Singapore Life buys Zurich portfolio

January 12 2018 by Nick Ferguson

Singapore’s newest insurer has gone from fintech startup to significant player after agreeing a deal to buy Zurich Life’s Singapore business portfolio this week.

When Singapore Life launched last June, it was the first local insurer to be licensed in the city since 1970 — and it promised to shake up the industry with a tech-focused approach that would be efficient, accessible and customer-friendly.

“The life insurance industry has not kept pace with the innovation seen in other industries and needs to be challenged to be better,” said Walter de Oude, chief executive of Singapore Life, at the time of the company’s launch. “People deserve a better partner for their life insurance needs — one who can reduce the complexities in the purchase journey and offer efficient, transparent and flexible solutions.”

The company started relatively small, targeting high-net-worth customers, particularly from China, “who prefer Singapore as a destination for their wealth and protection”. It is backed by Hong Kong’s Chong Sing Holdings FinTech Group and the UK-based IPGL Holdings, which together provided US$50 million in funding in April last year.

But the addition of the Zurich Life customers, who will be transferred by mid-2018, accelerates the company’s plan to broaden its business. However, while the deal gives Singapore Life some critical mass, it also means the company will be taking on a legacy portfolio — and that presumably undermines some of the benefits of starting a new-generation insurance company from scratch.

Even so, it clearly puts the company on the map. The Zurich Life Singapore portfolio comprises about 5,000 policies, according to the Swiss insurer, and has formally been in run-off since December 2015 as part of Zurich’s strategy to optimise its portfolio and geographical footprint.

The two companies have not said how much Singapore Life is paying, but the portfolio reportedly provides US$4.5 billion of coverage.

Although Zurich no longer considers the opportunity for life insurance business in Singapore to be attractive, the underlying dynamics are relatively positive for a digital insurer with a more efficient, lower cost model. According to the city’s Life Insurance Association (LIA), the period January to September 2017 saw an 18% increase in total weighted new business premiums, amounting to US$2.1 billion, with an increase in uptake across both single and annual premium products.

Compared to the same period in 2016, the industry recorded a 23% increase in weighted single premiums. Single premium par and non-par products comprised 75%, while the remaining 25% were single premium-linked products. Central Provident Fund Investment Scheme-included products comprised 15% and cash-funded products took the remaining 85%. There was also a 15% increase in weighted annual premiums and a 27% increase in total weighted premiums for retirement products.

“More Singaporeans are recognising the value of financial planning and insurance for their future, and this is reflected in yet another quarter of strong growth for the life insurance industry,” said Patrick Teow, president of LIA. “Especially against the backdrop of Singapore’s rapidly greying population, we are heartened that Singaporeans are actively taking up insurance policies to secure steady income streams in their retirement years.”

It remains to be seen if Singapore Life’s 100% digital offering will pose a competitive threat to the city’s established life insurers, of which there are more than 20. Time will tell.