Insurance Companies Diversifying Into Real Estate: Deal Of The 21st Century?

Given that a number of Chinese insurance companies have already diversified into the real estate business with lucrative results, does this move represent the “Deal of the 21^st Century”? 

By: Ringo Bones 

As of late, a number of Chinese insurance companies had diversified into the real estate / real property business during the past few years with lucrative results profit-wise. As far back as October 2014, Hilton Worldwide Holdings agreed to sell the storied Waldorf Astoria hotel to Anbang Insurance Group Co. of China after Anbang Insurance offered a bid of 1.9 billion US dollars. But it is only during the last week of January 2015 that US regulators gave the green light for the purchase. Anbang Insurance Group Co. sealed the 1.9 billion US dollar purchase of New York’s Waldorf Astoria hotel, which has been used by foreign dignitaries including Queen Elizabeth II. The Lloyd’s Of London building has also been recently bought up by a top Chinese insurance firm. 

Chinese insurers have been drawn to European office buildings because they are typically anchored by tenants with a 10-year leases and offer yields as high as 5 percent. This compares to Shanghai offices where 3 to 5 year leases and 4.5 percent interest yields are typical. 

“We consider high quality overseas property as a good substitute for fixed income investment” says Hing-Yin Lee, a senior executive director who manages overseas property investments for Ping An’s trust unit, told an investor conference back in December 2014. “Core offices in prime locations not only offer investors stable rental returns, the property prices may also go up in a few years”. With such investment returns, it looks like insurance companies diversifying into the real estate / real property business might as well be the “Deal of the 21^st Century”. 

Chartered Life Underwriter: Recession Proof Employment?

Given that “jobless recovery” is the new normal, is being a Chartered Life Underwriter truly is a recession proof form of employment? 

By: Ringo Bones 

                     

Even though recession has already “officially” ended in America and yet jobless recovery has since become the new normal, it seems that in every newspaper’s classified ads and online job search sites, Chartered Life Underwriters seems to be in hot demand as of late. Given that it has a “claim-to-fame” of being a recession proof form of employment, what is a Chartered Life Underwriter? 

Chartered Life Underwriters (CLUs) are a financial professional designation for individuals who wish to specialize in life insurance, estate planning and wealth transfer. The Chartered Life Underwriter – as a designation – was first given by The American College of Financial Services, also known as The American College, in Bryn Mawr, Pennsylvania, U.S.A. 

Technically, a Chartered Life Underwriter is a professional who has passed examinations on taxation, insurance and investments. He or she should also have planning experience with regards to life insurance. Chartered Life Underwriters typically undergo ten courses, 3 years of relevant and qualifying experience as well as the knowledge and obedience to the code of ethics as provided to the Chartered Life Underwriter. The courses aim to provide in-depth training that is concentrated on life insurance and personal insurance planning. There is also an exam after the end of the courses. 

 

Asia: The New Frontier of the Insurance Industry?

Even though the region has a notoriety of being “underinsured”, will the Asian region prove to be the new marketing frontier of the world’s leading insurance providers? 

By: Ringo Bones 

The tragic November 8, 2013 super-typhoon Haiyan / Yolanda that battered Tacloban, Leyte has highlighted the Asian region’s notoriety of being underinsured, but if Prudential has its way, Asia might prove to be a veritable growth industry for the world’s leading insurance providers. Given that a majority of this region’s inhabitants can hardly afford the relatively exorbitant premiums of top-tier insurance policies that cover climate change related catastrophes, will the Asian region prove to be a new and lucrative marketing frontier for the global insurance providers? 

U.K. based international insurance provider Prudential plc, which started in London back in May 1848 as The Prudential Mutual Assurance Investment and Loan Association that provided loans to professionals and working people has now provided their interim second quarter results for the year 2014 a few weeks ago showing that most of their profits and expected growth will be in its Asian markets. At the moment, Prudential operates across 13 Asian markets and is one of the Top 3 insurance providers in the Philippines, Malaysia, Indonesia, Vietnam, Hong Kong, India and Cambodia. 

Given the projected results showing that most of its positive growth market will be in Asia, the insurance company is now focusing its Asian market – as in its largest division in the name of Prudential Corporation Asia. The insurance company’s 13-million clients are expected to grow in the future, and most of the growth will probably be in Asia. Prudential also owns Jackson National Life Insurance Company which is currently the largest life insurance provider in the United States. Will Prudential now be concentrating more on its Asian clients than its American and European ones? 

Insurance Providers Without Borders, Anyone?

Given that the latest spate of climate change related catastrophes affecting largely uninsured poor countries, should commercial insurance based policies be made available to these people?

By: Ringo Bones 

It is a quite a sobering thought that over 90 percent of the surviving victims of Typhoon Haiyan that hit Tacloban City in Leyte of the central part of the Philippines back in November 8, 2013 don’t have any kind of insurance policy. A little over six months after the tragedy, a majority of the survivors are still scrimping and saving their own hard earned cash to fix their own homes and small business establishments since they don’t have any insurance payouts to collect and use to fix their own homes damaged by the most powerful typhoon on record so far to ever hit landfall. 

Trevor Maynard of Lloyd’s of London says current models used to predict disasters use historical data and the insurance company’s latest actuarial studies have shown that hurricanes poses the greatest damage in terms of payout costs when it comes to insurance policies tailored to meet latest climate change related catastrophes. Given that the world’s major insurance providers dismiss providing insurance services for the world’s poorest uninsured since such business schemes are “not economically viable” from their perspective, could insurance providing schemes based on Muhammad Yunus’ microfinance banking be a solution? 

Even though various kinds of microfinance insurance schemes already exists, creating one as a basis for a “insurance companies without borders” that would provide insurance coverage of climate change related catastrophes for the world’s poorest could solve the problem of typhoon and flooding victims unable to start over after their homes and businesses, livestock, farms, etc. are destroyed. Such solutions are likely to succeed given that they are congruent to existing conventional insurance underwriting schemes – except they are underwritten by a local microfinance banking scheme. 

The Uninsured Mount Everest Sherpa

Should the Nepalese government provide adequate insurance for the Mount Everest Sherpas? 

By: Ringo Bones 

Given that it was the tragic April 18, 2014 avalanche that shed light that probably all Mont Everest Sherpas are uninsured, the rest of the world now wonders why the Nepalese government has failed to provide adequate insurance to the Sherpas that assist foreign mountain climbers climb the world’s highest mountain. After all, Nepal earns millions of dollars in annual climbing fees from Everest alone. For the 2014 season, the Nepalese government had issued climbing permits to 734 people including 400 guides for 32 expeditions. The world has now been speculating whether the millions paid in climbing permits had been simply pocketed by Nepal’s political elites – rather than being set aside as an insurance / compensation fund for Sherpas.

Immediately after the tragic April 18, 2014 avalanche, the Nepalese government offered US$400 to each of the 13 victims’ families as a way to pay off “funeral costs.” Unsurprisingly, none had been pleased by the government’s offer. 

The average annual income in Nepal is around US$700 – while a Sherpa working for a typical 3-month season earns US$4,000. Despite earning more than the average Nepalese, being a Sherpa is a hazardous profession – a lot can happen to one hauling gear up a mountain for international climbers waiting at the Everest Base Camp.  

Mingna Sherpa said in an interview:”We love the mountains…but a mountaineer could climb in peace if he knew that his family will be taken cared of if something bad happens to him.” Nepal’s Deputy Prime Minister Prakash Man Singh said the government has been working to help the Sherpas, but unless the Nepalese government establish an effective social security for the Sherpas, international climbers could be put-off climbing Mount Everest via the Nepalese side because the government has scant social responsibility due to its inability to provide a well-underwritten insurance policies for the Everest Sherpas.