ShareBuilder extends ING Direct’s reach
ING Direct USA, the US internet banking unit of Netherlands
bancassurer ING Group, is to acquire ShareBuilder, an online
brokerage business focused on direct marketing of what ING terms “a
limited set of simple and high-value investment products”.
These products include shares, exchange-traded funds, options and
automatic investment plans to early stage investors. The
consideration for the acquisition is $220 million.
The transaction, said ING, will add cost-effective investment
options to ING Direct’s consumer product offerings, which currently
include online savings, payment accounts and home mortgages.
ING added that ING Direct USA will absorb 661,000 of ShareBuilder’s
customers (as of 30 September 2007), thereby helping ING Direct to
reach the 20-millionth customer mark worldwide.
CSC releases Product Accelerator
Product Accelerator, a software solution that developer US
technology group Computer Sciences Corporation (CSC) claims
drastically reduces the time-to-market of new products from months
to days, has been delivered to three of the US’s top 20 life
insurance and annuity insurers. The three unnamed companies
participated in an early adopter programme of the new product,
which is now available for general delivery.
During Product Accelerator’s development stage, CSC explained, it
reviewed the early adopters’ processes and incorporated automation
and other changes to streamline product introduction. Unlike other
product configuration software, continued CSC, Product Accelerator
includes a comprehensive library of insurance products that enables
carriers to reduce the time needed to launch new products from
months to days. In addition, the software includes common life
insurance and annuity product line templates, and content
MERGERS AND ACQUISITIONS
UnitedHealth boosts administrative capacity
In a $775 million cash deal, US health insurer UnitedHealth Group
is to acquire the major health care administrative units of Fiserv,
a provider of IT services to financial service organisations.
According to Fiserv, the units provide administrative services to
an estimated 2 million individuals.
The health care units that are to be acquired include Fiserv Health
Plan Administration, the largest third-party administrator of
self-funded health plans in the US; Fiserv Health Plan Management,
an outsourcing service for mid-sized health plans and health care
payer organisations; Innoviant, a prescription benefits
administrator; and Avidyn Health, a care management company. This
transaction is expected to close in December or in the first
quarter of 2008.
Larry King declares war on broker
The US life settlements industry is the focus of more unwanted
attention following the filing of a lawsuit by television talk-show
host Larry King in the California Central District Court against
one of the most respected insurance brokerage firms in the US, The
Meltzer Group, and its founder Alan Meltzer. King is claiming $1
million in damages related to the sale in 2004 of two life
insurance policies that carried death benefits totalling $15
King alleges in his suit that the defendants advised him to buy and
sell two policies, one worth $10 million and the other $5 million,
and sell them immediately. King followed this advice and realised a
total profit of $1.4 million.
However, despite what may appear to be a sizeable windfall profit,
King is unhappy and claims that the broker’s advice was not in the
best interests of his family as factors such as his future
insurability were not considered. Their advice, alleges King, was
motivated by “greed and avarice”.
Subprime woes for Scottish Re
Investors in Bermuda-based life reinsurer Scottish Re were dealt
another blow in late November when its share price slumped almost
one-quarter in three days, bringing its fall to 80 percent since
November 2006. The latest nosedive followed the release of Scottish
Re’s third-quarter results which reflected a $109.5 million loss,
bringing the total loss in the first nine months to $165
The bulk of the third-quarter loss – $95.3 million – related to
realised losses on subprime residential mortgage-backed securities
(RMBSs) valued on 30 June 2007 at $2.1 billion and slightly less
risky Alt-A RMBSs valued at $1 billion. The total value of the
reinsurer’s fixed maturity investments on 30 September was $7.64
billion and total assets were $10.69 billion.
On a positive note, Scottish Re’s balance sheet reflected total
cash holdings of $1.25 billion, up from $622 million a year
earlier. The increase followed a cash injection of $300 million
each from insurer MassMutual and private equity firm Cerberus
Partners, which now have a combined holding of 69 percent in
Standard Life exits protection market
Just two years after re-entering the UK protection market, Standard
Life has announced that it is to exit it once again. From 6
December, it will cease accepting new life insurance, income
protection and critical illness business. The Edinburgh-based
insurer’s health insurance business is not affected. In a
statement, Standard Life cited as reasons for its decision the
“fiercely price-competitive” nature of the UK protection market and
its own “sub-scale” involvement in the market.
Standard Life noted that in 2006 it held a 0.6 percent share of the
protection market, which accounted for less than 1 percent of its
sales. Standard Life has about 400,000 protection product
Axa aids academic research
French insurer Axa has come to the assistance of academics with the
launch of the Axa Research Fund, to which it has allocated a budget
of €100 million ($143 million) to be used over five years. The
fund, said Axa, will support:
· partnerships through endowments to academic
institutions for long-term research projects;
· studies and more specific research projects intended
to support Axa’s own research and development; and
· university campuses, engineering and business
Although it is in its early stages, the fund will support
institutions in Europe. Axa hopes to be able to accept applications
for assistance from outside Europe at a later stage.
MERGERS AND ACQUISITIONS
Munich Re enters insurance software arena
IT software can significantly enhance the productivity of life
insurers, believes Munich Re. The German composite insurer and
reinsurer is so convinced of this that it has acquired Allfinanz, a
Dublin-based developer of internet-based business processing and
underwriting automation software to the life insurance industry,
for €48 million.
Munich Re noted that the decision to buy Allfinanz followed the
success of a global marketing and co-operation agreement between
Allfinanz and Munich Re that began earlier this year.
According to Munich Re, Allfinanz’s software can significantly
improve the sales processes of life insurers, as it allows them to
issue policies to most clients in one efficient, automated process.
In addition, said Munich Re, by combining its underwriting rules
and reinsurance services with Allfinanz’s software solutions, life
insurers have access to “leading-edge” technology, enabling them to
process large volumes of business more efficiently.
“Insurers can [also] expect greater in-depth analysis of their
business data and processes, leading to continued improvements in
the underlying underwriting rules and processes,” added Munich
MERGERS AND ACQUISITIONS
ING drives deeper into Latin America
Netherlands bancassurer ING Group’s growth strategy in Latin
America took another step forward in November when it reached an
agreement with Spanish bank Santander and Argentine bank Grupo
Bapro to acquire their Argentine pension fund and annuity joint
venture (JV) for $280 million.
The JV’s units, mandatory pension fund Origenes AFJP and annuity
provider Origenes Seguros de Retiro, had 2.4 million customers and
assets under management of $6.5 billion as at 30 June 2007.
“These pension and annuity businesses both have exceptional market
positions in Argentina, making this acquisition an excellent
platform with which to grow ING’s wealth management and retirement
services position in the region,” said Tom McInerney, ING Insurance
Americas’ CEO. The acquisition will make ING Argentina’s largest
pension fund manager and second-largest annuity provider.
The deal came four months after ING announced the acquisition of
Santander’s pension fund management companies in Chile, Colombia,
Mexico and Uruguay for €960 million, a move that propelled ING into
the position of Latin America’s second-largest pension fund
Kyobo Life attracts Standard Chartered
Standard Chartered Bank has bought a 5.3 percent interest in Kyobo
Life Insurance, one of Korea’s largest life insurers, from existing
shareholders who are members of Kyobo’s founding family. The
investment was made by Finventures, a wholly owned investment
company of the UK bank’s private equity unit, Standard Chartered
Private Equity (SCPE).
“We view Korea’s life insurance industry as having undergone
dynamic changes in recent years that will lead to attractive growth
opportunities in this sector,” said Karam Butalia, the global head
of SCPE. “Standard Chartered believes that Korea is an economy and
marketplace particularly conducive to growth in the financial
Kyobo’s market share of 15 percent ranks it third, slightly behind
Korea Life, but well behind market leader Samsung Life, which holds
a market share of about 33 percent.
Old Mutual’s Pay-when-you-can product
Taking a lead from the purchase of top-up airtime for mobile
phones, life insurer Old Mutual South Africa (OMSA) has launched
Pay-when-you-can, an insurance product that it claims is a
world-first. The product, marketed via supermarkets of South
African chain Shoprite, enables customers to buy accident cover for
a family for periods of 60 days. Shoprite operates almost 1,000
stores in South Africa.
According to OMSA, first-time buyers register at a Shoprite
supermarket and pay ZAR9.95 ($1.50) for ZAR5,000 accident cover for
60 days. O-nce registered, the consumer will be able to top up the
cover for a cost of ZAR6.95 for ZAR5,000 cover for another 60 days.
Funeral insurance of up to ZAR20,000, which includes cover for
death relating to natural causes, is also available for extendable
periods of up to 12 months.
Samsung Life fights claim fraud
Samsung Life, Korea’s largest life insurer, has deployed ILOG
JRules, a software product designed to detect fraudulent claims.
Developed by US software vendor ILOG, the system’s deployment comes
against the background of a study by the Korean Financial
Supervisory Service, which found the number of detected insurance
fraud cases increased by 46.4 percent in 2006 compared with
ILOG JRules is an automated business rules management system (BRMS)
that harnesses knowledge accumulated from past insurance fraud
management work to review claims. In Samsung Life’s case, the
system analyses 800 different factors, including tracking the
history of insurance fraud detections, the number of insurance
accident cases and the number of insurance agreements.
Expressing satisfaction with ILOG’s solution, Samsung Life’s
senior manager of claims inspection, Sam Dongchul Park, said:
“Utilising BRMS, we shortened the inspection process for processing
10,000 claims from two weeks to one day.”
Aviva to enter Taiwan
Taiwan’s Financial Supervisory Commission (FSC) has granted
permission to UK insurer Aviva and Taiwanese financial services
group First Financial Holdings (FFH) to establish a joint venture
life insurance company to be named First-Aviva. FFH will have a 51
percent equity stake in the new Taiwanese insurer and Aviva a 49
percent equity stake. The initial paid-up capital of
First-Aviva will be NT$2.25 billion ($70 million).
In what Aviva claims is a first for Taiwan’s insurance industry,
First-Aviva will manufacture long-term savings and pension products
in Taiwan and distribute them through an exclusive bancassurance
agreement with FFH’s banking subsidiary, First Commercial Bank
FFH’s largest unit, FCB, operates 194 branches across Taiwan. FCB
and FFH’s other financial services operations, which include
securities trading and asset management, have a total customer base
of about 5 million. The launch of First-Aviva is subject to receipt
of approval of its operational licence from the FSC.
Green light for Saudi Arabian reinsurer
Saudi Arabia’s Council of Ministers has approved the establishment
of Saudi Arabia’s first reinsurance company. The new reinsurer, to
be named Saudi Re, E’ada, will have an initial capital of SAR1
billion ($268 million) and after incorporation will offer 40
percent of its shares to the public. In a statement, Mousa
Al-Rubaian, chairman of the Saudi Re Founders Committee, said the
new company will provide coverage in most classes of business and
will focus on opportunities in the Gulf Co-operation Council
countries of Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the
United Arab Emirates.
According to the Saudi Arabian Monetary Agency, the Saudi insurance
industry’s total premium income in 2006 was SAR6.9 billion, 35
percent up compared with 2005.
Health insurance premium income, the main growth driver, grew by 62
percent to SAR2.2 billion, general insurance premium income rose 25
percent to SAR4.5 billion and life insurance premium income rose 13
percent to SAR220 million.