2018 H1 Taiwan Life Insurance Market Overview

Transcription

1 2018 H1 Taiwan Life Insurance Market Overview I. Life Insurance Industry Business and Financial Overview A. Business Statistics The life insurance industry in Taiwan recorded NTD 1,750.1 billion in total premium income in the first half of 2018, up by 4.21% from NTD 1,679.4 billion in the same period in Of these, first-year premium (FYP) income accounted for NTD billion, an 11.40% increase compared with the 2017 H1 figure of NTD billion. Renewal premium income stood at NTD 1,042.4 billion, a decline of 0.15% over the same period last year. The data indicate that first-year premiums were the main contributor to the growth in total premium income. 1. Breakdown of Premium Income First-year premium represented NTD billion, or 40.44% of the total premium income reported in 2018 H1, up from 37.83% in 2017 H1. Single premium stood at NTD billion in 2018 H1, an increase of 17.19% from NTD billion in 2017 H1. Meanwhile, installment premium climbed 1.34% from NTD 231 billion in 2017 H1 to NTD billion in 2018 H1. Renewal premium income accounted for NTD 1,042.4 billion, or 59.56% of the total premium income in 2018 H1, down by NTD 1.6 billion from the same period last year, when it accounted for NTD 1,044 billion, or 62.17% of the total premium income earned. A further breakdown of the first-year premium indicates that single premium made up 66.94% in 2018 H1. Of this, interest-sensitive life insurance premium stood at NTD billion, while variable annuity premium came to NTD billion, or 40.23% and 29.86% of the total single premium, respectively. The data show that products with a higher percentage of single premium payments still contribute significantly to FYP income. 2. Breakdown of Premium Income by Product In 2018 H1, premium income generated by traditional insurance policies amounted to NTD 1,435.8 billion, or 82.04% of the total premium income. Of these policies, life insurance accounted for NTD 1,187.7 billion, down by 0.59% compared with NTD 1,194.7 billion in 2017 H1; health insurance generated NTD billion in premium income, a growth of 3.64% over the 2017 H1 figure of NTD billion; premium income from accident insurance totaled NTD 32.4 billion, an increase of 0.62% from NTD 32.2 billion in 2017 H1; and annuity premium income at NTD 39.1 billion represented a decline of 21.17% compared with NTD 49.6 billion in 2017 H1. FYP income generated by interest-sensitive life insurance which accounts for the majority of traditional life insurance policies increased 9.8% over the same period in However, the US China trade war has led to a depreciation in the New Taiwan Dollar and thus affected policyholders willingness to buy USD policies. FYP income generated from traditional life insurance policies dropped slightly by 0.48% 1

2 from NTD billion in 2017 H1 to NTD billion, and the total market share also decreased from 59.59% to 53.24%. On the other hand, traditional annuities generated NTD 35.9 billion in FYP income, a decline of 22.63% over the figure of NTD 46.4 billion in 2017 H1. Thanks to an improving global economy and rising financial markets, sales of investment-linked insurance policies rallied significantly in The premium income generated by investment-linked insurance policies totaled NTD billion in 2018 H1, accounting for 17.96% of the total premium income. This was an increase of 35.18% compared with NTD billion in 2017 H1. Of the investment-linked insurance policies, premium income from investment-linked life insurance totaled NTD billion, a growth of 24.59% from NTD billion in 2017 H1, while premium income from investment-linked annuity increased by 46.96% from NTD billion in 2017 H1 to NTD billion in 2018 H1. Further analysis indicates that FYP income generated from investment-linked life insurance increased significantly from NTD 84.1 billion in 2017 H1 to NTD billion in 2018 H1, and that from investment-linked annuity saw a growth of 44.76% from NTD 104 billion in 2017 H1 to NTD billion in 2018 H1. 3. Industry Channel Mix In 2018 H1, bancassurance and agency channels generated NTD billion (51.36%) and NTD billion (42.55%) of the life insurance industry s total FYP income, respectively. The two distribution channels represented 93.91% of the total market share, while other channels accounted for merely 6.09%. Based on further analysis, FYP income from the bancassurance channel grew by 15.17% from NTD billion in 2017 H1 to NTD billion in 2018 H1. The agency channel generated NTD 23.3 billion more in FYP income than the same period last year, increasing from NTD billion in 2017 H1 to NTD billion in 2018 H1, but its market share slid 1.18% from 43.74% to 42.55%. The bancassurance channel s share of FYP income is still larger than that of the agency channel in 2018 H1. In 2018 H1, life insurance companies issued 270,300 new investment-linked insurance policies, an increase of 53.93% compared with the figure of 175,600 in 2017 H1. Among the new investment-linked insurance issued, variable life insurance represented 42,900 policies, a surge of %; variable universal life insurance accounted for 70,200 policies, a growth of 16.03%, and variable annuity made up 157,200 policies, an increase of 48.02% over the same period last year. The sum assured for the new policies issued totaled NTD billion in 2018 H1, up by 46.29% in comparison with NTD 71.3 billion in 2017 H1. Of these new policies, the sum assured for variable life insurance policies jumped by % to NTD 16.4 billion; the sum assured for variable universal life insurance grew by 11.64% to NTD 67.3 billion, and the sum assured for variable annuity increased by % to NTD 20.6 billion. In summary, investment-linked insurance products posted growth in the number of new policies issued, sum assured, and FYP income from the levels achieved in 2017 H1. 2

3 5. Group Insurance and Personal Insurance In 2018 H1, 26 million new insurance policies were issued, up 9.57% from the 2017 H1 figure of million. The number of new personal insurance policies issued totaled 7.24 million, a decrease of 1.76% from 7.37 million in the same period last year. A further breakdown by product type indicates the following: life insurance accounted for 1.52 million policies, down by 11.11%; accident insurance constituted 3.09 million policies, a decline of 0.64%; health insurance represented 2.43 million policies, an increase of 1.25%, and annuity insurance amounted to 0.2 million policies, a growth of 33.33%. The number of insured protected by group insurance totaled million people, up by 14.67% from million people reported in 2017 H1. The sum assured of the newly issued policies totaled NTD trillion, a decline of 2.8% compared with NTD trillion in 2017 H1. The sum assured for newly issued personal insurance policies amounted to NTD trillion, down by 5.73% from NTD trillion recorded in the same period last year. A breakdown of the sum assured for the newly issued personal insurance by product type shows the following: the sum assured for life insurance stood at NTD 0.95 trillion, up by 10.47%; accident insurance reached NTD trillion in sum assured, down by 7.38%; the sum assured for health insurance amounted to NTD 0.88 trillion, an increase of 1.15%; and the sum assured for annuity insurance was NTD 0.23 trillion, a growth of 15%. The sum assured for newly issued group insurance saw an increase of 3.23%, climbing from NTD 8.06 trillion in 2017 H1 to NTD 8.32 trillion in 2018 H1. In summary, health insurance and annuity insurance saw growth in the number of new policies, sum assured, and FYP income in 2018 H1 compared with the same period last year. Life insurance posted decline in the number of new policies while recording growth in the sum assured and FYP income compared with 2017 H1. 6. Policies in Force As of the end of June 2018, there were million policies in force, up by 4.13% compared with million policies in force as of the end of June The number of life insurance policies in force totaled million, an increase of 1.36%; accident insurance policies in force came to million, a growth of 4.51%; health insurance policies in force stood at million, a rise of 5.39%, and annuities in force totaled 1.44 million, up by 15.2%. The sum assured for policies in force totaled NTD trillion, a slight increase of 1.01% from the figure of NTD trillion at the end of June A breakdown of the total sum assured by product type shows that life insurance grew by 2.63% to NTD trillion; accident insurance saw an increase of 3.11% to NTD trillion; health insurance was down by 8.72% to NTD trillion, and the sum assured for annuities climbed 18.12% to NTD 1.63 trillion. 7. Insurance Benefit Payments In 2018 H1, insurance benefit payments totaled NTD 940 billion, up by 21.21% compared with NTD billion in 2017 H1. Of these, life insurance payments saw the biggest increase of 24.95%, totaling NTD billion; annuity insurance payments came second at NTD

4 billion; followed by health insurance payments at NTD 65 billion, and accident insurance payments at NTD 13.4 billion. In terms of the number of beneficiaries, a total of million people received insurance benefit payments in 2018 H1, an increase of 16.74% compared with million in 2017 H1, and the number of beneficiaries of life insurance benefit payments topped the chart, accounting for million, or 55.55%, of the total number of beneficiaries. A breakdown of the types of benefit paid indicates that surrender benefits accounted for NTD billion, or 36.15% of the total benefit payments in 2018 H1, followed by maturity benefits at NTD billion (32.1%), and survivor benefits at NTD billion (15.01%). Together, the three types made up 83.26% of the total benefits paid, and maturity benefits saw the largest increase, growing 21.05% from NTD billion in 2017 H1 to NTD billion. This growth may be attributable to the fact that the short-term endowment policies of some companies have reached maturity. B. Financial Overview and Analysis 1. Assets and Liabilities As of the end of June 2018, life insurance companies reported NTD trillion in assets, up 11.07% compared with NTD trillion in the same period in A breakdown of the assets shows that total assets excluding separate accounts totaled NTD trillion, an increase of 10.95%. The value of the separate accounts amounted to NTD 1.88 trillion, representing 7.26% of the total assets, up from 7.16 % as of the end of June A breakdown of life insurance companies asset allocation by category indicates the following: 74.74% of the total utilized fund was allocated in securities, 7.26% in separate accounts, 5.68% in loans, 3.82% in cash and cash equivalents, 3.98% in property investment, and 4.52% in other assets. In comparison with the end of June 2017, the most notable growth can be seen in securities (14.09%) and separate accounts (12.57%). The growth is a result of life insurers capital utilization and allocation strategies. As of the end of June 2018, life insurance companies recorded NTD trillion in total liabilities, up by NTD 2.45 trillion, or 11.10%, when compared with NTD trillion in the same period in Of these, insurance liabilities accounted for NTD trillion, or 88.66% of total liabilities and 83.97% of the total assets. Also during this period, the owners equity of the life insurance industry totaled NTD 1,370.9 billion, an increase of NTD billion from the figure of NTD 1,247 billion at the end of June The owners equity to asset ratio fell from 5.35% at the end of June 2017 to 5.3%, which was still higher than the pre-european Debt Crisis level (the ratio stood at 4.03% at the end of 2009). In the meantime, the debt-to-equity ratio (leverage) remained at 18 times the same level as at the end of June 2017 indicating that life insurers have a stable ability to absorb future losses and that their financial standing is still robust. 2. Profits and Losses Life insurance companies recorded NTD 2.06 trillion in aggregated operating revenue as of the end of June 2018, up 5.26% from NTD 1.96 trillion in the same period in

5 Operating costs at NTD 1.93 trillion, an increase of 2.87% from the figure of NTD 1.88 trillion at the end of June 2017, accounted for 93.69% of the total revenue. As the result, life insurance companies posted NTD billion in business profits. Operating life insurance companies posted total profits of NTD 79.1 billion as of the end of June 2018, an increase of NTD 44 billion on the NTD 35.1 billion from the same period in Despite a strong performance in the Taiwanese equity and bond markets in the first half of the year, the significant appreciation of the New Taiwan Dollar led to substantial foreign exchange losses, and as a result the comprehensive income for life insurance companies recorded an NTD billion decrease from NTD billion at the end of June 2017 to NTD 12.5 billion at the same point in Utilization of Funds As of the end of June 2018, the life insurance industry recorded NTD trillion in available funds, up by 9.31% from NTD trillion in same period in Among the fund utilization categories, securities investment accounted for NTD 4.44 trillion, or 19.29% of the total utilized funds (mostly equities, which made up NTD 1.62 trillion or 7.04%), and foreign investment totaled NTD trillion, or 67.51%. The combination of the two categories represented as high as 86.79% of the total utilized funds. In recent years, the general environment has been characterized by low interest rates and loose liquidity conditions, and the spread between domestic and foreign government bonds has been thinning. Thus, the life insurance industry is gradually shifting capital allocation to higher-yielding assets such as domestic real estate with steady rent income and dividends, and foreign investments. As of the end of June 2018, the life insurance industry invested NTD 1,622.9 billion in domestic equities, which comprised 7.05% of total investments, up 16.51% from the 6.61% at the same point in At NTD 1,096.6 billion, investment in real estate in terms of absolute figure was up 2.13%, but its share slid to 4.76% from 5.1% at the end of June Foreign investments totaled NTD 15,543.8 billion, or 67.52%, up 16.62% from 63.28% at the end of June II. Conclusion and Outlook 1. Conclusion In 2018 H1, life insurance companies recorded NTD 1,750.1 billion in premium income, up by 4.21% compared with the same period last year, and FYP income also increased by 11.40% to NTD billion. FYP income generated from traditional products dropped by 2.64% from the 2017 H1 figure to NTD billion. On the other hand, FYP income from investment-linked products increased 44.76% to NTD billion. Meanwhile, renewal premium income totaled NTD 1,042.4 billion, a decline of 0.15% over the figure recorded in 2017 H1. Overall, the increase in premium income was a result of growth in premium income generated from investment-linked products and FYP income. In 2018 H1, 26 million new insurance policies were issued with a total sum assured of NTD trillion, and personal insurance saw decline in both the number of new policies 5

6 issued and the sum assured. The total number of policies in force was million and the total sum assured came to NTD trillion, and personal insurance recorded an upward trend in both the number of policies issued and the sum assured. Meanwhile, life insurers paid a total of NTD 940 billion in benefits, of which life insurance and annuities accounted for 91.66%. A further analysis of the benefit payments shows that surrender benefits (NTD billion), maturity benefits (NTD billion), and survivor benefits (NTD billion) made up 83.26% of the total benefit payments. Of these three, maturity benefit payments grew by 21.05% from 2017 H1 owing to short-term endowment policies reaching maturity. Life insurance companies posted a net investment profit of NTD billion, up 28.51% from NTD billion in 2017 H1. The 2018 H1 growth was mainly a result of substantial foreign exchange gains, but the profit was offset by nearly NTD billion in hedging losses and NTD 17.1 billion in foreign exchange reserves, which meant net profits from continuing operations in the life insurance industry shrank to NTD 79.1 billion. 2. Outlook While the total premium income hit a record high in 2018 H1, the US initiated a rate hike cycle, leading prospective clients to expect rising interest rates and falling premiums and to remain on the sidelines. As a result, it will prove challenging for the insurance industry to generate a higher premium income in 2018 H2 over the same period last year. At the same time, thanks to a recovering global economy and rallying financial markets, sales of investment-linked products saw a significant rebound. In 2018 H1, investment-linked products contributed NTD billion in FYP income, or about 40% of the total. Among these products, discretionary investment policies, a type of product where investment decisions are made by experts, recorded the biggest growth, generating NTD billion in FYP income, a 29.76% increase on the NTD billion in 2017 H1. Thus, the prospect of FYP income hitting another high in 2018 will depend on the performance of discretionary investment policies. 6