Major Players In India's Insurance Sector

Major Players In India's Insurance Sector

In India, the insurance sector is regulated by the Insurance Regulatory and Development Authority (IRDA). The authority is made up of a 10-member team appointed by the government. It describes its mission as to 'protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto'.

The insurance trade association is the General Insurance Council of India (GIC), a statutory body under the Indian Insurance Act 1938. Membership of the GIC is 'automatically extended by invitation to all insurance companies authorised to underwrite non-life insurance business of any class in India'.

The outstanding feature of both segments of the Indian insurance sector is the domination of public sector organisations. As the tables below show, Life Insurance Corporation of India (LIC), the former state-owned monopoly, still accounts for a majority of premiums. The private sector life insurers, of which there are 23, fall into two groups. Some, such as SBI Life, are members of Indian corporate/financial groups. Others are majority Indian-owned subsidiaries, joint ventures or partnerships with major multinational groups. The largest of this second group, ICICI Prudential, is the affiliate of Prudential plc, the UK insurance giant with a strong presence across the Asia Pacific region. Others are affiliates of Standard Life, Allianz, SunLife, New York Life, AIA (ie: Tata-AIG), Old Mutual, HSBC Life, Aviva, MetLife, ING, AXA, Generali, Aegon, Ageas (IDBI Fortis) and Prudential Financial (DLF Pramerica).

Four public sector owned companies still account for about 60% of the premiums in the non-life segment. New India is the largest non-life company overall, and accounts for about 15% of all non-life premiums. United India, Oriental Insurance Company and National Insurance Company each account for 13-14% of total non-life premiums.

Among the 13 private sector non-life insurers, the largest is ICICI Lombard, the joint venture between Indian financial group ICICI and Canada's Fairfax Financial Holding. The Reliance Group's Reliance General is the second largest private sector non-life insurer. Tokio Marine-Nichido is represented through its JV with IFFCO. Tata-AIG is an offshoot of AIA. RSA's affiliate is Royal Sundaram: press reports in mid-2010 said that Reliance General had applied to the IRDA for permission for a merger with Royal Sundaram. A deal would enable Sundaram, one of India's leading non-bank financial groups to exit from the business and leave RSA with a smaller share of a larger insurer. RSA would serve as a strategic partner to Reliance. Other multinational non-life companies with JVs in India include ERGO, Generali, AXA, Sompo and QBE.

Table: Non-Life -- Gross Written Premiums, Six Months To September 30 (INRmn)
	2009	2010	% change y-o-y
ICICI Lombard	16,117.0	21,255.6	31.9%
Bajaj Allianz	12,177.4	14,197.2	16.6%
Reliance General	10,455.5	8,000.2	-23.5%
IFFCO-Tokio	7,482.0	8,973.0	19.9%
Tata-AIG	4,553.8	6,141.2	34.9%
Royal Sundaram	4,383.0	5,327.4	21.5%
HDFC ERGO General	4,211.4	6,288.2	49.3%
Cholamandalam	4,152.1	4,751.5	14.4%
Future Generali	1,689.2	2,999.4	77.6%
Shriram General	1,374.4	3,169.3	130.6%
Bharti AXA General	960.0	2,582.4	169.0%
Universal Sompo	670.7	1,471.5	119.4%
Raheja QBE	3.3	41.0	1131.8%
Sub-total -- private sector insurers	68,229.9	85,270.7	25.0%
New India	30,333.4	36,430.4	20.1%
United India	24,655.5	30,486.4	23.6%
Oriental	23,075.9	26,382.9	14.3%
National	21,927.4	28,222.0	28.7%
SBI General	0.0	72.6
Sub-total -- public sector insurers	99,992.2	121,521.7	21.5%
Total	168,222.1	206,792.4	22.9%
Source: IRDA

Table: Life -- First-Year Premiums, Six Months To September 30 2010 (INRmn)
	Ind. Single	Ind. Non-single	Group single	Group non-single	Total
LIC	169,147.0	101,257.0	108,602.7	77,905.2	456,911.9
SBI Life	5,055.2	14,591.9	10,221.6	1,848.9	31,717.6
ICICI Prudential	1,084.0	23,564.3	1,005.9	4,501.1	30,155.4
HDFC Standard	593.6	13,869.2	34.6	1,865.3	16,362.8
Bajaj Allianz	3,534.1	9,308.2	444.7	1,818.7	15,105.7
Reliance Life	1,513.8	11,608.2	178.0	800.7	14,100.8
Birla Sunlife	65.6	8,557.0	26.2	1,875.7	10,524.5
Max New York	1,003.6	8,156.7	100.4	432.1	9,692.8
Tata AIG	1,041.3	4,278.2	147.0	791.0	6,257.6
Kotak Mahindra Old Mutual	296.6	3,925.8	481.1	674.0	5,377.5
Canara HSBC OBC Life	53.4	3,479.6	109.6	0.0	3,642.6
Aviva	174.2	2,841.5	2.7	263.6	3,282.1
MetLife	528.4	2,320.9	71.3	151.6	3,072.2
ING Vysya	13.6	2,678.9	46.6	2.1	2,741.2
Shriram Life	1,255.5	1,089.1	298.8	33.8	2,677.2
India First *	972.4	1,351.2	30.7	4.5	2,358.9
Star Union Dai-Ichi	1,103.4	936.8	197.6	28.6	2,266.3
IDBI Fortis Life	607.1	1,358.5	0.0	7.8	1,973.4
Bharti Axa Life	34.3	1,841.6	91.3	0.0	1,967.2
Future Generali Life	53.9	1,541.8	1.0	121.3	1,718.0
Aegon Religare	40.9	893.0	3.1	0.0	936.9
Sahara Life	186.8	233.7	0.0	0.0	420.5
DLF Pramerica	8.0	342.3	0.0	0.0	350.3
Total	188,366.7	220,025.5	122,095.0	93,126.2	623,613.4
* Started operations after March 2010. Source: IRDA

Table: Life -- Growth In First-Year Premiums, Six Months To September 30 2010 (% change y-o-y)
	Ind. Single	Ind. Non-single	Group single	Group non-single	Total
DLF Pramerica	3,047.7%	250.3%			257.5%
Aegon Religare	552.7%	154.2%		-100.0%	162.0%
Star Union Dai-Ichi	156.9%	39.5%	448.1%	282.8%	98.0%
Shriram Life	260.1%	-5.3%		1219.0%	78.4%
LIC	114.7%	27.6%	8.6%		77.0%
HDFC Standard	-7.5%	44.2%	-95.3%	788.6%	46.1%
Kotak Mahindra Old Mutual	264.0%	25.0%	142.1%	81.2%	41.8%
ICICI Prudential	75.2%	38.8%	26.2%	55.8%	41.7%
IDBI Fortis Life	39.3%	35.6%		2902.7%	37.2%
SBI Life	198.6%	17.9%	645.7%	-78.2%	32.7%
Canara HSBC OBC Life	10.9%	28.2%	1086.5%		31.5%
Bharti Axa Life	30.6%	28.5%	-17.6%		25.3%
Tata AIG	1,174.7%	-0.5%	23.3%	25.8%	21.9%
Future Generali Life	58.2%	17.1%	276.5%	17.7%	18.2%
Max New York	5.3%	14.4%	948.1%	31.8%	15.1%
Reliance Life	180.1%	7.7%	-76.1%	89.7%	12.9%
Aviva	-50.3%	14.0%		34.6%	8.0%
Bajaj Allianz	168.4%	-15.7%	76.1%	2.3%	5.0%
Birla Sunlife	-70.0%	-11.4%	1580.0%	72.1%	-4.0%
ING Vysya	-65.9%	-8.7%	3.5%	32.8%	-9.3%
MetLife	1295.1%	-31.6%	-52.4%	-14.3%	-18.2%
Sahara Life	25.8%	-15.6%		-100.0%	-28.7%
India First *
Total	116.9%	20.7%	16.8%	453.2%	59.7%
* Started operations after March 2010. Source: IRDA

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Analysis Of Regional Competitive Conditions

As in previous reports, we have looked at which cross-border insurers are present in which country across each region. We endeavour to describe the competitive landscape in some detail on the basis of recently published official information -- whether sourced from the regulator or the trade association. With very few exceptions, foreign multinationals have a significant, if not a dominant, presence in the markets that we survey. Because so many multinational insurers consider national markets not as individual entities but as part of a larger region, or indeed the whole world, we contend that it is difficult to understand the competitive landscape within a particular country unless one also considers the footprints of all the multinationals across the relevant region.

Accordingly, for each of the multinationals profiled, we have sought to identify particular issues: the proper name of the holding company in the home country; the activities, in summary, of the company in its home country; the name of the company's operations in each of the countries in the region; and relevant and specific comments (if any) made by the company in relation to its operations in each of the countries in the region. As much as possible, we have used company websites and annual reports as sources of information. For efficiency, we have often quoted verbatim. In such instances, we always indicate the source used.

The size and diversity of Asia Pacific markets are such that generalisations are harder to formulate than in other parts of the world. The majority of the multinationals have a joint venture in China -- although not necessarily with a local financial institution. In some cases, associated asset management businesses of a multinational insurer also have joint ventures in China. Many of the multinationals also have insurance joint ventures in India. As in China, the local partner is not necessarily a financial institution.

For some multinationals, their presence in the region is limited by specialisation. In some cases, this is because the company's business revolves around particular lines of non-life insurance -- QBE and RSA are good examples. In other cases, it is because the company in question has chosen to offer products that closely resemble those that it provides clients -- on a much larger scale -- in its home markets. Examples include the Principal Financial Group (offering life products in Hong Kong), Hartford (life products in Japan, and in no other country in the region), Prudential Financial (life and savings products in Japan, Taiwan and South Korea), MetLife (annuities in various markets), HDI-Gerling (branches in Japan, Hong Kong and Australia), Fortis (life insurance joint ventures in China, India, Malaysia and Thailand) and Zurich Financial Services (servicing corporate non-life clients in South East Asia and operating in the life segment in Australia, Hong Kong and Japan).

A second group of multinationals have varied businesses and very broad footprints, which have been developed over a long period of time. What these companies have in common is that, worldwide, they are among the largest insurers. Furthermore, within their global businesses, their Asia Pacific operations are significant relative to the total and very large in absolute terms. In most cases, they have been present in Asia Pacific for well over 50 years. AIG, which was founded in Shanghai in 1919, is the largest (in terms of the total business that it writes across the region) and perhaps the most obvious example. AIG ranks among the largest insurers in several of the markets in which it operates (eg Hong Kong, the Philippines and Taiwan), is generally regarded as the largest foreign insurer in China, and has long maintained a large and profitable insurance business in Japan. HSBC Insurance's history and geography reflect that of its parent, the eponymous bank. Almost one-third of HSBC Insurance's global business comes from Hong Kong, although the rest of the region accounts for only about 5%. Prudential is probably the second largest multinational insurance group in the region after AIG, and sees its Asia Pacific business as one of its four core operations. As is the case with HSBC, Hong Kong is a key market for Prudential, although it has a significant presence in many other regional markets.

A third group of companies are European multinationals whose business in the Asia Pacific is a relatively small part of their global total, but is large in absolute terms. These companies have broad ranges of businesses, but are predominantly focused on life rather than non-life lines. Perhaps the most important example is the ING Group. ING generated a premium income of EUR12,632mn in Asia Pacific in 2007, although almost all of this came from Japan, South Korea and Taiwan. AXA generated premiums of more than EUR8,623mn across the region, of which half came from Japan. Australia and Hong Kong are AXA's other two key markets in the region. Aviva has a diverse range of businesses, in Australia, South Korea, Taiwan, Hong Kong, Singapore and Malaysia (as well as China and Sri Lanka). Within some of these markets, and in particular areas, Aviva is one of the largest companies. Allianz is a major player in life insurance in Taiwan and South Korea and in non-life insurance in Australia.

There are two Canadian companies with long-standing and significant businesses in Asia. As with ING, Aviva and Allianz, the Asian operations account for a minority of these companies' worldwide activities. Manulife derived about CAD3,000mn in premiums from its substantial (mainly variable annuity) business in Japan and its other smaller operations across the region last year. In 2007 Sun Life Financial generated CAD629mn in premiums and CAD2,319mn in premiums and gross sales of mutual funds and segregated funds from its operations in Hong Kong, China, India, the Philippines and Indonesia.

Finally, a number of multinationals that are enormous in terms of the premiums that they write worldwide, and are among the largest insurers in their home countries or in other parts of the world, have only a small presence in Asia Pacific. Generali, which has one of the largest pan-European businesses -- including dominant market positions in Italy and other countries in or near Europe -- is perhaps the best example. Generali has operations in India, China, Japan, Thailand and the Philippines, as well as regional headquarters in Hong Kong. In 2008 EUR 315mn of the EUR377mn in premiums that the company wrote in Asia came from its joint venture in China. AEGON, Cardif and Groupama are three other European giants that have a limited presence in Asia Pacific.

In any discussion of the nature of the competition from local groups across the region, it is probably helpful to consider Hong Kong and Australia separately. For many companies, Hong Kong is the regional headquarters and/or a support centre for operations in southern China. As noted in the company profiles, many multinationals also see Hong Kong as a vibrant market in its own right that, in regional terms, is too large to be ignored. Bank of China (International)'s insurance subsidiaries are also notable players in the Special Administrative Region (SAR)'s non-life and much larger life segment. Hong Kong Life, a joint venture between Wing Lung Bank and several other smaller banks is also a notable provider of life, health and savings products. Overall, though, Hong Kong is the only market in the region in which both the non-life and the life segments are dominated by subsidiaries of multinational groups.

Over half of Australia's substantial non-life market is accounted for by subsidiaries of Suncorp Metway (such as Suncorp, Vero, AAMI, GIO, RACQ, RAA and Shannons) or Insurance Australia Group (such as NRMA, CGU, SGIO, SGIC and Swann). Most of life insurance products sold in Australia are packaged in products that are formally constituted as superannuation (retirement savings) vehicles. AMP and National Australia Bank/MLC are the two largest local life insurance companies. Their respective shares of the life segment are 28% and 26%. The ING/ANZ Bank joint venture is the third-largest player, with a market share of 17%.

The competitive landscapes of Japan, China, Taiwan and South Korea have many features in common. The commercial opportunity, especially for life insurance, has been driven by high savings rates, tax incentives in favour of insurance and/or an absence of alternative ways of laying off risks. The commercial landscape is dominated by truly massive local firms who in the past -- and to a certain extent at present -- are protected from full-scale foreign competition. The protection comes from gradual deregulation, access to low-cost capital, opportunities to take advantages of scale economies (even in relation to the largest global firms), established brands and distribution channels and cultural factors.

In Japan, for instance, the leading non-life firms are Tokio Marine & Nichido, Mitsui Sumitomo and Sompo. Each of these writes gross premiums of JPY1,600-2,200bn. Aioi and Nipponkoa, the next two largest firms, are each about half this size. Nissay Dowa, Fuji, Kyoei and Nisshin all write annual premiums of JPY164-380bn. AIU, the non-life operation of AIG, is apparently the only foreign-owned company in the top 10. In the life segment, the numbers are larger and the rankings different, but the overall story is the same. Between them, Nippon Life, Dai-Ichi Life, Sumitomo Life and Meiji Yasuda account for about one-third of total premiums. ALICO Japan, the local life operation of AIG, is the country's fifth largest life insurer, with a market share of about 4%.

In China the landscape continues to be dominated by former state-owned enterprises (which are now listed companies in which the government retains substantial stakes) and new, but substantial, private sector firms. The People's Insurance Company of China (PICC) and China Life each account for 40-50% of the non-life and life segments, respectively. Ping An and China Pacific are listed public companies with 10-15% shares in each of the two segments. As noted above, AIG's local operation is the largest foreign insurance joint venture in the country.

Local titans dominate the insurance sectors of both Taiwan and South Korea, even though foreign groups have made more headway than they have in Japan or China. According to the Taiwan Insurance Institute, Cathay Life has a market share of around 23% within its segment. Shin Kong (with a market share of 11%) and Chunghwa Post (8%) are the next two largest players. However, Nan Shan Life -- the local AIG affiliate -- and ING are, respectively, the second and fifth largest life insurance companies, with market shares of 14% and 8%. The non-life segment is more fragmented. Fubon's market share is 21%. It is followed by Mingtai (9%), Shinkong and Union (8% each) and Cathay Century (7%). The Korean Life Insurance Association notes that the combined market share of the 'big three' -- Korea Life, Samsung Life and Kyobo Life -- has slipped from about 66% to 62% of life premiums. The foreigners' combined share had risen from 18% to 20% 'boosted by their remarkable performance in bancassurance'. The remainder of the South Korean life segment is accounted for by 'small and medium' insurers such as Shinhan Life and Tongyang Life. However, with annual premiums of around US$2bn, neither company would rank as small in most of the countries profiled by BMI. Samsung Fire & Marine accounts for a little more than one-quarter of gross premiums written in the non-life segment. Hyundai Fire & Marine, Dongbu and LIG each have market shares of about 6%. The other seven South Korean non-life companies are Meritz, Hanwha, Daehan, Green, First, HungKuk Ssangyong and Kyobo AXA.

The insurance markets of India and Vietnam continue to be dominated by state-owned enterprises. In this sense they resemble China rather than South Korea, Japan or Taiwan. In India the public sector firms have been losing ground but still account for the majority of premiums written in both segments. In the life segment, former monopoly Life Insurance Company of India still has an 80% market share, according to the Insurance Regulatory & Development Authority (IRDA). The IRDA notes that in the non-life segment New India is the largest player and speaks for about 20% of premiums. National Insurance Company, Oriental Insurance and United India each have market shares of about 15%. The next largest firms, with (rising) market shares of 12% and 7% respectively are the ICICI Lombard joint venture and the Allianz-Bajaj joint venture. There are two purely Indian-owned private sector firms -- Reliance and Cholamandalam -- and four other joint ventures that involve foreign partners -- HDFC Chubb, Royal Sundaram, Tata AIG and IFFCO Tokio. Each of these six companies has a market share in the low single digits. In Vietnam former state-owned monopoly Bao Viet is by far the largest insurance company. PJICO, PVIC and PTI are all owned by different state-owned enterprises. Bao Minh, formerly an element of Bao Viet, has made the transition to being a joint stock company.

Elsewhere in South East Asia, Singapore's Great Eastern Life, a subsidiary of banking group OCBC, stands out as a regional giant. Great Eastern has operations in Singapore, Malaysia, Indonesia, Brunei, Vietnam and China and total assets of around SGD46bn. It has around 3mn customers in Singapore and Malaysia alone. Its subsidiary OAC operates in Singapore and Indonesia. TM Asia Life, which is active in Singapore and Malaysia, is a subsidiary of Tokio Marine & Nichido. Elsewhere, whether they operate in the life segment, the (typically smaller) non-life segment or both, most of the local companies would rank as small to medium-sized insurers in other countries. Examples include NTUC Income in Singapore; Etiqa (a joint venture between Fortis and Maybank), Kurnia and Malaysian Assurance Alliance (MAA) in Malaysia; and Bangkok Life, Dhipaya, Thai Life, Sampanth and Viriyah in Thailand. Perhaps because of a preference of local business elites to prefer to work with their own -- effectively in-house -- insurance operation, there is a plethora of small indigenous companies in Indonesia and the Philippines. Insular Life and Malayan Insurance stand out in the Philippines, but there are many other examples from that country. Bumiputra 1912 (in the life segment) and Jasa Indonesia (in the non-life segment) are the two largest Indonesian insurers. Others include Jasa Raharja, Jiwasraya, Jiwa Sequis Life, Tugu Pratama and Sinar Mas.

We make three other observations in relation to the South East Asian markets. The first is that the markets have been open to foreign insurers for a long time. Indeed, foreign groups (or joint ventures between foreign groups) feature among the largest players in the non-life and the life segments of the region. The main exception, as noted above, is Great Eastern Life. The second observation is that unlike, say, Central and Eastern Europe, a surprisingly large number of local companies survived as independent entities. This may be because their owners have not always been motivated by purely commercial considerations. The third observation is that, in addition to (many of) the 23 multinational companies that we have profiled in this report, there are two large Japanese non-life groups -- Tokio Marine & Nichido and Mitsui Sumitomo -- which have significant (if not dominant) businesses in several countries across the region.