BRIEFING
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ASIA INSURANCE
An executive briefing on
insurance for July 8, 2004, prepared by Asia Pulse, the real-time, Asia-based
wire with exclusive news, commercial intelligence and business opportunities.
JAPANESE HOUSEWIVES WORRIED ABOUT PREMIUM HIKE BURDENS |
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TOKYO
- A whopping 64.2 per cent of housewives cited the rising costs resulting from
public pension and health insurance premium hikes as their biggest concern in
their day-to-day management of household expenses, according to a quality of
life survey that Sompo Japan DIY Life Insurance Co. released Wednesday. |
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This underscores the growing
lack of confidence in government policies in areas such as pension reform,
according to Sompo Japan DIY Life. LIFE INSURERS IN JAPAN
BOOSTING DOMESTIC-BOND INVESTMENT |
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TOKYO
- A climb in long-term interest rates is encouraging life insurance companies
to increase their investment in domestic bonds this fiscal year. |
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The move is intended to help
eliminate their negative spreads: the gaps between returns on their investments
and guaranteed rates of return to policyholders. CHINA
DRAWS UP RULES ON INVESTMENT IN OVERSEAS INSURERS |
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BEIJING
- China has
drafted a set of rules on administration of investment in overseas insurance
organizations, and public opinions on the rules are currently being solicited,
according to an official of the China Insurance Regulatory Commission. |
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According to the draft, the
rules will apply not only to domestic insurance companies but also to
non-insurance enterprises in establishing or investing insurance organizations
abroad. 6 NONLIFE INSURERS POST 1.2% RISE IN APRIL-JUNE NET PREMIUMS |
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TOKYO
- The preliminary total net premiums of six major non life insurance companies
rose 1.2 per cent on the year to 1.52 trillion yen (US$1.3 trillion) in the April-June
quarter. |
Net premiums at Tokio Marine
& Fire Insurance Co., Sompo Japan Insurance Inc. (TSE:8755), Mitsui
Sumitomo Insurance Co. (TSE:8752), Aioi Insurance Co. (TSE:8761) and Nipponkoa
Insurance Co. (TSE:8754) all rose between 0.4 per cent and 3.1 per cent. Nissay
Dowa General Insurance Co. (TSE:8759) saw its figure drop 1.8 per cent.
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Winter warning MOTOR insurance
claims typically rise by 12 per cent during the winter months compared to the
summer months, according to telephone and internet insurer, esure. In an attempt to curb the seasonal increase,
esure is urging drivers to slow down to avoid accidents on treacherous roads. |
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Standard bid STANDARD Life is
the latest company to join Ship (Safe Home Income Plans), the organisation
which promotes equity release schemes. There are now 17 lenders in the
self-regulating organisation which saw an 86 per cent increase in business in
the first half of this year. |
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Festive cheer PARENTS plan to
spend an average of £ 127 on each of their children this Christmas, a spending
survey by Goldfish financial services has revealed. |
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House help ALMOST two thirds of
parents aged 50 and over intend to give their children financial help to get
onto the property ladder. Website www.50connect.co.uk says the average amount
they plan to give is £ 5,000. |
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Pension poser THE State Pension
system is expensive, bewildering and unable to provide enough income for most
pensioners, says a report from the Centre for Policy Studies. The think-tank
wants the government to raise the basic pension and scrap means-tested
benefits. |
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Quick loans CUSTOMERS of First
Direct can now get personal loans in seconds through the Internet banking
service. |
Rates rise NATIONAL Savings and
Investments (NS&I) is increasing interest rates on a range of fixed and
variable rate products for the fourth time in three months. New issues,
offering rates up to 0.45 per cent above previous issues, are now on sale.
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High cost of education THE
parents of children born in 2003 will face a £ 129,000 bill for school fees if
they decide to educate their children privately between the ages of 11 and
18. This is according to an analysis by
JP Morgan Fleming, which warns parents that careful long-term financial
planning is needed for a private education. |
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Bond offer YORKSHIRE Building
Society has two new fixed-rate savings bonds, offering investors the best rate
currently available on the high street over two or three years. The two-year
bond pays 4.5 per cent gross annually (3.60 per cent net) with a monthly income
option at 4.41 per cent. The three-year option pays 4.65 per cent gross (3.72
per cent net) or 4.55 per cent monthly. There is a minimum investment per bond
of £ 100. |
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Share boost INSURER Norwich
Union has increased its share in the equity release market to almost 45
per cent at the half year, according to the latest figures released by consumer
protection body SHIP (Safe Home Income Policies). In the first half of 2003,
Norwich Union's equity release sales totalled £ 252m - equating to
almost £ 10m a week in equity being released from people's homes. |
Savings up ALMOST £ 100m more
was invested in new regular saving in the second quarter of 2003 than the first
- £ 579m compared with £ 485m. But this still represents a 17 per cent fall on
the second quarter of 2002, says the Association of British Insurers
(ABI). Better bonus ALLIANCE &
Leicester International, the offshore savings bank, has re-launched its
Offshore 180 Plus account with a new, enhanced bonus element.
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ASIA INSURANCE - JULY 8, 2004 |
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An executive briefing on
insurance for July 8, 2004, prepared by Asia Pulse, the real-time, Asia-based
wire with exclusive news, commercial intelligence and business opportunities.
JAPANESE HOUSEWIVES WORRIED ABOUT PREMIUM HIKE BURDENS |
|
TOKYO
- A whopping 64.2 per cent of housewives cited the rising costs resulting from
public pension and health insurance premium hikes as their biggest concern in
their day-to-day management of household expenses, according to a quality of
life survey that Sompo Japan DIY Life Insurance Co. released Wednesday. |
|
This underscores the growing
lack of confidence in government policies in areas such as pension reform,
according to Sompo Japan DIY Life. LIFE INSURERS IN JAPAN
BOOSTING DOMESTIC-BOND INVESTMENT |
|
TOKYO
- A climb in long-term interest rates is encouraging life insurance
companies to increase their investment in domestic bonds this fiscal year. |
|
The move is intended to help
eliminate their negative spreads: the gaps between returns on their investments
and guaranteed rates of return to policyholders. CHINA
DRAWS UP RULES ON INVESTMENT IN OVERSEAS INSURERS |
|
BEIJING
- China has
drafted a set of rules on administration of investment in overseas insurance
organizations, and public opinions on the rules are currently being solicited,
according to an official of the China Insurance Regulatory Commission. |
|
According to the draft, the
rules will apply not only to domestic insurance companies but also to
non-insurance enterprises in establishing or investing insurance organizations
abroad. 6 NONLIFE INSURERS POST 1.2% RISE IN APRIL-JUNE NET PREMIUMS |
|
TOKYO
- The preliminary total net premiums of six major nonlife insurance companies
rose 1.2 per cent on the year to 1.52 trillion yen (US$1.3 trillion) in the
April-June quarter.
LIFE INSURERS IN JAPAN
BOOSTING DOMESTIC-BOND INVESTMENT |
|
A climb in long-term interest
rates is encouraging life insurance companies to increase their investment
in domestic bonds this fiscal year. |
|
The move is intended to help
eliminate their negative spreads: the gaps between returns on their investments
and guaranteed rates of return to policyholders. |
|
Meiji Yasuda Life Insurance Co.
plans to raise the balance of domestic bonds it holds by up to 900 billion yen
(US$8.2 billion). |
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Asahi Mutual Life Insurance Co.
intends to use about 200 billion to be raised from selling short-term foreign
bonds to purchase Japanese government bonds. |
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Guaranteed yields offered by
large insurers stand at around 3-4 per cent a year, while the yield on newly
issued 10-year government bonds, a benchmark for long-term interest rates,
has been climbing, briefly reaching 1.9 per cent last month. |
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Japan's
nine major life insurers will boost investment in domestic bonds by a total of
1.4 trillion yen, up 70 per cent from fiscal 2003, according to their
investment plans compiled early this fiscal year. |
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Dai-ichi Mutual Life Insurance
Co., for example, will increase investment in government bonds with maturities
of 20 years or longer. |
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Meiji
Yasuda intends to increase its domestic-bond investment by 400-500 billion yen
from its original plans.
Bond Insurers: Fitch Report Sees Stable Ratings, Greater Rivalry in Sector |
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In a report released today,
Fitch Ratings said its ratings in the primary bond insurance sector are stable.
Unlike robust market conditions in 2003, however, where premiums increased by
as much as 100%, Fitch forecast that in today's market environment of lower
issuance, firms will find themselves under pressure to grow in a "prudent
and profitable" manner. |
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The rating agency also
predicted burgeoning rivalry growing out of the acquisition of Financial
Guaranty Insurance Co. by the PMI Group Inc., the public offering of Assured
Guaranty Ltd by ACE Ltd., and the launch of MBIA Insurance Corp's partially
owned reinsurer, Channel Re. |
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"These transactions
suggest increased competition ... which coincides with a drop off in demand for
financial guaranty insurance in various sectors, due mainly to an uptick in interest
rates, and a tightening of credit spreads in the overall market,"
according to the report, authored by lead analyst Thomas Abruzzo. |
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As a result of increased
competition, "there has been a transition of the various business models
within the financial guarantor industry over the past several years... changes
which have led to an increased emphasis on the insuring of less commoditized
structured finance products and international obligations," the report
said. |
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Mostly, the onus of managing
the risk of growing in these new ways are on younger entrants like CDC IXIS
Financial Guaranty and non-triple-A participants such as ACA Financial Guaranty
Corp. and Radian Asset Assurance Inc., according to Fitch. |
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"These challenges have
been recognized by CIFG's decision to insure certain transactions that are
atypical of the established 'AAA' financial guarantors," the report said.
"Such exposures have included senior mezzanine-layered insured exposures to
synthetic collateral debt obligations or first loss reinsurance from
third-party financial guarantors." |
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"There is concern that
these companies are migrating into products that could result in higher loss
severity in the years ahead," Fitch said. |
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Indeed, this type of
diversification might result in portfolios with credit deterioration, some of
which was reversed by the recent, stabilizing economic conditions. Sectors
showing deterioration include manufactured housing securitizations, which
continued to deterioriate over the past year -"a decline that has led to
substantial rating downgrades to numerous MH securtizations, as rising loan
defaults and increased severity have caused noticeable erosion to a number of
existing deals." |
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Finally, the industry outlook
is that "long-term profitability in the 12-14% range on a return on equity
basis is sustainable," though Fitch noted that these levels may be out of
reach for newcomers. |
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"Various factors will
ultimately determine the overall ROE return on equity for a financial
guarantor, including premium pricing, actual losses, expense control, net
investment income, and leverage." |
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In another recent report,
Moody's Investors Services noted non-financial guaranty diversification of
major financial guarantors' businesses, was a "departure from the strategy
you saw 10 years back," said analyst Ranjini Venkatesan. |
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The extent of the non-financial
guaranty diversification has not been very large, comprising about 6% of
revenues and 3% of pre-interest and tax-profits as of year end 2003. But these
are different from the insurers' core business in terms of risk profiles and as
a percentage of total outlays of capital and resources, according to
Venkatesan, who said she expected the guarantors Ambac Assurance Corp,
Financial Security Assurance Inc, and MBIA to maintain these businesses in the
future. |
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Standard & Poors expects to
release its 2004 bond insurance book and profitability index for guarantors
shortly. |
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In
a recent report citing more competition, lower muni volume, and insured
penetration in the asset-backed market, Standard & Poor's asked, "will
these factors lead to a renewed focus on diversification or prompt pricing and
underwriting concessions?"
PMI Europe Receives Regulatory Approval
for Business in Italy |
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The PMI Group, Inc. (NYSE:PMI)
announced today that its wholly owned subsidiary, PMI Mortgage Insurance
Company Limited (PMI Europe), has received regulatory approval to operate its
Italian branch. |
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With regulatory approval, PMI
Europe's Italian branch will offer its array of products specially developed to
cover credit risk. PMI Europe expects to offer flexible coverage types, premium
payment options and reimbursement options for both new mortgages (such as high
LTV mortgages) and old mortgage portfolios (such as adjustable rate loans
exposed to higher default risk if interest rates were to increase) in
the Italian market. |
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"PMI Europe is committed
to developing customized solutions that take into account the risk management
needs and portfolio characteristics for our banking clients. We believe that
our specialist products can be of significant value to the Italian market and
with regulatory approval we are delighted to announce that PMI Europe is now
open for business in Italy," said Giuliano Giovannetti, Italian Country
Manager for PMI Europe. |
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The Italian mortgage market has
continually grown for a number of years and presents PMI Europe with sizable
opportunities. Industry data demonstrates that Italy's
homeownership rate is approximately 70%, one of the highest homeownership rates
in Europe. Mortgages originated in Italy
for 2003 totaled $52 billion (Euro 42 billion). Mortgage originations between
2002 and 2003 grew by over 20%. Italy's
mortgage debt as a percentage of GDP is approximately 10%, which is much lower
than many other European countries, suggesting further growth opportunity for
total mortgage debt outstanding. |
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PMI Europe |
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PMI Europe is a mortgage
insurance and credit enhancement company incorporated and domiciled in Dublin,
Ireland, with an
affiliated sales company incorporated in England
and located in London. PMI Europe
is authorized to provide credit, suretyship and miscellaneous financial loss
insurance by the Irish Financial Services Regulatory Authority. PMI Europe's claims-paying
ability is rated "AA" by S&P and Fitch, and "Aa3" by
Moody's. These ratings are based upon PMI Europe's capitalization, management
expertise, and capital support obligations guaranteed by The PMI Group, Inc. |
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The PMI Group, Inc. |
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The PMI Group, Inc.,
headquartered in Walnut Creek, CA,
is an international provider of credit enhancement products that promote
homeownership and facilitate mortgage transactions in the capital markets.
Through its wholly owned subsidiaries and unconsolidated strategic investments,
the company offers residential mortgage insurance and credit enhancement
products domestically and internationally, financial guaranty insurance and
financial guaranty reinsurance. |
Forward-Looking Statements:
Statements in this press release that are not historical facts or that relate
to future plans, events or performance are "forward-looking"
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Many factors could cause actual results and developments to differ
materially from those expressed or implied by these forward-looking statements.
Risks and uncertainties that could affect PMI are discussed in its various
Securities and Exchange Commission filings, including its report on Form 10-Q
for the quarter ended March 31, 2004.
PMI undertakes no obligation to update forward-looking statements.
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BRIEFING
- |
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ASIA INSURANCE |
|
An executive briefing on
insurance for July 8, 2004, prepared by Asia Pulse, the real-time, Asia-based
wire with exclusive news, commercial intelligence and business opportunities.
JAPANESE HOUSEWIVES WORRIED ABOUT PREMIUM HIKE BURDENS |
|
TOKYO
- A whopping 64.2 per cent of housewives cited the rising costs resulting from
public pension and health insurance premium hikes as their biggest concern in
their day-to-day management of household expenses, according to a quality of
life survey that Sompo Japan DIY Life Insurance Co. released Wednesday. |
|
This underscores the growing
lack of confidence in government policies in areas such as pension reform,
according to Sompo Japan DIY Life. LIFE INSURERS IN JAPAN
BOOSTING DOMESTIC-BOND INVESTMENT |
|
TOKYO
- A climb in long-term interest rates is encouraging life insurance companies
to increase their investment in domestic bonds this fiscal year. |
|
The move is intended to help
eliminate their negative spreads: the gaps between returns on their investments
and guaranteed rates of return to policyholders. CHINA
DRAWS UP RULES ON INVESTMENT IN OVERSEAS INSURERS |
|
BEIJING
- China has
drafted a set of rules on administration of investment in overseas
insurance organizations, and public opinions on the rules are currently being
solicited, according to an official of the China Insurance Regulatory Commission. |
|
According to the draft, the
rules will apply not only to domestic insurance companies but also to
non-insurance enterprises in establishing or investing insurance organizations
abroad. 6 NONLIFE INSURERS POST 1.2% RISE IN APRIL-JUNE NET PREMIUMS |
TOKYO
- The preliminary total net premiums of six major nonlife insurance companies
rose 1.2 per cent on the year to 1.52 trillion yen (US$1.3 trillion) in the
April-June quarter.
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