Wednesday October 8, 2008
PETALING JAYA: The credit crunch that is causing havoc in the US and European financial markets has little impact so far on local insurance companies but their performance may take a knock if the financial crisis worsens, industry players said.
“If the credit crunch persists, it may affect the performance of insurance companies as it will have an impact on the local economy, hence affecting spending,” an insurer said.
Already, Kurnia Asia Bhd has felt the whiplash from the global financial hurricane.
It posted a net loss of RM301.79mil for the financial year ended June 30 due to an underwriting deficit and a significant reduction in total investment income due to the poor performance of stock markets.
Kurnia Asia executive chairman Tan Sri Kua Sian Kooi claimed that despite the loss, the company was stronger than ever.
The company recently raised RM400mil via a capital injection and currently has a total capital base of RM600mil.
“Our claims reserves have strengthened to more than RM1.88bil from RM1.66bil in the last financial year,” Kua told StarBiz. “This places the company in an excellent position and confidently allows us to meet our commitments to our policyholders, agents and stakeholders.”
With the new capital, Kurnia would be able to “move forward, expand and strengthen our network,” he said.
Allianz Malaysia Bhd chief executive officer (CEO) Alexander Ankel said the current credit crunch had minimal impact on the company because its exposure to the local stock market had been reduced. Allianz also had “minimal exposure in foreign investments,” he added.
Anker said it was difficult at this juncture to predict the outcome should the credit crisis persist.
Manulife Insurance Bhd president and CEO Peter Robertson said the credit crunch might slow growth but sales would continue to grow.
Hong Leong Assurance Bhd group managing director and CEO Charlie E Oropeza said the company anticipated its business to grow despite the challenges because economic downturns created a need for insurance protection.
“The company’s investments are mainly in the local markets and we do not have exposure to collateralised debt obligations and exotic instruments,” he said.
“Our investments are well diversified and exposure to the stock market has been kept to a minimum and in sound dividend-yielding stocks.’’
http://thestar.com.my/news/story.asp?file=/2008/10/8/business/2211456&sec=business
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