ING Direct 2009 Annual Report Download - page 46

Insurance Asia/Pacific
Key points
> Strong presence in key Asian economies
> Diversified distribution reach, large tied
agency network complemented by bank
distribution partnerships
> Well-positioned to benefit from economic
upturn and recovery of life insurance sector
ING is a leading international life insurer with significant operations
in Asia. Insurance Asia/Pacific retains a strong footprint in Asia, with
nine insurance operations in seven countries, following the sale of
the insurance and wealth management venture in Australia, New
Zealand and all our operations in Taiwan. ING holds top-5 insurance
market positions in South Korea, Malaysia and the Japanese
Corporate Owned Life Insurance (COLI) market. Furthermore ING
has a growing presence in Hong Kong, Thailand, India and China.
ING is also the fourth largest regional investment manager, based
on assets under management, operating in 11 markets.
FINANCIAL DEVELOPMENTS
Gross premium income declined by 25.2% or EUR 2,169 million
to EUR 6,422 million in 2009 from EUR 8,591 million in 2008.
The decrease was mainly due to the 40.8% lower premium income
recorded in Japan, which resulted from the cessation of the Single
Variable Annuity Product (SPVA) business as of 31 July 2009.
Excluding the discontinued SPVA business in Japan, premium
income fell by 7.8%, due to the drop in new sales in South Korea
on an overall weaker demand for investment-linked products in
2009, partly offset by higher premium income from robust new
business growth in Malaysia, Hong Kong and Thailand.
Total underlying income was 33.4% down from EUR 11,437 million
to EUR 7,618 million, primarily due to the SPVA business in Japan.
Fair value changes on derivatives used to hedge Japan’s guaranteed
variable annuity benefits are reflected in ‘Total investment and
other income,’ offset by a reduced increase in benefit reserves
reflected in the underwriting expenditure.
New sales declined by 31.6% to EUR 1,024 million in 2009
compared with EUR 1,496 million in 2008. Excluding the
discontinued SPVA business in Japan, new sales declined 24.2%
to EUR 929 million from EUR 1,226 million in 2008. The decline
was primarily due to 34.6% lower new sales in South Korea,
resulting from continued pressure on investment-linked product
sales for most of 2009 and a restructuring of the tied agency force.
In Japan, new sales for our COLI business declined by 19.3%.
The decline in South Korea and Japan was partly offset by double-
digit growth in Malaysia and Thailand, up 14.8% and 14.1%,
respectively, thanks to continued strong sales through Public
Bank in Malaysia and TMB Bank in Thailand.
The value of new business fell by 28.2% to EUR 127 million in 2009
from EUR 177 million in 2008. Excluding the discontinued SPVA
business in Japan, the value of new business declined by 19% to
EUR 145 million from EUR 179 million in 2008. The decline was
primarily due to a 13.0% decline in the value of new business in
South Korea due to lower sales, partly offset by Malaysia, where
the value of new business rose 23.5%. The internal rate of return
(IRR) remained stable at 13.3%.
Operating expenses decreased 14.7% or EUR 103 million to
EUR 599 million from a year earlier driven by ongoing cost
containment initiatives and efforts. In particular, operating
expenses in South Korea and Japan declined 25.3% and 19.2%,
respectively, as structural, i.e. administrative expenses, shrank,
due to lower fixed personnel costs due to ongoing staff
rationalisation and business and organisational restructuring.
Insurance
Financial overview
in EUR million 2009 2008
Underlying* premium income 6,422 8,591
Underlying* operating expenses 599 702
Underlying* result before tax 220 –1
Total result before tax 543 –213
Value of new life business 127 177
Internal rate of return 13.3% 13.3%
New sales 1,024 1,496
* Underlying numbers are derived from IFRS-EU numbers, excluding the
impact of divestments and special items.
Geographical breakdown of premium income
in EUR million 2009
Japan 37% 2,383
South Korea 43% 2,731
Rest of Asia* 20% 1,308
Total 100% 6,422
* India, China, Hong Kong, Thailand and Malaysia.
Poised to benefit from renewed demand
1.2 Report of the Executive Board
ING Group Annual Report 2009
44