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Taiwan Insurance Report Q4 2011
Business Monitor International, Oct 2011, Pages: 83
The track record of Taiwan’s life insurers suggests that what is, by any standard, a massive and well-developed life segment may continue to grow over the medium term as a result of product development.
In the short term, though, the official discouragement of sales of interest-variable products, which had been seen as competitors to term deposits, has constrained growth. Both Cathay Life and Fubon Life reported that total premiums and first year premiums were significantly lower in H111 than they had been in H110. In coming months, we will almost certainly be revising down our projections for life penetration and premiums, for 2011 and subsequent years.
The life segment is reaching the end of a three-year period during which a number of foreign majors have – for various reasons – decided to reduce their commitment to the Taiwanese life segment or to sell out completely. Taiwan is a massive market, but it is one where the foreigners face massive competition from entrenched local titans such as Cathay Life, Fubon Life and Chunghwa Post.
Competitive pressures and regulatory decisions have constrained the non-life segment in the past. However, the latest reports from Cathay Century and Fubon Insurance indicate that premiums were again growing quite strongly in H111.
The absolute size, relative size, access to capital, brand and distribution networks of the massive Taiwanese financial services conglomerates – Cathay, Fubon and Shin Kong – which own the eponymous life companies (and Chunghwa Post, which is analogous to the Japan Post in Japan and La Poste in France) make them formidable competitors. Nevertheless, Allianz has succeeded in building in Taiwan a business that is larger, in terms of premiums written, of its combined (and not insubstantial) businesses in Central and Eastern Europe. Very unusual for a major Asia Pacific regional market, BNP Paribas Cardif appears to be the second largest foreign life company. However, one of the unusual features of Taiwan’s life insurance landscape is that, over the last three years, foreign companies have been selling or scaling down their businesses in Taiwan. In some instances – such as AIG’s protracted efforts to sell Nan Shan – the decision has been driven primarily by financial problems in other countries. Prudential Financial, Prudential plc, AEGON, MetLife and Manulife are all examples of companies that have very large businesses in other parts of the Asia Pacific, but which currently have a relatively small (or no) presence in Taiwan.
The much smaller, and more fragmented, non-life segment is dominated by property and casualty insurance operations of the Taiwanese financial conglomerates – and affiliates of Japanese property and casualty insurers. Multi-nationals such as Zurich and Chartis are present, but are relatively small. Aside from health insurance premiums written by life companies, which we have included in the non-life segment in order to ensure comparability of figures with other countries surveyed by BMI, most non-life lines had been contracting over the five years to the end of 2010. However, as noted above, the latest data from the largest local companies indicate that the segment was expanding again in H111.
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