Market Research Report : Life Insurance Market in China 2012

Life Insurance Market – China

January 2012

2LIFE INSURANCE MARKET IN CHINA 2012.PPT

SAMPLE

Executive Summary

Market

Drivers & Challenges

Competition

Life Insurance market is the fastest growing segment of the insurance industry in ChinaA handful of domestic players dominate the insurance industry in ChinaForeign firms are stepping in the market primarily through joint ventures and mergers

Company 4 Company 2 Company 3Company 1

Major Players

Government Initiatives

12th five year planCIRC Measures Life Insurance Market Regulations

Drivers: Challenges:

IPO pipeline JV and M&A LandscapeRise in BancassuranceProduct Innovation

Trends

• Rise in Middle Class and Increasing Income

• Rise in Ageing Population• Low Market Penetration• Impact of Liberalization

• Location Challenge• Recession in Developed Markets• Complex Market Regulations• Lack of Human Resource


SAMPLE

•Market Overview

• Global Market Scenario

• Domestic Market Scenario

•Distribution Channels

•Drivers & Challenges

•Government Initiatives

•Trends

•Competition

•Key Takeaway


SAMPLE

Source:

Life insurance is one of the fastest growing segments of the insurance sector in the worlds

•Global life insurance market grew by x% from 20‐‐ to

Y bn in 20‐‐

• Share of life insurance premium was a% of the total

insurance premium collected in 20‐ ‐

•USA ranked x in terms of life insurance premium

volume in 20‐‐ and is expected to rank y in 20‐‐

• China currently holds the y position and is expected

to emerge as the z global life insurance market by 20‐

‐

•Global life insurance market is expected to be highly

concentrated in n years time

• The top emerging market countries to dominate the

global life insurance market by 20‐‐ are A, B, C, D and

E

• These countries are expected to have a x% share of

the life insurance industry of the emerging markets

Global Life Insurance Market ‐ Overview Global Life Insurance Premium – Growth Rate

Global Life Insurance Markets – Ranking

0

500

1,000

1,500

2,000

2,500

3,000

USD bnX%

Year 2

x2

Year 1

x1

b1a1USA

b4a4France

b3a3Japan

b2a2China

b6

b5

20‐‐

a6

a5

20‐‐

India

UK

Countries

Note: Emerging Markets refers to an economy with low level of per capita income


SAMPLE

Source:

Life insurance market in China is expected to witness a rapid growth

• Insurance market in China has evolved into a large

and rapidly growing industry over the years

• Life insurance is the largest segment by premiums

collected of the insurance industry in China

Life insurance market is projected to grow to USD x bn in

20‐‐ from USD y bn in 20‐‐

•Domestic firms dominate the life insurance market in

China

• Rising competition by the foreign firms is a key

feature of the life insurance market

• The life insurance market in China is dominated by a

large number of institutional regulations

• Ratio of the claims paid to the premiums earned is

lowest for the A segment compared to the B and C

segments

Domestic Life Insurance Market ‐ Overview Life Insurance Premium – Growth Rate

Life Insurance – Market Segments (2010)

0

100

200

300

400

500

600

USD bn

Y%

Year 4

y4

Year 3

y3

Year 2

y2

Year 1

y1

a3

B

b2

a2

A

b1

a1

%

100%

80%

60%

40%

20%

0%C

b3

Premium earnedClaims paid


SAMPLE

Life insurance market in China is divided into three major segments

• Life insurance market in China is divided into three segments X1 X2 X3

• Life insurance market in China accounts for x % of the total premiums of the overall insurance market

• Share of X1 premium is the highest at y% of total premiums collected

Domestic Life Insurance Market ‐ Segmentation

Source:

Market Structure

Share of Insurance Premiums (20‐‐)

B

B1

A

B3

Insurance

B2

D%

C%B% A%

X4

X3

X2

X1


Liberalization of the insurance market in China played a major role in driving the market growth

Source:

Year a Year eYear d

• Ccc

Year f

• Ddd

Year b Year c

• Eee • Fff • Ggg • Hhh

• Bbb• Aaa


SAMPLE

Drivers & Challenges – Summary

Drivers

Rise in Middle Class and Increasing Income

Rise in Ageing Population

Low Market Penetration

Impact of Liberalization

Recession in Developed Markets

Location Challenge

Challenges

Complex Market Regulations

Lack of Human Resource


SAMPLE

Rise in middle class population coupled with a rise in disposable income drives the life insurance market

•Finding 1

•Finding 2

•Finding 3

Rise in Middle Class and Increasing Income Impact

Source:

Share of Chinese Urban Households Per Capita Urban Disposable Income

0

20

40

60

80

100

Year 4

e4d4

c4

b4

a4

Year 3

e3

d3

c3

b3a3

Year 2

e2

d2

c2b2 a2

Year 1

e1

d1c1b1 a1

edcba

0

500

1,000

1,500

2,000

USDY%

Year 2

x2

Year 1

x1


SAMPLE

Rapid rise in the share of ageing population provides a golden opportunity for market growth

•Finding 1

• Finding 2

• Finding 3

• Finding 4

Rise in Ageing Population Impact

Source:

Share of 80+ group (2010) Growth of Ageing Population (60+)

0

5

10

15

20A%%

Year 3

a3

Year 2

a2

Year 1

a1

B%

A%

BAAaa

Rise in Life‐Expectancy

0

20

40

60

80

Years X%

Year 3

x3

Year 2

x2

Year 1

x1


SAMPLE

Low penetration level of the life insurance market presents a greater opportunity for growth

•Finding 1

• Finding 2

• Finding 3

Low Market Penetration Impact

Source:

Penetration Rate China ‐ Regional Penetration

0

1

2

3

4

%

X3

x3

X2

x2

X1

x1

0

5

10

15

20

%

D

d1

C

c1

B

b1

A

a1

Note:


SAMPLE

Liberalization of the economy acts as a major driver of the life insurance market

•Finding 1

•Finding 2

•Finding 3

•Finding 4

Impact of Liberalisation Impact

Source:

Competition Mix – Key Regions

0%

20%

40%

60%

80%

100%%

Y

b2

a2

X

b1

a1

BA

a6

a5

a4a3

a2

a1 654

321

Competition Structure (2010)


SAMPLE

SAMP

LE

Summary – Trends

IPO Pipeline JV and M&A Landscape

Product Innovation Rise in Bancassurance

Trends


SAMPLE

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000

Net Income

Revenue

c1

b1

a1

Domestic Competition – Summary (1/2)

Source: Note:

Size of the Bubble represents Market Capitalization in USD mn

CBA


SAMPLE

Domestic Competition – Summary (2/2)

Source:Note:

Revenue and Profit for Major Domestic Companies

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000

USD mn

Cc2

c1

Bb2

b1

Aa2

a1

YX


SAMPLE

Major Domestic Players in the Market (1/7)

•Company is a operating subsidiary of A

• Total premium income of the company till Oct 20‐‐ amounted to USDx bn

•After approval from the CIRC issuance of USDy bn subordinated debt was completed by the company in Oct 20‐‐ Maturity period of the subordinated debt is fixed at a years with an interest rate of b% for the first c years

Proceeds from the issuance will be used to raise solvency ratio and raise supplementary capital of the company

• In May 20‐‐ company completed the filing of record for private equity and investment in real estate with the CIRC

• Till Dec 20‐‐ company had three subsidiaries that engaged in a1, a2 and a3

Source:

Headquarters City 1, Country 1

Founded 19‐‐

Products Product 1, Product 2, Product 3

Key People Name 1 –Designation 1

Company Snapshot: Company 1

Business Highlights

Corporate Information Financial Performance

Profit / Loss

Revenue

0

20,000

40,000

60,000

80,000

0

2,000

4,000

6,000

8,000

ProfitUSD mn

RevenueUSD mn

Year 4

x4

Year 3

x3

Year 2

x2

Year 1

x1


SAMPLE

Despite a large number of institutional restrictions life insurance market in China is poised to witness rapid growth

Life Insurance Market in China is expected to grow by A% to USD X bn by 20‐‐

Rise in middle class population along with rise in disposable income provides a major opportunity for growth

Opportunities in the Market Market Size

Government Initiatives

Challenges

Low market penetration level coupled with a rising share of ageing population propels the life insurance market in China

Entry of firms through joint ventures and mergers is a major driver of the life insurance market

• Location Challenge

• Recession in Developed Markets

• Complex Market Regulations

• Lack of Human Resource

12th five year plan of the government focuses on measures to develop the life insurance sector

China Insurance Regulatory Commission hasalso adopted several measures to boost the market

Life insurance market in China is dominated by restrictive investment regulations

0

200

400

600

USD bn

A%

Year 4

a4

Year 3

a3

Year 2

a2

Year 1

a1


Thank you for the attention

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Jitendra PunjabiPhone: +91 33 4064 6215E‐Mail: [email protected]

Market Research Report : Life Insurance Market in China 2012

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