On the surface, the U.S. property and casualty (P&C) insurance industry received good news on Valentine’s Day, during Chinese Vice President Xi Jinping’s visit to the United States. U.S. Vice President Joe Biden announced the “Joint Fact Sheet on Strengthening U.S-China Economic Relations,” under which China agreed to open up its US$65 billion auto insurance market to foreign competition. The Chinese insurance market had 2010 annual premiums exceeding US$236 billion, including US$150 billion in life and US$86 billion in P&C, of which foreign life and general insurers hold insignificant market shares of roughly 4% and 1%, respectively. Non-China-based insurers, originally lured to … Continue Reading →

Constituting roughly 80 million individuals born in the 1980s and 1990s, the Generation Y population is estimated to be as large as that of the baby-boom generation. Of Gen Yers, approximately 50 million are of investing age. Capturing this large group is critical for wealth management firms that want to see assets continue to grow once their baby-boomer clients hit retirement. What characterizes these young investors? A December 2011 Aite Group survey of 1,000 investors (240 Gen Y investors) that hold a minimum of US$25,000 in investable assets reveals the following: Half are entirely self-directed and state that they “look into investments … Continue Reading →

The years immediately following the financial crisis were extremely challenging ones for the financial services industry. For the last few years, most bank IT budgets have been monopolized by regulatory compliance, matters related to running the bank, and cost-cutting initiatives, with little to no focus on growth. Further, many of the growth initiatives banks planned for 2011 were put on a back burner or never came to fruition. Despite this, banks continued to see the value of technology and to invest in IT during even the most challenging times. Most institutions enjoyed a small increase in IT spending — about 3% … Continue Reading →

The Wall Street Journal reported yesterday that subprime mortgages, a distressed sector of the securitized debt market, have been smartly rallying in value since late 2011, as measured by the 2006 AAA slice of the ABX index. Currently, the index stands at about 50% — almost twice the value at its all-time low in early 2009. Does this mean that the party is getting started again? Well, it depends on your perspective. Analyzing securitized debt is not for the faint-hearted, even if it is on the most senior tranche, as the index level of the 2006 AAA ABX index can … Continue Reading →

Last week, the Canadian Securities Administrators (CSA) opened for comment the latest in its series of consultation papers on the regulation of over-the-counter (OTC) derivatives. CP 91-404 explores issues, considers alternative solutions, and sets out proposals for the segregation and portability of customer accounts and collateral associated with OTC derivatives transactions cleared through a central counterparty (CCP). The protection of customers’ collateral is an important topic; indeed, Aite Group wrote about account segregation (as well as CCPs) in Top 10 Trends in Institutional Securities & Investments, 2012. We have come to expect the CSA’s Derivatives Committee to explain complex matters clearly and develop regulatory … Continue Reading →

On Wednesday, February 15, Aite Group’s Wholesale Banking team will host a webinar discussion about key trends featured in our analysis of top 10 wholesale banking expectations in this Year of the Dragon. Ambition and innovation are two components often associated with the year in astrology, and Aite Group sees these as strong themes for planned wholesale banking initiatives in the year to come. Our team’s goal for this webinar is to to engage participants in a discussion about the trends and initiatives that are emerging in 2012, and to provide actionable advice on what these trends mean and how … Continue Reading →

Friday’s news that North Carolina-based BB&T would acquire Roseland, New Jersey-based The Crump Group for US$570 million signals a further heating of the already warm space of insurance-distribution M&A. Already the nation’s second-largest bank-owned insurance broker, BB&T Insurance Services will become the largest independent U.S. wholesale distributor of life insurance and a strong number two in wholesale P&C insurance after acquiring Crump. Bank insurance has been something of a sleepy domain in the United States, which has never seen “successful” bancassurance behemoths like ING or Fortis (whoops!) take root. All of Sanford Weill’s wiles could not keep the banking and … Continue Reading →

Prudential Financial yesterday announced a multistate settlement concerning death-benefits-matching. Like other insurers, Prudential had come under pressure from regulators for failing to do all it could to determine whether the insureds on its life insurance policies remained among the living or had died, the latter of which would necessitate the paying out of a death benefit. At the same time, Prudential’s annuities lines of business, which were able to stop paying out annuities when the annuitant passed away, worked very hard to stay on top of that data point. I have argued in the past that, in the absence of … Continue Reading →

January 31, 2012 has come and gone, and the Federal Insurance Office (FIO) Report on insurance industry modernization — clearly mandated by Dodd-Frank to have been delivered to the U.S. Congress no later than that date — is now officially late. Although the report may just be another in a string of late Dodd-Frank deliverables, could its delay indicate something more foreboding than a blown bureaucratic deadline? As I have articulated in detail in prior blog posts on this subject (“FIO Report to Congress: The Moment of Truth Approaches” and “The U.S. Federal Insurance Office: McRaith Takes the Reins”), numerous large and … Continue Reading →