insurance & Benefits Group LLC (IBG). IBG provides
property and casualty services such as surety bonds
placement, workers’ compensation, inland and ocean
marine, and environmental liability.
UK–based financial services provider Jelf Group PLC has
acquired Hertfordshire, UK–based general insurance
broker Libra Insurance Services Limited for an undisclosed
amount. The acquisition — funded by an existing loan
facility with Barclays — aligns with Jelf Group’s strategy of
growth through organic initiatives and selected
acquisitions.
Chicago, US–based commercial insurance agency, Union
Insurance Group has acquired Rockville, Maryland–based
insurance agency The McLaughlin Company, for an
undisclosed amount. Union Insurance Group specializes in
property and casualty, as well as professional liability
insurers for labor organizations.

London, UK–based underwriting agency Nexus
Underwriting Management has bought another London–
based specialist managing general agency (MGA) EBA
Insurance Services for an undisclosed sum. EBA’s MGA
business lines include architects and engineers’
professional indemnity, as well as general professional
indemnity. The acquisition is expected to help Nexus
Underwriting Management grow its MGA business across
Europe.
Companies banking on changes in Indian
FDI norms
Indian financial services company HDFC is selling 9% stake
in its insurance business HDFC Life to Its British joint venture
partner Standard Life for approximately INR17 billion. The
sale will help Standard Life increase its stake in the joint
venture from 26% to 35%, as the Indian government has
increase Foreign Direct investment (FDI) limits in domestic
insurance sector from 26% to 49%. Post the sale, HDFC’s
stake in the joint venture would come down to 61.65%.

Canadian insurer Sun Life Financial Inc. is planning to raise
its stake in its Indian joint venture with Aditya Birla Group —
Birla Sun Life Insurance. The insurer is planning to raise its
stake from 26% to 49%, after the government’s regulatory
changes. Sun Life is bullish about India and other Asian
countries — which contributed approximately 13% of its
operating earnings in the second quarter of 2015. It has
also announced three acquisition deals in 2015.
UK–based Aviva Plc. Is also planning to increase its stake in
its Indian joint–venture — Aviva India — from 26% to 49%
after the regulatory changes. Aviva currently holds the joint
venture with Indian company Dabur Invest Corp (DIC),
having the 74% stake.
Similarly, Japan–based Tokio Marine Holdings Inc. is
planning to increase its stake to 49% in its Indian joint
venture — Edelweiss Tokio Life Insurance. The company
has a joint venture with Edelweiss Financial Services, where
it presently has 26% stake. The joint venture has a network
of 60 branches across 50 major cities in India with more
than 10,000 personal financial advisors.

Regulatory changes across countries
The government of China is expanding the ambit of its
medical insurance to cover all critical illnesses for its
population. In order to improve the healthcare system of
the country, the government is bringing half of all the
medical costs of individuals under insurance. The move is
expected to reduce the healthcare burden on the citizens.
The Insurance Regulatory and Development Authority of
India (IRDAI) is planning to digitize all insurance policies
across India. Once implemented, policyholders will have
to pay an additional fee to have a physical copy of their
insurance policy. At present only 2% of all the policies sold
in India are in digitized format, and IRDAI expects the
whole process to take approximately three years.
In the US, the California Supreme Court has given a
decision that policyholders can assign their rights under
liability insurance policies, after the loss or injury has
occurred and potential liability exists. The decision was
given in the case Fluor Corp. vs. Superior Court, and
overturned the decision in Henkel Corp. vs. Harford
Accident & Indemnity Co. (2003), which held that post–loss
transfers were invalid unless the insurer gave consent.

After the June 2014 legislation in Ohio, US, which allowed
businesses to form captive insurance companies, the state
has come up with the first ‘protected cell’ captive
insurance company — Imprise Financial PCC Inc. Captive
insurance companies are opened by businesses for their
own commercial insurance needs, and are regulated by
the Ohio Department of Insurance. The protected cell
captive insurance structure eliminates the market–entry
barriers for such self–insurance programs.
Insurers divesting their stake
Wells Fargo & Co. is planning to divest its crop insurance
business, and has launched an auction for the same. The
company is reviewing strategic options for its Rural
Community Insurance Services (RCIS) subsidiary, including
a sale. The move is due to increased regulatory pressure
on the US banks to improve their balance sheets and
reduce risks.
Belgium–based insurance company Ageas is selling its
Hong Kong Life insurance business to Chinese asset-
management firm JD Capital for EUR1.23 billion (US$1.4
billion). Ageas is realigning its strategy in the Asia, and has
plans to focus on joint ventures and partnership in

emerging countries such as India, Malaysia, China,
Philippines, Thailand and Vietnam. The company is
expected to complete the sale in the first half of 2016.
Companies going for expansion
Insurance risk assessment services and decision analytics
provider Verisk Insurance Solutions has launched a new
analysis app — ISO ClaimSearch mobile application. The
mobile app provides the insurers with a productivity tool to
access property and casualty insurance databases on a
real–time. It further helps the insurers to investigate and
adjust claims more efficiently, as well as conduct inquiries
to facilitate faster claims handling.
Berkshire Hathaway’s subsidiary Geico Corporation has
increased its car insurance premium rates in Illinois by an
average of 7.7%. The rates have been increased for new
policies, effective August 2014, and renewals effective
October 2013. The company has taken the step to cover
its costs. Geico’s loss ratio has also increased to 84% in the
second quarter of 2015, from 76% a year before.

Organizations Mentioned in the Report
Aditya Birla Group
Ageas
Allied International Holdings Inc.
AssuredPartners Inc.
Aviva Plc.
Berkshire Hathaway
Birla Sun Life Insurance
Dabur Invest Corp
EBA Insurance Services
Edelweiss Financial Services
Edelweiss Tokio Life Insurance
Geico Corporation
HDFC
HDFC Life
Hilb Group
Imprise Financial PCC Inc
Insurance & Benefits Group LLC
JD Capital
Jelf Group PLC
JWB Insurance Group
Libra Insurance Services Limited
Nexus Underwriting Management
Patriot National Inc.
R.C.A. Insurance Group
Standard Life
Sumitomo Life Insurance Company
Sun Life Financial Inc.
Symetra Financial Corporation
T.H.E. Insurance Co.
The McLaughlin Company
Tokio Marine Holdings Inc.
Trigen Insurance Solutions
Union Insurance Group
Verisk Insurance Solutions
Wells Fargo & Co.
X.L. America Inc.

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The information contained in this report is of a general nature and is not
intended to address any particular individual or entity’s circumstances.
Although proper care has been taken to provide accurate and timely
information, there can be no guarantee that such information is accurate
as of the date it is received or that it will continue to be accurate in the
future. The publisher should not be held liable for any discrepancy in the
information. No one should act upon such information without appropriate
professional advice after a thorough examination of the particular
situation.
Publication Volume: GIT-15-INS-09
Publication Date – September 2015
© 2015 Indalytics Advisors Private Limited
For further information, please contact info@insightsed.com

Global Industry Trends - Insurance - September 2015

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Global Industry Trends - Insurance - September 2015