>>> Zurich Insurance eyes organic and inorganic growth for Indonesian divisions

Zurich Insurance eyes organic and inorganic growth for Indonesian divisions - exec
03 SEP 2018
Zurich Insurance Group [SWX:ZURN], the Swiss insurance firm, is eyeing organic and inorganic strategies to enhance its business in Indonesia, CEO and Country Manager Chris Bendl said.
The strategy is planned for the group’s Jakarta-based life insurance and general insurance businesses. It will include possible acquisitions as well, he noted.
Currently, Zurich’s life and general insurance divisions rank 30 to 35 among insurance players in Indonesia based on the size of their assets. The group targets to enter the top 10 of the list in five years, Bendl said.
The executive said the group will comply with the recent regulations set by Indonesia’s Financial Service Authority (OJK), which could impact its potential acquisition plans, Bendl said, without revealing further details about the acquisition strategy.
According to the Insurance Law issued in 2014, shareholders of Indonesian insures are prohibited from owning more than one company with the same business. The OJK has encouraged shareholders of several insurance firms to consolidate their units under one roof, such as the recent merger of AXA Life Indonesia and AXA Financial Indonesia in February 2018.
Meanwhile, as part of its organic growth strategy, Zurich plans to focus more on the retail market and strengthen its digital distribution channel to increase the number of customers, Bendl said. In October 2017, Zurich launched a digital platform exclusively in Indonesia especially for its agents and customers to facilitate access to services, as reported by the local media.
Zurich Group started operating general insurance business Zurich Insurance Indonesia in 1991 through a joint venture partnership with local insurer Asuransi Bina Dana Arta [IDX:ABDA], according to the company’s website. The group’s life insurance firm Zurich Topas Life was established in 2010 following the acquisition of an 80% stake in Mayapada Life from Mayapada Group. Zurich currently owns 80% of the life insurance arm and 98.49% of the general insurance division. The new regulation does not apply retroactively, therefore, the firm is not required to sell down its stakes in the units.
Zurich Topas Life booked net revenue of IDR 125.6bn and IDR 71.9bn net loss in 1Q18, according to its latest financial report. Zurich Insurance Indonesia posted IDR 97.48bn of net premium income and IDR 47.12bn net loss in 2Q18.
Bendl noted the group plans to grow in the country, which still has very low penetration of insurance products. Zurich Group also wants to help the government develop the domestic insurance market, he added.
The life insurance market penetration in Indonesia reached 7.1% by March 2018, a local media report noted, citing Indonesia Life Insurance Association. Meanwhile, the penetration of general insurance remains low due to Indonesia’s demographic conditions and challenges arising from the slowdown of macro economic growth, as per the association’s report last year.
So far, Zurich Group has less than a 10% market share in Indonesia, for both life and general insurance, despite its long-term presence in the country, Bendl said.
In April 2018, the Indonesian government issued a regulation that limits foreign ownership in domestic insurance companies to a maximum of 80%, as reported by local media. Previously, the government allowed overseas investors to hold up to 100% in local insurers. The law was originally issued during Asia's financial crisis in 1998 as local parties were unable to inject more capital into the firms.
Indonesian insurance companies, however, still need to partner with foreign parties as they have strong financial and human resources, said Hendrisman Rahim, Chief of Indonesia Life Insurance Association, as per a media report published July 2017. The OJK accounted a total of 22 life Indonesian insurance companies with foreign shareholders and 23 general insurers with foreign shareholders, as per data released by the regulator, cited in a media report in May 2018.

FT : Thames Water to invest record £12bn on infrastructure upgrades

Thames Water to invest record £12bn on infrastructure upgrades
Company to spend on improvements and reducing pollution incidents

Britain’s largest water company plans to invest a record amount on improving infrastructure and will cap payouts to investors after a barrage of criticism over its performance.

Thames Water, which supplies more than 15m people, said it will spend £11.7bn on upgrades for the period from 2020 to 2025. 

The business plan, submitted to the industry regulator on Monday, will cut leaks by 15 per cent, reduce pollution incidents by almost one-fifth and generate enough green energy power to 115,000 homes, Thames Water said. 

It also includes £2.1bn to “boost resilience and reduce leakage”, the company said. Thames Water was ordered to pay £120m in June by Ofwat, the regulator, to compensate customers over leakage failures. 

The company will also limit annual external shareholder distributions to about £20m. Average bills will remain flat before inflation, it said. 

Steve Robertson, chief executive of Thames Water, said the company’s proposals were “ambitious, well-costed and widely supported by our customers, who agree we should prioritise the most vulnerable”. 

“Bills will be flat in real terms over the five-year period and our shareholders will receive annual distributions of around £20m as we prioritise investment on significantly improving service,” he added.

After 2020, management bonuses and dividends will be tied to meeting targets on reducing leakage and pollution, and increased customer satisfaction, Thames Water said. The company is also overhauling its corporate structure to make it easier to understand and plans to lower operational unit costs by nearly 14 per cent. 

All water companies across England and Wales were due to submit their business plans to Ofwat for the years 2020 to 2025 on Monday. Severn Trent and United Utilities said they would cut the average bill by 5 per cent and 10.5 per cent respectively. South West Water said it would offer customers a stake in the business. 

Ofwat will publish an assessment of each company's plan in January 2019. The regulator said in December that the results of its price review would result in a cut in bills between £15 and £25 a year from 2020 to 2025.

FT : Boris Johnson labels May’s Brexit plan ‘a disaster’

Boris Johnson labels May’s Brexit plan ‘a disaster’
Attack by leading Brexiter increases pressure on PM as she fights to save Chequers plan

Boris Johnson has drawn up the battle lines for a Conservative party fight that could determine the UK’s future in Europe and Theresa May’s in Downing Street, as he denounced the prime minister’s Chequers Brexit plan as a “disaster” for Britain.

As MPs return to Westminster after the summer break, Mrs May is facing a battle to save her Chequers compromise plan in the face of concerted opposition from Tory Eurosceptics, including the former foreign secretary.

In his weekly Daily Telegraph column, Mr Johnson said Mrs May’s plan, which was agreed by the cabinet at her country retreat in July, would leave the UK with “two-thirds of diddly squat” and that the prime minister was going “into battle with the white flag fluttering over our leading tank”.

Conservative MPs in the Eurosceptic European Research Group will this week discuss a rival plan — espoused by the former Brexit secretary David Davis — which would see Britain have a looser Canada-style trading relationship with the EU.

Mrs May opposed Mr Davis’s plan, arguing it would create a hard border in Ireland and disrupt Britain’s trading relations with Europe; both Mr Johnson and Mr Davis resigned after the Chequers meeting.

Pressure on Mrs May will intensify this month ahead of the Conservative conference in Birmingham, at which Mr Johnson and other Eurosceptics including Jacob Rees-Mogg are expected to be feted by activists for their opposition to Mrs May’s compromise plan.

The daunting political challenge facing Mrs May was thrown into even sharper relief on Sunday when Michel Barnier, the EU’s chief negotiator, said he “strongly opposed” the “illegal” Chequers plan, because it sought to unpick the single market.

Mrs May wants to keep the UK aligned with the EU on goods and agriculture, but outside the single market for services and Brussels’ rules on free movement.

In an interview with Frankfurter Allgemeine Zeitung, Mr Barnier said: “If we let the British cherry pick which of our regulations to follow, that would have serious consequences: all sorts of other third countries could insist that we offer them the same deal.

“That would be the end of the single market and the European project. I am often accused of being dogmatic in the UK, but the truth is I’m only protecting our fundamental interests.”

Mrs May’s dilemma is that she might have to give further ground to Brussels on issues such as free movement and customs co-operation to secure a deal with the EU, while many in her party believe she has already gone too far.

The prime minister hinted of further concessions to come in a carefully phrased article for the Sunday Telegraph, when she said: “I will not be pushed into accepting compromises on the Chequers proposals that are not in our national interest.”

The moment of truth for Mrs May will come this autumn when — assuming she concludes an exit deal with Brussels — she presents it to the House of Commons for a “meaningful vote”.

Mr Davis has already warned he will vote against Mrs May’s plan, while even some moderates believe it represents the worst of all worlds for Britain. Nick Boles, a former ally of David Cameron, said on Monday it would be voted down.

Mr Boles told Radio 4’s Today programme that the chances of Mrs May winning parliamentary backing for any deal based on the Chequers plan were “very very small — as close to zero as you can have in politics”.

FT : South Korea allots first money from $9bn start-up fund

South Korea allots first money from $9bn start-up fund
Seoul aims to boost growth areas including drone tech and AI to stay competitive

South Korea has begun rolling out the first tranche of a $9bn-plus investment fund designed to boost start-ups in dozens of growth areas including drone technology, artificial intelligence and fintech.

The move comes amid concern in Asia’s fourth-largest economy that its export-led growth model is losing steam and that the country needs to foster expertise in new technologies to remain competitive.

“A low-growth pattern has taken root in the economy,” said Min Byung-doo, a lawmaker who presided over the launch of the fund on Monday. “Innovative growth is a task that cannot be postponed. And in order to make this growth possible, finance must play a pivotal role.”

The three-year fund is being shepherded by South Korea’s Financial Services Commission and the Ministry of SMEs and Startups, which will this year dole out some $2.8bn to start-ups before increasing the amount available for 2019 and 2020 to more than $3.3bn each year.

The launch of the fund comes hot on the heels of an announcement last month by Samsung — the country’s largest and richest conglomerate — that it would pour $160bn into new technologies and start-ups over the next three years.

“South Korea’s fund is much smaller than similar funds in Japan and China. But with the move the government is signalling to big Korean companies like Samsung and Hyundai to increase their investments in start-ups and SMEs,” said Lee Hang-koo, a researcher at Korea Institute for Industrial Economics and Trade.

For South Korea and Samsung, the investments are being done with an eye on China.

Under the “Made in China 2025” blueprint, Beijing has made clear it wants to dominate high-tech industries over the next decade and is willing to spend big to achieve that goal.

Research group Gavekal suggests the Chinese government could spend as much as much as $300bn on the project, although other analysts caution the amount already raised is only about a third of that figure. 

“Although the total amount [of the South Korea start-up fund] is not so big, the funds are needed because venture capital here is weak and the M&A market is also too small,” said Mr Lee.

Unlike with previous government funds, Seoul is this time putting private fund managers, not bureaucrats, in charge of assessing promising start-ups, Mr Lee added.

A spokesperson for the FSC said it would raise private funds to match the public purse before handing out the money to promising businesses.

Kim Young-soo, an official at the Korea Development Bank, which is overseeing the fund, said this year’s tranche would be invested in 45 sectors including AI, autonomous driving, drone technology and fintech.

Funds would also be allocated to developing advanced manufacturing processes, new chemical materials and biopharmaceuticals, he said.

However, Seoul’s choice of growth areas has come under fire for its lack of originality. Critics say the government is simply following objectives already outlined by Samsung.

>>> What to look at today - 3rd of September 2018

Asian stocks began September with declines, while the dollar held on to its recent rally as investors assessed the outlook for trade and whether turmoil in some emerging markets can be contained. The pound slid as the chief European negotiator on Brexit said he strictly opposed the U.K.’s current proposal.
Stocks slipped in across the region, while European futures were mixed. The S&P 500 closed flat Friday as gains in consumer shares offset losses in energy stocks, while Treasuries posted a modest decline. U.S. markets are closed for Labor Day on Monday. The yen ticked higher alongside the euro and emerging market equities fell.

Nikkei -0.69% Hang Seng -0.82% CSI -0.60% Shanghai -0.36% Shenzen -0.53%

Eur$ 1.1606 CNH 6.8386 CNY 6.8312 JPY 110.93 GBP 1.2909 CHF 0.97 TRY 6.6852 RUB 67.7857 WTI$ 69.62 -0.26%

S&P +0.02% EurStoxx -0.21% FTSE +0.37% Dax -0.34% SMI -0.02%

Macro :
- IMF Insists Argentina Stops Using Funds to Support Peso: Infobae
- Trump Says US Will Make New NAFTA Deal or Go Back to ’Pre-NAFTA’
- Italy Nudges Ever Closer to Euro Crisis Trading: Markets Live

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- BMW GY : BMW Is Said to Avoid Legal Charges in Diesel Investigation: SZ
- BOL FP : Bollore First Half Revenue EU10.87 Bln
- CO FP : Casino Amends 1H Presentation, Adds Details on Cash Holdings
- GTO NA : Thales, Gemalto Get Regulatory Clearance From Turkey
- HIAG SW : Hiag Immobilien First Half Ebitda CHF43.3 Mln
- SDF GY : K+S Eliminates 253 Positions at Sigmundshall Site, FAZ Reports
- MDG1 GY : Medigene: CFO Taapken to Leave Aug. 31 for Personal Reasons
- NHH SM : MHG Increases Stake in NH With New Share : Filing
- NOVN SW : Novartis Chairman Sees Lower U.S. Prices Impacting Sector: NZZ
- ONTEX BB : Ontex Board Unanimously Rejects Lowered Offer From PAI Partners
- ORSTED DC ; Orsted Is Considering Bid for U.S. Offshore Wind Projects: WSJ
- PLP LN : Polypipe to Buy Permavoid; Deal to Help Earnings in 1st Year
- UG FP : French August New Car Registrations Up 8.9% on Year
- RNO FP : French August New Car Registrations Up 8.9% on Year
- RIO LN : Rio Tinto Seeks Exemptions on U.S. Aluminum Tariffs
- SAN FP : Sanofi’s Caplacizumab Approved in EU for Blood-Clotting Disorder
- SBMO NA : SBM Offshore Brazil Settlement to See Shares Rally: Bernstein
- SVT LN : Severn Trent Proposes New Community Dividend of 1% of Profits
- TDSA PL : Teixeira Duarte Wins Contract to Build Bridge in Ecuador
- HO FP : Thales CEO: 2018 Growth Rate Ex. Acquisitions Around 4-5%
- TKA GY : Gather Says Krupp Foundation Can’t Exert Influence Over Ops: BZ
- FP FP : Total S.A. CEO Wants to Expand Danish N. Sea Assets: Berlingske
- VAN BB : Van De Velde 1H Adjusted Ebitda EU28.5 Mln Vs. EU36.3 Mln Y/Y
- VOW3 GY : No Sign of Rigged Gasoline Engine Tests: German Transport Min.
- Wonga Group (not listed) : Activist Targets High-Cost U.K. Lenders After Wonga, FT Says
- WPP LN : WPP Names Mark Read as CEO, Effective Immediately