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8db6_ING Insurance - Asia-Pacific
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Transcript of 8db6_ING Insurance - Asia-Pacific
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ING Insurance
Asia/Pacific
Frank Koster, CEO
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Key messages
ING has attractive market positions across Asia
Contesting for #2 position in the region
Back to Basics completed ahead of schedule
Generating new commercial momentum is now priority
APE ambition CAGR: 17-20%
Maintain cost discipline and high operating efficiency
Several measures to capture growth in Asia
Tied agents are dominant in distribution and are being directed toward
further out-performance ING is increasingly focused on a number of preferred bank partnerships
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ING market share and rank (APE)
* COLI only through Independent agents (IA)** Foreign insurers only, all other markets reflect foreign and local playersSource: ING internal estimate based on latest available data
Hong Kong
Thailand
China
Top three position inindividual life
Exclusive BA partnershipwith Public Bank
Market leading EmployeeBenefits (EB) business
Malaysia
Significant potential togrow both BA and TAchannels
India
#1 foreign insurer, withstrong brand recognition
Leading tied agency (TA)company in Korea
Uniquely positioned tobenefit from Kookmin Bankrelationship
Korea
Leading internationalinsurance company in theindependent agent (IA)channel
Excellent bancassurance(BA) relationships
Product innovator in COLI
J apan
Insurance Asia has attractive positions inseveral key markets
14.8%
10.1%
4.7%
2.7% 2.7% 2.6%
1.2%
J apan* Malaysia Korea Thailand China** Hong
Kong
India
1 3 9 9 13 10 12
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Gross premium ranking in Asia ex Japan (EUR)
Pru + AIA Allianz ING MetLife Aviva Manulife AXA Fortis Generali
15.6 bln
4.0 bln 3.8 bln
2.5 bln2.1 bln 2.1 bln
1.8 bln1.4 bln
0.8 bln
Source: Insurance regulator statistical releases. Data as of Sept-09 for Korea, March-09 for J apan and India, Dec-09 for China and Thailand, Dec-08for Hong Kong, Taiwan, Singapore, and Philippines, Dec-07 for Malaysia and Indonesia.1. Adjusted for ownership (ING at 50% and Fortis at 20% in China).2. Premium stated reflects 100% of Sino-foreign joint venture life insurance companies or investment in insurance companies.
ING contesting for the number 2 foreign insurerin the region
987754321
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Cost reduction(EUR mil lion)
1st generation SPVA in J apan
Sale of ING Life Taiwan
Australia and New Zealand Insurancesold
ING entered into an agreement to sell its50% stake in PALIC
Completed divestments /Closed blocks
Successful completion of Back to Basics
De-risking of the General Account
29% 22%
13%
30%2%
3%
611
523
2008 2009
2008
39%
12%
26%17%
2%
5%
2009 Corporate bonds
Financial bonds
Government bondsEquity
ABS
Other
Government bond exposure increased to 39% ofGeneral account assets in 2009
Equity exposure was proactively managed down toEUR 0.3 bln and stable at 2% of General accountin 2009
Other includes cash, real estate, mortgages andpolicy loans
Risk exposure managed proactively
EUR17 bln
EUR18 bln
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Insurance Asia showed stable quarterly operatingresults*
* Results restated to include SPVA J apan core margin in Operating Result** Income non-modeled life business primarily includes KB Life, PALIC, ICLIC and Malaysia(employee benefits and unit-linked businesses)
Note: Due to rounding figures may not add upNote: DAC amortisation and trail commissions includes normal amortisation, non-capitalisedcommissions and acquisition expenses
In EUR million
10716
5
2
9
91
190
242
134
109
332
2235
272
3
3Q09
1178
5
-1
4
109
0109
236
142
94
345
3241
263
7
4Q09
9621
6
-2
17
75
174
245
143
102
319
1945
253
2
2Q09
63-27
-15
-9
-3
90
189
257
152
105
346
1341
296
-4
1Q09
-78-163
-18
-23
-122
85
184
318
187
131
402
33105
276
-12
4Q08
Investment margin
Fees and Premium based revenues
Gains/losses and impairments
Revaluations
Market & Other impacts
Administrative expenses
Operating result before tax
Operating result (Life)Non-life operating result
Non-operating impactsUnderlying result before tax
Expenses (Life)
DAC amortisation and trail commissions
Operating income (Life)
Income non-modeled life businessTechnical margin
Fee and premium basedrevenues are primary source ofincome as the portfolio is moregeared towards premium-loading driven products. This
provides a solid source ofearnings, which grows with thepremium base
Technical margin is healthy anddriven by growth in the reservebase
Spike in 4Q08 technical marginmainly due to impact ofassumption updates with offsetin DAC amortisation
Declining pattern in
administrative expensesreflecting emphasis on costcontrol in 2009
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Overall APE declined primarily driven by unit-linked products and VAs
Sales, APE (EUR million)
Traditional Life sales remained stable throughout the market turmoil
Unit-linked products impacted negatively by stock market performance
Stopped selling first generation SPVAs in J apan in summer of 2009
0
100
200
300
400
500
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Life - Traditional Life - Unit-linked Pension products J apan SPVA
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Thailand
5.4
7.8
2009 2013
Market size
India
39.2
75.0
2009 2013
Market size
Malaysia
Market size
5.5
4.0
2009 2013
CAGR
9.6%
CAGR8.4%
Korea
42.8
54.9
2009 2013
Market size
Japan
205.2
225.6
2009 2013
Market size
Hong Kong
Market size
13.2
18.5
2009 2013
China
79.6
136.3
2009 2013
Market size
Bangkok
Kuala LumpurBangalore
Hong Kong
Tokyo
Seoul
Dalian
CAGR17.6%
CAGR
14.4%
CAGR
6.4%
CAGR2.4%
CAGR8.8%
Source: ING estimates, Morgan Stanley research
Market size in EUR bln
Insurance Asia operates in markets expected togrow
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Growth is primarily driven by
Health Growing health care expenditure drivenby aging population and lack of publichealth care
Segmentmarketing
Target specific niches with tailor madeproducts
Pensionmarket
In the early stages of development
In Korea, following regulatory changes tothe pension system, strong growth isforecast in corporate pension assets overthe medium to long term
Takaful
insurance
Promotion of this product among the
large Muslim populations in Malaysia inIndonesia implies a major opportunity forthe industry
High networth
Important growth driver for moredeveloped markets
Further product innovations
Economic growth
Resulting in higher income levelsand greater demand for wealthprotection
Demographic changes
Expanding middle-age andretirement groups lead todemand in savings andprotection, as well as health
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With a number of initiatives to capture thisgrowth resulting in ambitious APE growth
Costs Maintain cost discipline andefficiency at high levels
Focus on standardisation ofprocesses and systems across theregion
Life admin expenses/ Life operatingincome (%)
Growth Enhancing productivity of strongcore Tied Agency business in keymarkets
Driving Bancassurance growththrough preferred bank relationships
Diversification of product mix fuelledby new sales campaigns andproduct innovation
APE ambition: CAGR 17-20%
35%
31%
25%
30%
35%40%
45%
2008 2009 2010 2011 2012 2013
Overall Target: 35%
Improvemargins
Improve technical margin by takingmore Insurance risk
400
800
1,200
1,600
2,000
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13
Asia APE excl. J apan SPVA APE J apan SPVA
CAGR21%
CAGR17-20%
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APE contribution by channel
Increase #of activeand core agents
Increasescale
Reviewcompensationmodels and
differentiate agents Productivity and
consistency drivers of the future
Compen-sation
Simplify agencystructures
Segment sales forceaccording to agent
career Driveprofessionalism
Agencystructure
TA remain dominant distribution force and arebeing directed toward further out-performance
56% 56%
11%20%
33% 19%
5%
0%
25%
50%
75%
100%
2003 2009Tied agency Bancassurance
Independent agents Others
Note: Other distribution channels include brokers and direct distribution
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Embed insurance in preferred
banking partnership sales staff Activity management
J oint setting and monitoring oftargets
Salesmanagement
Regular training
Measure customer service
Integrate and upgrade IT systemsSales process
Develop complete range of
customer driven profitable -Banking portfolio pricing
Differentiate based on preferredbanking partnership client base andbundle where possible
Products
Steering committees
Regular senior managementreviews
Relationshipmanagement
ING is increasingly focused on a number ofselect bank partnerships
Pursue in depth long term bank relationship in each country with the objective to gain maximum growth
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Korea
ING Life Korea:4.0% / #10
KB Life: 0.7% /#19
Marketshare andposition in
terms ofAPE
7,029 (ING LifeKorea)
Overview
#of tiedagents
Opportunities for growth
Market growth CAGR of 6.4% to 2013
Large middle class and aging population offeringopportunities in retirement savings products andpost retirement products like annuities
Bancassurance partnerships
Corporate pension reforms will stimulate growth afterregulatory changes
Product and distribution mix based on APE
Product mix Distribution mixTraditional
Life
54%Unit-linked
46%
Tied agent
83%
Bancassurance10%
Independent
agents
2%
Direct
5%
2010 strategic init iatives
Bringing tied agency channel back tobasics through recruitment campaigns,enhanced training, discipline andactivity management of agents
Increase productivity from current levelof 3 policies per month to 5 policies
Further improvement ofBancassurance partnerships andtargeting the retirement servicessegments
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J apan
14.8% / #1(COLI throughIA)
Market shareand position interms of APE
5,038
Overview
#ofindependentagents
Opportunities for growth
Mature market, but extremely large withsome niches offering attractive growth
Aging population leading to increaseddemand for medical coverage and long-termcare products
Product innovation and bank alliances candrive above-market growth
2010 strategic ini tiatives
Successfully defend COLI leadership positionwith sales campaigning and speeding upproduct innovation
Expand product offerings to IAs beyond COLI(individual protection)
Revive distribution relationships with a selectednumber of J apanese financial institutions, withmore diverse product lines, including the optionof de-risked annuities
Product and distribution mix based on APE
Traditional
Life
66%
Unit-linked
34%Independent
agents
66%
BA
32%
Other
2%
Product Distribution
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Malaysia
10.1% / #3Market shareand position interms of APE
10,169
Overview
#of tied agents
Opportunities for growth
Market growth CAGR of 8.4% to 2013
Population still underinsured, with life insurance
penetration of ~2.7% Unit-linked products have been growing rapidly
Significant growth potential for TakafulInsurance due to sizeable Muslim population
2010 strategic ini tiatives
Continue to be the marketleader in employee benefits
Maintain momentum andstrong growth in tied agents
Enhanced bancassuranceproductivity (exclusivepartnership with Public Bank)
Product and distribution mix on APE
Traditional
Life81%
Unit-linked
19%
Tied agent
71%
Bancassurance19%
Direct
10%
Product Distribution
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China
Market is big and growing fast due to lowpenetration
Focus on one JV, ING Capital Life
Unique partnership with Bank of Beijing
Thailand
Bancassurance cooperation with TMB keygrowth driver
TMB is #5 bank in Thailand
Revamping tied agency channel
Other growth markets
India
ING Life India is a relevant player in theSouthern markets of India
Operating platform is small but efficient
Continue to strengthen partnership with INGVysya Bank to benefit from rapid branchexpansion
Enhance efficiency of fixed cost agencymodel
Significant acceleration of variable costdistribution
Hong Kong
Growing but mature and competitive market
Bancassurance cooperation with selectnumber of banks offers further upside
Tied agent force expanding and productivity
increases ongoing