Archive: January, 2009

Need to regain confidence -Bill Lisle

No comments January 30th, 2009 wm afendi

WHAT are some of the challenges or areas of concern for the insurance industry?

Malaysia’s insurance industry will be in for a challenging time in 2009 given the lack of consumer confidence following the recent AIG bailout. Unfortunately, most consumers think that one insurance company is the same as the other. This, in my opinion, is one of the challenges the industry is facing at the moment.

However, I believe as consumers begin to understand that all local insurers are strictly regulated and subject to very strict solvency requirements by Bank Negara, the situation will improve gradually. I think it will take at least three to six more months for consumers to have confidence again.

Bill Lisle

With the current economic slowdown, what are the prospects of this sector this year?

Basically, our industry is recession-proof and I am optimistic with the outlook, simply because insurance remains an important protection and savings tool regardless of the market environment. In difficult times like now, we need insurance all the more to provide protection and a safety net. I think many Malaysians understand that and they tend to think twice before cancelling their policies for fear of losing their basic life protection and medical insurance.

At Prudential, we have not seen any drastic increase in the cancellation rate for the last three months. We are still the same before the global financial crisis started and the new take-up rate is still going strong.

Furthermore, with only about 40% of the population insured (as at 2007), the market certainly has plenty of room for growth. There are opportunities for insurance players to continue to introduce new products.

Is the company on track to achieve the risk-based capital (RBC) framework scheduled to be implemented in January this year?

Yes, we are. We have successfully switched over to the RBC on Jan 1, 2009 and we are now managing the business within the requirements of the RBC framework. We have always adopted a risk-based approach to our business and we have a very healthy capital position which is above Bank Negara’s minimum requirement.

What are some of the strategic measures the company is adopting to strengthen its foothold in the sector?

The transformation strategy which we have put in place since April 2008 has been a key driving force behind the company’s strong growth momentum. Our new business sales (including takaful sales) grew by 13% in the first half of the year.

We recorded a 33% improvement in the third quarter and for the first nine months ended Sept 30, we registered a strong double-digit growth of 20%.

For 2009, we will focus on a number of key areas such as strengthening Prudential’s brand promise (“The Face You Can Trust”), transforming our agency force to wealth planners who will have the ability to distribute multiple products, and enhancing agents’ productivity.

We are also looking at continuing our leadership in the market by introducing innovative products.

Our current range of protection, investment/savings, retirement and health products will be strengthened to provide innovative, relevant and effective financial solutions that meet our customers’ needs.

I am confident that with the transformation strategy now in full swing, supported by a preferred and trusted brand acceptance as well as a strong talent pool, Prudential will be able to get through the economic challenges in 2009 and emerge stronger.

Is the company on track to achieve its expansion plans and make relevant investments amid the slowing economy?

Yes, we are. Prudential Malaysia is a key contributor to the Prudential Group’s vision to be the leading retail financial services provider in Asia.

And our strong fundamentals in marketing, distribution and customer service will continue to put us in good stead to realise this role. While we lead the industry in the agency distribution channel, where our agents are the most productive, we have also put in place key initiatives to drive our expansion plans through alternative channels.

Do you foresee more mergers and acquisitions in the industry in view of the RBC?

I do not discount the possibility of M&A activities, although I think strategic alliances will more likely take place given the complexity of the business that we are in.

As for Prudential, we are coming from a position of strength where we have a robust capital position. Whenever an opportunity for M&A arises, we owe it to our shareholders to review it on a case-by-case basis, and make sure it adds value for the company as well as our shareholders.

Insurance/Takaful/Banking Industry, Prudential ,

Start from young

No comments January 3rd, 2009 wm afendi

ANDREW Liao, Lee Swee Beng and Yee Foong Kuen are able to enjoy a carefree retirement because they have a steady stream of income and medical coverage, and they get retirement benefits from their previous employers.

Living within their means, their retirement lifestyle is simple yet fulfilling and comfortable.
Abdul Ghani Shahbudin: ‘Savings should ideally be 10% to 15% of one’s income.’

Prudential’s Senior Wealth Manager Abdul Ghani Shahbudin noted that unfortunately, such retirement benefits are no longer available today, with most people depending on their EPF funds as their main source of retirement income.

Sadly, surveys have shown that on average, EPF savings can only last three years into retirement. This means the younger generation has to take ownership of their retirement planning, depending on themselves to achieve their retirement lifestyle.

Basic principles of starting early and maintaining disciplined savings are important in building a solid retirement fund.

Starting early allows the money to work harder and grow bigger through compounding interest. In reference to the retirees’ experiences, Abdul Ghani also stresses the importance of saving and making it a habit. He says savings should ideally be 10% to 15% of one’s income. A retirement plan such as PRUretirement accumulator would be ideal, whereby investing as little as RM200 a month (which can be likened to forced-savings), the money can potentially grow into a sizable guaranteed monthly income of RM870* at retirement.

There is also the flexibility of increasing their retirement fund when there is extra income such as year-end bonus or salary increment.

Lastly, it’s always wise to invest in some sort of protection. Echoing Liao’s advice, Abdul Ghani says if you have a family, it’s crucial to have basic life insurance with medical protection first. Subsequently, other forms of investment can be added or obtained depending on one’s financial capability and the strength of the economy.

(*Estimated for a 25-year-old male, non-smoker, who retires at age 55 and enjoys 15 retirement years.)

Financial Planning ,

Start early

No comments January 1st, 2009 wm afendi

THREE couples with different needs posed an interesting challenge for Prudential’s Wealth Manager, Joselin Ooi.

Ooi’s advice to the youngest couple, Mohd Khairi Ibrahim and Fara Lucia Razali, is that they must get into the habit of putting aside a small amount of money every month for their retirement fund.

Starting early buys time, which is the biggest factor in building a retirement nest egg. The sooner they start, the easier it is to reach their goal, thanks to the power of compounding interest.

A retirement plan such as the PRUretirement accumulator would be ideal for this young couple, whereby an investment of as little as RM300 a month (which can be likened to forced savings), can potentially grow into a sizable guaranteed monthly income of RM1,114* upon retirement.

There is also the flexibility of increasing their retirement fund when they have extra income such as a year-end bonus or salary increment.

For Harminder Gill and Balvinder, while they have a savings plan in place and are aware of the importance of planning for retirement like most parents with young children, they currently give more emphasis on building their children’s education funds.

For their retirement, Ooi recommends that they see a professional financial advisor to review and evaluate their financial needs. Knowing the type of retirement lifestyle desired and retirement number is crucial.

Once the couple know their retirement number, a professional can then work out a strategy to ensure they realise their dreams.

Ooi believes that Kelvin Boey and Karin Lim may be the most prepared financially among the couples for their retirement, given their age. Her advice is simple – that the couple review their needs annually.

Every investment has a risk, so it is important to have annual reviews which will help ensure that their savings and investments meet their retirement goals.

The biggest hurdle to achieving their retirement number is inflation.

Investing in a vehicle such as PRUretirement accumulator is an added advantage as it provides capital protection with potential for higher returns.

(*Estimated for a 28-year-old male, non-smoker, who retires at age 55 and enjoys 15 retirement years.)

Insurance/Takaful/Banking Industry ,