MERGERS AND ACQUISITIONS
Largest wholesale US distributor
US private equity firm JC Flowers (JCF) has
completed the acquisition of the life and commercial insurance and
retirement services divisions of the former BISYS Group from US
bank Citigroup. The acquired divisions will be merged with Crump
Insurance Services, a wholesale property and casualty insurance
broker owned by JCF, and the combined units will now operate under
the name Crump Group.
The combination of the former BISYS divisions and Crump Insurance
Services has, according to JCF, created the largest wholesale
insurance distributor in the US. On a pro forma consolidated basis,
Crump Group, which employs about 3,000 associates in 60 locations,
generated more than $450 million in revenue during the past 12
months, said JCF.
Citigroup acquired BISYS Group in May 2007 for $1.47 billion and
simultaneously on-sold the life, commercial and retirement services
divisions to JCF for an undisclosed sum.
Great-West Lifeco expands US operations
Great-West Life & Annuity Insurance Company, the US unit of
Canadian insurer Great-West Lifeco, has announced that it has
acquired the 401(k) retirement plan record-keeping business of US
investment management company Franklin Templeton Investments.
Great-West Life, which has supported Franklin Templeton’s
record-keeping business since 2006, will assume additional
servicing and custodial responsibilities for about 340 plans
representing 64,000 participants.
“This agreement reinforces our position as one of the top
retirement plan providers in the United States,” said Raymond L
McFeetors, president and CEO of Great-West Lifeco.
The deal further consolidates Great-West Life’s position in the US
retirement plan record-keeping market where, according to a ranking
by research company Spectrem Group in January 2007, it holds fourth
position based on total participants.
According to Great-West Life, it provides retirement plan services
to 21,000 plans representing about 3.5 million participants and
$104 billion in assets.
Positive signs from North American individual life
Data compiled by research company MIB Group has revealed that
application activity for individually underwritten life insurance
in the North American market in the second quarter of 2007, though
still in decline, displayed encouraging signs. According to MIB
Group, application activity in the quarter displayed its lowest
decline in three years, falling 1.3 percent year-on-year. This
compared with a year-on-year decline of 5.5 percent in the first
quarter of 2007.
In the US, application activity in the second quarter of 2007
declined by 1.6 percent compared with a decline of 5.3 percent in
the first quarter, while in Canada second-quarter application
activity increased by 0.5 percent compared with a first-quarter
decline of 7.5 percent.
On a year-on-year basis, MIB Group reported that North American
application activity in June 2007 was down 2.2 percent compared
with a year-on-year decline of 3.5 percent as at 31 March 2007. To
30 June, year-on-year declines of 2.7 percent and 0.9 percent were
recorded in the US and Canada, respectively.
AVIVA USA to move home
Aviva USA, the US unit of UK insurer Aviva, has announced plans to
build a new national head office in West Des Moines in the state of
Iowa. The new 360,000 sq ft office will be located on a 71-acre
site and is expected to cost between $135 million and $150 million,
said Thomas Godlasky, CEO of Aviva North America.
The new office, due for completion in early 2010, will enable Aviva
USA to consolidate existing operations in three downtown Des Moines
locations and create capacity for expansion.
Godlasky said that in the past seven months, Aviva USA had added
about 200 jobs and expected to add at least another 400 over the
next three years.
Hartford Financial settles with three states
US insurer The Hartford Fin-ancial Services Group (The Hartford)
has agreed without denying or admitting any violation of laws to
pay $115 million to settle allegations by the states of
Connecticut, Illinois and New York that it faked insurance bids and
allowed illegal trading in some of its mutual funds in the
Under the settlement, The Hartford will establish a $5 million fund
for policyholders harmed by improper insurance practices and pay a
$26 million penalty to the three settling states – $3 million each
going to Connecticut and Illinois, and $20 million to New
It will also establish an $84 million fund to compensate market
timing investor victims.
Allianz success for grandparent product
Launched in April, the EnkelPolice is the first of a series of
multi-line products Allianz Deutschland plans to bring to the
German market to fill what it believes is a need for more products
aimed at people aged 55 and over.
The EnkelPolice policy is aimed at people wanting to provide
protection and capital benefits for their grandchildren or other
young relatives, and has been dubbed ‘the grandchildren’s policy’
Among the product’s features is private health coverage for
illness, extended care or disabling injury for children from birth
until the age of 18. In addition, the policy has a capital
accumulation component which becomes payable to the beneficiary at
age 18 or can be used to establish a long-term retirement plan. The
policy also incorporates insurance on the life of the person paying
the premiums. Should he or she die, full coverage continues until
the child reaches 18.
Between April and the end of July, 7,000 of the policies had been
sold – proving, said Gerhard Rupprecht, chairman of the Allianz
Deutschland board of management, that products custom-tailored for
seniors have “great potential”. The age group 55 and above is the
only one increasing in size in Germany, he added.
MERGERS AND ACQUISITIONS
Royals end merger talks
Merger negotiations between UK mutual life insurers Royal London
and Royal Liver initiated in late April this year have been
abandoned. In a statement, Royal Liver noted that although the
proposed merger had considerable merits for its members, its board
has decided that the company’s interests “will be better served by
pursuing an independent strategy”.
Royal Liver has faced headwinds in recent years as it strived to
modernise its marketing channels and wrestled with cost over-runs
(excess of operating costs over income). Royal Liver’s CEO, Steven
Burnett, noted in the insurer’s 2006 annual report that cost
over-runs had until recently “threatened our continued operation”.
While this threat has abated, he added that “challenges remain”.
Royal Liver had a cost over-run of £7.9 million ($15.9 million) in
Royal Liver reported total assets under management of £3.5 billion
in 2006, much less than Royal London’s £31.5 billion.
AIG buys into Bulgarian communications
AIG Capital Partners (AIGCP), a unit of US insurer American
International Group, has acquired a 90 percent stake in Bulgarian
Telecommunications Company (BTC) and is to launch a tender offer to
outstanding minority shareholders.
Though AIGCP did not disclose the full purchase price, it did
reveal that it had paid the primary vendor of BTC, private equity
firm Viva Ventures, €1.08 billion ($1.47 billion) for its 65
percent interest. When AIGCP concluded the deal with Viva Ventures
in May this year, a total value of €1.661 billion was placed on
Services provided by BTC include voice, data, internet, leased
line, TV and radio broadcasting and transmission and payphone
BTC owns one of Bulgaria’s three mobile operators, Vivatel, and is
one of the country’s largest internet service providers and the
principal provider of satellite communications.
Sun Life strengthens its Chinese distribution
Strengthening its distribution capacity, Chinese life insurer Sun
Life Everbright (SLE) has entered into a bancassurance agreement
with China Everbright Bank. SLE was established in 2003 as a joint
venture between Canadian financial services group Sun Financial and
Chinese state-owned conglomerate China Everbright Group, which
holds a 45.6 stake in China Everbright Bank.
Under the agreement, SLE’s pensions and protection products will
initially be marketed in conjunction with China Everbright Bank’s
enterprise annuity offerings, a form of group pensions. The
agreement will later be extended to include the distribution of
individual and group pension, health and accident insurance
products. China Everbright Bank has 370 branches and sub-branches
in 36 cities in 23 provinces.
“We are confident this initiative will contribute to our
significant business growth in China,” said Sun Life CEO Donald
Indian insurers harness mobile technology
ING Vysya Life (IVL) has become the first Indian life insurer to
harness the mobile phone as a means of permitting policyholders to
pay premiums. To facilitate this, IVL has opted for mobile payments
service provider PayMate India’s wireless platform that utilises a
mobile phone short message service (SMS) to execute
IVL explained that a customer sends an SMS with their policy number
and instantly receives a reply confirming the premium amount due
and asking for payment authorisation, which is done by replying
with the PayMate PIN given at the time of registration for the
service. Once the customer has input and sent the PIN, he or she
gets a payment confirmation within a few seconds, again via SMS.
PayMate’s mobile payments service was launched in mid-2006.
IVL is not the only Indian insurer to harness the benefits of
technology in its marketing efforts. In 2006 Birla Sun Life
launched India’s first internet-based pension and life insurance
marketing platform, permitting customers to initiate a policy
purchase online and pay premiums online via the use of a credit
card. Other life insurers have followed, including ICICI
Prudential, Tata AIG and Bajaj Allianz.
Ping An’s profits roar ahead
Ping An, China’s second-largest life insurer, set a blistering pace
in the first half of 2007, lifting its net profit 139.5 percent
compared with the comparable period in 2006 to RMB9.97 billion
Ping An’s results were, in particular, boosted by strong gains in
share investment values and its acquisition of Shenzhen Commercial
Bank in 2006. Net profit derived from banking operations soared
from a mere RMB1 million in the first half of 2006 to RMB1.09
Net profits from life insurance operations also put in a strong
showing, rising 70 percent to RMB6.01 billion. General insurance
unit Ping An Property & Casualty Insurance recorded a 140
percent increase in net profit to RMB760 million, while securities
trading units increased net profits almost fourfold, from RMB174
million to RMB676 million.
As at 30 June 2007, Ping An’s total assets stood at RMB617.8
billion, up 24.9 percent compared with a year earlier.
Citibank and PT Prudential Life team up
The Indonesian units of UK insurer Prudential and US banking group
Citibank have formed an alliance to market a new product,
Ultimatelink, that combines a unit-linked investment and life and
accident and insurance. The product is available in Indonesian
rupia and US dollars.
In the partnership, Citibank will serve as marketing agent for
Prudential, which will allocate financial service consultants to
Citibank branches. Citibank has 17 branches operating in major
Commenting on the alliance, Kevin L Holmgren, president director of
Prudential Indonesia, said: “Industry trends suggest that there is
a significant growth in the demand for unit-linked product that
provides double benefits.” He added that unit-linked product sales
represent 38 percent of the Indonesian insurance market.
In addition to the new alliance with Citibank, Prudential Indonesia
has an existing distribution alliance with UK bank Standard
Chartered’s Indonesian unit. Prudential Indonesia reported premium
income of £36 million in the first quarter of 2007, up 57 percent
compared with the first quarter of 2006.
Romanian private pensions on the move
American Life Insurance Company (ALICO) has become the latest
foreign insurer to enter Romania’s fledgling mandatory private
pensions market following the granting of a licence by the Romanian
Commission for the Supervision of the Private Pension System.
Spearheading ALICO’s drive into the market is a new pension
management unit, AIG Fond de Pensii, which is majority-owned by AIG
Life Asigurari Romania, ALICO’s Romanian insurance business that it
established in 1998.
The new unit will commence business on 17 September, the launch
date of the new mandatory pensions system. The move is anticipated
to compel up to 3.5 million Romanians to enter the market as
PruHealth joins forces with Sainsbury’s
‘Improve your lifestyle and save on health insurance costs’ is a
key feature of UK health insurer PruHealth marketing pitch. Now in
a unique move, PruHealth has teamed up with grocery retailer
Sainsbury’s to reward policyholders for buying fruit and vegetables
at any of its 779 stores.
PruHealth explained that policyholders earn Vitality points
according to monetary spends. For example, for every £2 spent on
fresh fruit and vegetables, policyholders will earn one Vitality
point. Vitality points are accumulated over the course of a year
and offset against health insurance premiums upon renewal the
following year, assuming no claims have been made.
Launched in 2004, PruHealth, a joint venture between UK insurer
Prudential and South African insurer Discovery, covers 117,000