Many life insurance companies, both U.S. and foreign, have tagged international growth as a high priority, particularly in view of worldwide trends showing the need for pension reform and individuals taking responsibility for retirement security.
Andrew Jurczynski, vice president of A.T. Kearney, reported on research his firm has conducted with some 20 executives in 12 countries whose companies have international operations. He spoke at the Global Financial Leadership Forum here, which was sponsored by A.T. Kearney, EDS and the American Council of Life Insurers.
On the issue of pension reform, Jurczynski said that although it is a global issue, executives saw the solution as local. In other words, he said, it is important to grasp the detail of local markets.
Demographics, driven by increasing longevity, are putting enormous pressure on government pension systems around the world. “Governments are painted in a corner,” he said. “Theyre looking for a helping hand from the life insurance industry.”
This opens up a vast number of opportunities for the industry, he said. One of these is for insurers to offer new asset accumulation products under corporate and individual pension plans. Another opportunity arises in the management of newly privatized pension assets by insurers and asset management companies.
But competition is heating up, he said, as foreign insurers seek to enter new markets and take advantage of new regulations.
The executives interviewed by Kearney suggested that selecting markets for entry is something largely influenced by distribution capabilities, market demographics and entry barriers. Other considerations judged less important were available resources, product needs and competitive intensity. Regarding the latter, Jurczynski said, “No one worried too much about this; they felt their own strategy was strong.”
When it came to the business model these executives preferred to enter a market, a de novo company was the choice of over 50%. “This makes sense,” Jurczynski said, “because you can create a culture consistent with the parent company.”