Executive Summary

The global insurance market overview

-  ■■ 2003 saw some signs of recovery after two years of worldwide recession and growth rates are gradually picking up.

-  ■■ The world insurance premium volumes, after a drop from $2,444,903 in 2000 to $2,408,252 in 2001, are now growing at a steady pace, and reached $2,940,670 in 2003, experiencing a compound annual growth rate of 6.3% in the period 2000 and 2003.

 

-  ■■ Life insurance premiums have experienced a very slow growth after the decrease in premium income in 2001. In many countries 2003 saw a further decrease in premium income, for example in the UK.

-  ■■ The compound annual growth rate for non-life insurance in Europe between 2000 and 2003 totalled 15.6%, compared with only 5.1% for life insurance during the same period. Only one country, Germany, experienced a negative growth during this period.

-  ■■ Bancassurance has been particularly successful in France, Italy and Spain. Banks in these countries enjoy more than 50% of the distribution of life assurance products.

" ■■ In Italy, for example, bancassurance accounted for 56% of the distribution of life assurance products, with five of the top 10 life assurance competitors in the market owned by Italian banks.

" ■■ Depolarisation would encourage a competitive advantage for banks holding in the UK. This would allow non-independent institutions to offer life and pensions products from more than one provider, coupled with the introduction of simpler products.

The top 10 global insurers: company analysis

" ■■ Nippon Life, based in Osaka, Japan, is both the largest provider of life insurance in Japan and one of the world's largest insurance companies in terms of total assets and policies in force. The company's core business is life insurance. Products and services within this area are made available to both individual and corporate/group clients. The company also offers non-life products and such cover as medical treatment and long-term care, as well as asset management/asset formation products.

-  ■■ For the fiscal year ended December 2003, ING’s company's revenues (including both insurance and banking operations) were Ђ64,913 million, compared to Ђ70,650from the previous year. Operating net profit amounted to Ђ4,053 million, an 18.1% increase compared with 2002. Banking profits were up by 72.6%, which compensated for the somewhat weaker performance of insurance activities.

-  ■■ Allianz is hoping its latest 'New Dresdner' program will see the bank earn its cost of capital again in 2005.Consistent bad news from the Dresdner investment banking arm has blemished the organisation's reputation. Harsh cost cutting tactics have been operating for two years now and Dresdner still has not managed to return to profitability.

" ■■ State Farm Insurance is a personal lines property/casualty company that provides auto insurance, non-medical health, life, and homeowners insurance. The company has various subsidiaries across the United States that sell all types of insurance. It also operates State Farm Bank, which provides additional financial services. State Farm Insurance is headquartered in Bloomington, Illinois.

-  ■■ Axa capitalises on its core strengths: over 50 million clients worldwide; a 44,000-strong captive distribution force; a global brand; unique product skills in areas such as insurance underwriting, long-term investments, and financial advice, all on a scale that enables Axa to leverage best practices and operations platforms across the group.

" ■■ Assicurazioni Generali has one of the strongest balance sheets in the sector and boasts Ђ1.7 billion in excess capital. The low level of equity exposure, limited exposure to asset management and commercial banking and no direct exposure to the United States or Japan gives it a very stable outlook in the current environment, where there is a clear correlation between capital adequacy and share price performance.

-  ■■ While half of its business comes from the UK, it has presence in France, the Netherlands, Spain, Italy, Ireland, Canada and Australia. Aviva operates through its subsidiaries under names such as Aviva, CGNU, Norwich Union, CGU, Morley Fund Management and Delta Lloyd. It has 30 million customers.

-  ■■ For the fiscal year ended March 2004, the Dai-ichi Mutual Life Insurance Company achieved revenues that totalled Ґ5,090.4 billion ($46,990 million) a decrease of 4% against the previous years revenues that were Ґ5,255.9 billion ($47,565 billion). Reduced insurance premiums and lower revenues from group pensions were some of the key reasons behind the fall in overall revenues.

-  ■■ Zurich benefits from the considerable scale of its operations. It maintains a presence in 60 countries globally, and a strong focus on the key markets of the UK, U.S. and Switzerland, with expanding operations in continental Europe. It is the UK's third largest household insurer in terms of gross earned premiums. It also has 2,000 financial planning businesses in the UK, through the Zurich Advice Network. This is also one of the country's largest mortgage introducers. In total it has around 38 million customers.

-  ■■ For fiscal 2003 AIG's revenues were $81.3 billion, an increase of 20.5% on the previous year's results of $67.4 billion. The company achieved operating revenues that totalled $15,805 million, a 47.5% increase on the previous year’s total of $10,712 million.