Highlights
Economic growth in Asia continues to outpace other regions as more wealth is created. Consequently, life insurance in Asia is expected to grow more rapidly than in other regions in the coming years, both to accommodate the wealth accumulation of aging populations and to provide savings plans for the rising working classes. Insurance Asia/Pacific is well-positioned to benefit from this long-term growth and build on its strong position in the markets in which it operates.
ING has a strong financial services franchise in the Asia/Pacific region. It is currently the second-largest international life insurer there, based on annual premium equivalent (APE), which is the sum of regular and annual premiums from new business plus 10% of single premiums on new business written during the year. At present ING has 12 life operations in 10 markets and commands leading positions in the larger, established markets of Australia, New Zealand, Japan, South Korea and Taiwan. ING is well-placed for growth in the large and medium-sized rapidly expanding markets of India, China, Malaysia and Thailand.
Based on assets under management, ING is a top-3 regional investment manager with operations in 13 markets. Insurance Asia/Pacific will continue to invest in growth, either through bolt-on acquisitions or organically. In 2007, ING Investment Management Korea merged with the recently acquired Landmark Investment Management, to become South Korea’s 10th largest asset manager.
The shift in the market from fixed income products to investment-oriented products and the significant increase in distribution via banks present opportunities which ING can leverage on. In line with these developments, ING’s strategic priorities remain geared towards strengthening its distribution channels, focusing on profitable new product offerings, expanding organisational capabilities, increasing operational efficiency, enhancing brand awareness and achieving scale in the asset management operations.
Strengthening multiple distribution channels
ING sells its life insurance products in the Asia/Pacific region via tied agents, banks, direct channels and several innovative alternative channels. The tied agency channel has been the strongest, but distribution through banks is growing fast. ING continually works to broaden its distribution methods and increase the efficiency of existing channels.
In Hong Kong, India, Malaysia, South Korea and Taiwan, ING has a strong tied agency force. ING Life Korea is the exemplary tied agency model in the region, with Taiwan catching up quickly. ING Life Korea’s success is based on selective recruiting, excellent training and support, and continual performance monitoring of its financial advisers. In 2007, ING has further strengthened its tied agency force in Taiwan and India. In Taiwan, this has led to near record sales levels. In India an accelerated growth plan has led to a significant increase of life insurance branches and agents, to more than 270 and 51,000 respectively by the end of the year (versus 90 branches and over 26,000 agents at year-end 2006). As a result, ING has been able to increase its market shares in highly competitive markets.
In Australia, ING further strengthened its distribution network and added 139 new aligned advisers through the successful acquisition of Financial Services Partner Group (FSP Group). FSP Group is the third largest dealer group in Australia with over 250,000 client relationships. This acquisition positions ING Australia as the second-largest aligned adviser network in the country with just under 1,500 aligned advisers and yielding significant growth opportunities and cost and operational synergies.
Bank distribution becoming a significant channel
While tied agency is currently ING’s strongest channel, we continue to develop third-party channels, in particular bank distribution. In Malaysia, ING recently signed an exclusive regional distribution agreement with Public Bank. Public Bank has an extensive distribution network of 241 branches across Malaysia and 15 commercial branches in Hong Kong. Sales through the Public Bank branches commenced in January 2008 with the launch of a three-year investment linked plan that provides life insurance coverage and capital protection. In India, distribution via ING Vysya Bank has been stepped up, and in Thailand an exclusive bank distribution agreement is being signed with the fifth largest bank, TMB, following ING’s announced acquisition of a 30% strategic shareholding in the bank. ING offers a total solution provider approach to its bank partners, including marketing and organisational support. One of our greatest strengths is our understanding of both the banking and insurance businesses, and how the two can augment each other.
ING has sizeable equity interests in three banks – Bank of Beijing in China, ING Vysya Bank in India and TMB in Thailand – and has developed joint ventures and partnerships with a large number of other banks and securities houses in the region. The partnership with ANZ in Australia and New Zealand continues to be successful. In addition, new alliances have been forged with the China Construction Bank (Asia) in Hong Kong and Public Bank in Malaysia and Hong Kong. In South Korea, ING signed bank distribution agreements with the country’s second and third-largest banks, Shinhan and Woori. In Japan, the second- largest life insurance market in the world, ING works together with over 40 banks and securities houses. The current number of ING’s partnership banks in the region has increased to over 200 banks, with a total distribution network of over 16,000 branches. In 2007, we also completed the purchase of an additional 5.1% stake in ING Life Korea from our partner Kookmin Bank.
Alongside bank distribution and tied agents, ING continues to explore innovative alternative channels. In South Korea, for example, selling insurance via Tesco’s hypermarkets has recently begun, and direct online sales of simple life insurance products such as OneCare express in Australia has also shown positive results. OneAnswer, ING’s investment platform offering retail investment services also continues to experience rapid growth.
Introducing new products
Most markets are showing a shift to investment-oriented life insurance products. In Japan, the introduction of a new SPVA product, Smart Design 1-2-3, in September 2007 has been very successful and has enabled us to maintain market share despite the negative impact of the FIEL regulation. South Korea and Taiwan showed increased sales of investment-oriented products and annuities. In Taiwan, ING’s sales in investment-linked products in 2007 have increased because of a concerted effort to improve the productivity of our service. In New Zealand, the KiwiSaver pension product has been launched successfully and ING New Zealand has become the leading player in this segment with over 65,000 customers and 3,000 employers signing up for this voluntary retirement savings plan. In Australia, sales via ING Direct of ING Australia’s life insurance product linked to a mortgage commenced during the latter part of 2007 and the initial results are promising.
Expanding organisational capabilities
Building and improving organisational capabilities, with particular focus on recruitment, management development and training, was an absolute priority in 2007. Along with the tremendous economic growth in Asia, the demand for talent is huge. Human resources remains a key priority, and ING is investing in improving and broadening long-term incentive programmes to attract and retain talent.
Increasing operational efficiency
On an operational level, ING aims to reap the benefits of scale through greater standardisation in key processes and systems. Regional roll-outs of standardised processing have started, along with a large number of efficiency projects. In line with Group risk and cost management, Insurance Asia/Pacific continues to improve operational risk management and cost management in the region. In Taiwan, for example, the focus on efficiency has stimulated profitable new business growth. Implementing ING Group’s compliance policies also continues to be a high priority.
Enhancing brand awareness
Efforts to enhance brand awareness have been initiated and implemented successfully. ING reached an audience of almost 500 million people in the region with sponsorship of the AFC (Asian Football Confederation) 2007 Asian Cup and Formula One races in Australia, China, Japan and Malaysia. Both platforms generated valuable business leads and increased brand awareness levels were registered, especially in Malaysia, South Korea and Thailand.
ING Investment Management in Asia/Pacific
ING Investment Management (ING IM) is a leading asset manager in Asia/Pacific and manages both proprietary life portfolios as well as funds for third-party clients. In 2007, the focus has been on increasing scale. Recent acquisitions, such as Landmark Investment Management in South Korea, have helped create the right level of scale. The year also saw the opening of an office in Dubai, the United Arab Emirates. ING IM’s initial focus will be on the six Gulf Co-operating Council countries of Saudi Arabia, United Arab Emirates, Kuwait, Oman, Qatar and Bahrain. Several new funds were successfully launched in multiple markets across the region during 2007. Fund performance was on track: over the one-year period to December 2007, 68% of ING funds outperformed their respective benchmarks on an asset-weighted basis. Investment management services in Asia/Pacific are discussed in more detail in the Asset Management chapter.
