Asian countries are receiving lots of attention from large coverage providers.
Some of the largest insurers in North America are making insurance news as their set their sights on Asia and the potentially lucrative business for wealth management that is presenting itself there, as they make efforts to balance the losses that they have been experiencing in traditional markets as a result of interest rates that remain continually low.
Common insurance news from the second quarter involved low earnings on many levels.
Insurers’ earnings from Q2 were smashed down by equity markets that continue to be volatile, as well as low interest rates on their investment incomes. Large coverage providers have predicted that if the interest rates remain low, then holding the same course could cause them to lose hundreds of millions of dollars over the upcoming years.
Many of these companies have recently made insurance news announcements to say that they would be turning their focus on Asia, where there is a tremendous asset management business growth. This will be a significant part of their strategies to reposition themselves for new earnings within an economy that is maintaining such a low interest rate.
Manulife, for example, has reported a loss of $300 within the second quarter of 2012. It has said that if the interest rates remain the same, then it expects to experience another $400 million in losses in 2013. According to that company’s chief executive officer, in reference to an announcement that it had previously made for a targeted $4 billion in earnings in 2015, “We need to remind investors of the third-quarter basis changes and that the impact of the continued macro-economic headwinds makes the achievement of our 2015 objectives more of a stretch.”
Insurers have been blaming the difficult interest rates and equity markets for the losses, as much of the premiums collected from policyholders often goes into investments in order to increase earnings and keep rates lower and competitive.
At the same time, wealth management has become a growing niche in its appeal among financial services firms as the Baby Boomer generation enters retirement and younger generations watch the erosion of pension plans that are offered through employers. This has caused individuals to focus their insurance news more heavily on investment portfolios and retirement savings plans.