How quickly things have changed. When the East Asian insurance community met in Macau in 1998 for the 19th Biennial Conference of the East Asian Insurance Congress, discussion was tempered by the reality of the region's maturing economic slump. In the middle days of a financial crisis that had run rampant, East Asia's insurers could do nothing to alter the stark reality of events beyond their control.
Remember those days? Chew Loy Kiat of Singapore's People's Insurance Company, president of the EAIC's executive board, opened the 19th Conference with a strong dose of realism. “The solvency levels of some insurance companies are under pressure, and these may struggle to survive,” he said. “For them the future looks bleak. Some will fall by the wayside.” Dr Vitor Rodrigues Pessoa, Macao's Portuguese secretary for economic co-ordination, was more philosophical. “The Asian crisis represents a break, or a step back in the convergence process with western economies ... the insurance sector is bound to feel the pinch.”
Chief Delegate Dr Kim Taek-Kee of Seoul reported on the “drastic depreciation of 50.2%” of the Korean Won, interest rates of 24.3%, and the Korean government's choice to turn to the International Monetary Fund for a financial lifeline. Arnop Porndhiti of Bangkok revealed that the financial crisis had driven Thailand's motor and new life premiums down by 25% in the first six months of 1998. Munir Sjamsoeddin of Jakarta explained how the nearly complete devaluation of the Indonesian currency made year-on-year premium growth figures wildly misleading.
Most of the other chief delegates had similar tales to tell. In the corridors and cocktail parties of Macau, gloom prevailed despite the island's party atmosphere. “We are more like undertakers than underwriters,” said one Japanese delegate. “My premiums are down 30%,” said the manger of a Malaysian captive. A facultative underwriter bemoaned his falling gross. “There were maybe 1,000 fac risks in the region,” the Australian said. “Now, with new retentions, there's maybe 300.”
It will all be different this time, when delegates meet in Manila. Optimism has replaced the depressed mood of the 1998 conference. The dark days have, for the most part, passed, and were mercifully short. Collapsing curves of all varieties are once again on an upward trend. As implied by the theme of this year's Conference, Rebounding From the Asian Financial Crisis: Strategies for Continued Growth, most economies are ready to pick up where they left off, although many have some painful restructuring to digest before rampant prosperity returns.
One thing is certain: rampant interest in East Asia has returned full-strength, not least from western insurance investors. That interest and optimism is reflected in this special supplement of Global Reinsurance Magazine. “The future looks bright for Malaysia generally and its insurance industry in particular,” declare London brokers The Miller Insurance Group. Lloyd's of London says its “decision to stick with Asia seems to have paid off.” Nascent reinsurer Danish Re explains the roll-out of its operations in Japan and Singapore, and describes “enormous potential in the region.” Royal & Sun Alliance says changes occurring in Korea: “have the potential to create one of the world's most dynamic markets.”
QBE International is bullish. “With economies currently recovering from the Asian crisis, we expect growth in business opportunities across the board.” Gerling Global Re is also anticipating swelling demand. “Forthcoming mergers will lead to bigger insurers with larger net retentions, but with an increasing need for non-proportional covers from the reinsurance market,” they forecast. And Clyde & Co says confidently: “Selling political risk cover in Asia should be as easy right now as shooting fish in a barrel.” In this special supplement we also learn how Allianz is playing patience in China, and what Munich Re sees as the strengths of the fully-recovered Singapore reinsurance market.
Many local players are equally enthusiastic about the reawakening and re-engineering of their own markets. VINARE. describes the results of Vietnam's established liberalisation programme, and expresses excitement about further reforms. From Japan, we learn of the coming of age of the world's largest insurance market, after radical upheaval. Hong Kong, we are told, will relentlessly pursue professional intermediary standards.
It is my great pleasure to return to the EAIC with such optimism prevailing, just as it is to offer this collection of thoughtful essays and reports on insurance and reinsurance in the region. As your read through this special supplement, please be aware that sums in dollars, unless otherwise noted, are in US dollars. Finally, thanks to all who contributed – both to the success of this publication, and to the turn-around in East Asia's economy. See you in Manila.
Adrian Leonard is a freelance insurance journalist and regular contributor to Global Reinsurance.