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1、5 to 10 Year Business Strategy Proposal(presentation)for Minsheng Life,PwC,1,Contents,Executive SummaryObjectiveKey challengesWork planTeam StructurePwC CredentialsTeam CVsThought Leadership,2,Executive Summary,Thank you for asking PricewaterhouseCoopers to make this proposal to help Minsheng Life p
2、repare a 5 to 10 year business strategy.PricewaterhouseCoopers has the experience and knowledge to do an excellent job:We understand the insurance market in China through our wide experience of working with Chinese insurance companiesThrough our unrivalled international network and our investment in
3、 thought leadership we can draw on international best practice.In particular,we will draw extensively on our global research work for“Tomorrows Leading Life Insurer”.Our team has extensive experience of market research and insurance strategy projects both in China and InternationallyWe are already w
4、orking with you to prepare a business plan and can ensure that the strategy is consistent with the business planOur approach is to work together with your staff at your offices,to manage the work according to the work plan set out in this proposalIf you decide to appoint us,our fee for the work will
5、 be Rmb 495,000 plus out of pocket expenses.This fee excludes the cost of any consumer research which may be necessary,3,Objective,Minsheng life needs to develop a 5 to 10 year business strategy fo rthe development of its life insurance business.The strategy will cover The business aims of the compa
6、ny and the management philosophyThe market positioning to be adoptedThe customer segments to be addressedThe distribution channels to be employedThe categories of products to be soldThe strategy will support and extend the business plan and information memorandum which the company is already prepari
7、ng.,4,Key Challenges,Challenges,5,Social change is driving the demand for life insurance in China,RMB:hundred million,The reforms of social security and healthcare insurance have a big effect on life insurance.People strengthen their consciousness of risk control,Source:Ministry of Labour and Social
8、 Security,*Social Security=Pension+Healthcare Insurance+Unemployment Insurance,Challenges,Annual Growth Rate:19%,Annual Growth Rate:15%,Annual Growth Rate:27%,6,Chinas insurance market is growing rapidly,Life Insurance Growth Rate:59%,Source:China Insurance Regulatory Commission,RMB:hundred million,
9、China Insurance Market,Total premium income:29%Life Insurance:59%,Growth Rate over the period 97-01,Challenges,7,Double digit growth in life insurance is possible for the next decade,Life insurance penetration is much lower in China than in developed markets.There is a wide expectation,supported by
10、Government statements,that a private pension system will be developed in China.Growth in the life insurance market may be expected to continue in the medium term,although there will be competition from retail funds vehiclesGrowth in the life insurance market over the three years 1997 to 2001 average
11、d 59%per annum.?In the short term high growth rates are likely to continue,perhaps in excess of 30%.Growth over the following 5 to 10 years may be in excess of 15 to 20%per annum,based on PwC projected growth rates.(PwC estimates are based on market reaching certain penetration levels over 20 years.
12、),Life insurance premiums as a percentage of GDP in selected Asian,countries(1999),0,1,2,3,4,5,6,7,8,9,10,Japan,Australia,South Korea,Taiwan,Hong Kong,Singapore,Malaysia,India,Thailand,PR China,Philippines,Indonesia,Sri Lanka,Bangladesh,%,Life insurance premiums as a percentage of GDP in selected As
13、ian,countries(1999),0,1,2,3,4,5,6,7,8,9,10,Japan,Australia,South Korea,Taiwan,Hong Kong,Singapore,Malaysia,India,Thailand,PR China,Philippines,Indonesia,Sri Lanka,Bangladesh,%,Projected Annual Growth Rates derived from target 20 year target penetration,Target penetration,Challenges,8,Over the five y
14、ears to 2000,household savings in China have grown at an average annual rate of 20%.Retail bank deposits have grown less fast while life insurance has grown more rapidly.Significant retail funds held directly in equities.The mutual funds market is still very small.Volatile equity markets have caused
15、 a sharp fall in sales of investment linked life insurance contracts and a surge in sales of participating business,Life Insurance Market New Business Share(%)(July 2001 to June 2002),0,10,20,30,40,50,60,70,Unit Linked,Participating,Other including health,New Business,Share%,PwC estimates,The retail
16、 savings market is growing overall,with a shift from bank deposits to other sectors in response to falling interest rates.,Challenges,9,Three companies dominate the life insurance markets,AIANew China Life InsuranceTaiKang LifeManulife Sinochem LifePacific-Aetna Life Insurance Citic Prudential Life
17、AXA-MinmetalsAllianz Da Zhong Life China Life CMGJohn Hancock Tian An Life,Other Life Insurance Companies,RMB:hundred million,Key Players of China Life Insurance Market in year 2001,Challenges,10,Foreign insurers have only a small share in China life insurance market,Foreign life insurers,RMB:hundre
18、d million,Challenges,11,But competition in Chinas insurance market is intensifying,Foreign insurers speed up their steps into China market because the regulatory environment is changing,Product ScopeChina will expand the scope of activities for foreign insurers to include group,health,and pension li
19、nes of insurance(about 85%of total premiums)over 5 yearsPrudential CriteriaChina has agreed to award licenses solely on the basis of prudential criteria,with no economic needs test or quantitative limits on the numbers of licenses issuedInvestmentLife:Allow 50%foreign ownership in JV&be able to choo
20、se their own JV partners,Challenges,12,New distribution channels are emerging,Currently,more than 90%life insurance market share has been fallen into these two channelsNumbers of agents have grown fast,including 9 Insurance brokers and 45 insurance agents till 2001,Banks,joined with securities compa
21、nies and post offices,have quickly grown as the 3rd important sales channels*The premium from Bancassurance channel occupies less than 2%share of total premiumComparing with foreign countries average market share of 20%,the potentials of banks channels are great in China*According to the estimates,t
22、he online market size will reach RMB50 billion till 2012*According to a survey carried out in some big cities,47%of the interviewees will try to buy insurance by internet*,Have been developed in other Asian countries,*Sources:China Economic Times,Social Survey Institute of China,Challenges,13,2000 a
23、nd early 2001 sales heavily unit linked.Stock market performance has caused a big switch to participating business in second half of 2001.PwC estimate for mix of new business is shown in graph opposite.,IAS Accounting Rules from 2005/2006 will expose the underlying guarantees in the participating bu
24、siness and potentially create substantial capital demands.,0,10,20,30,40,50,60,70,Unit Linked,Participating,Other,including,health,New Business,Share%,Life Insurance Market New Business Share(%)(July 2001 to June 2002),PwC estimates,The success of participating business is potentially a problem in t
25、he making,Challenges,14,Work Plan,Estimate business growth by market segment/product category/distribution channel Identify customer preferences by segment,Competitors positioning and competitive advantageDocument competitor business models,Develop criteria for segment selectionPrioritise segment,Id
26、entify channels preferred by target segment,Identify international trends in channels used by target segments,Develop long term targeting plan,Develop channel strategy plan,Review or commission customer researchReview the needs of target segments internationally,Review international best practiceRev
27、iew competitors,Develop product strategy,Identify preferred business model,Deliverables,Week one,Week one,Weeks two and three,Weeks four and five,Weeks five and six,15,Team Structure,To be revised,Team structure,16,PwC Credentials,A new Chinese Life InsurerThis new insurer needed to develop a busine
28、ss plan to support its joint venture with a leading global insurer.We worked with both parties to create a business plan and products.Our combination of China market and international experience meant that the plan had credibility for the international partnerA new Chinese Life insurance joint ventu
29、reThis JV between a major European insurer and a Chinese company will use an unconventional distribution channel.We designed products for this channel and developed the business plan as well as assisting with systems design and customer research.A global insurerWe were retained by a major global lif
30、e insurer to identify potential joint venture partners and assist in negotiating with shortlisted companies.We helped our client refine their China strategy.We then developed a set of selection criteria for potential partners based on this strategy.We used the selection criteria to identify potentia
31、l partners.Finally,we worked with the client to negotiate their joint venture.AVIVA(formerly CGNU)This global insurance player asked us to help them develop a global strategy for health insurance covering all territories except USA.We developed scenarios for all the main health markets,including a n
32、umber of Asian countries and developed strategic options for the board.We were also asked to develop strategic business models for savings products in Europe.We looked at industry best practice and identified a number of distribution and servicing models that gave the benefits of economies of scale
33、in the European market.,17,PwC Credentials,ZFSWe have worked with this world leading multinational life and non-life insurer on the two key strategic assignments below.European StrategyThe client asked us to identify specific opportunities to leverage its pan-European presence with particular refere
34、nce to the start of the single currency.We brought together European insurance experts and our EMU experts together with key client personnel around Europe in an interactive strategy process which led to the identification of five significant opportunities to add value to the group in Europe.Direct
35、Strategy for a leading business unitThis subsidiary is a major player in its markets.Its retail products were distributed largely through brokers but there was a limited amount of business sold through employer sponsored affinity groups.It was concerned at the threat from direct distribution,particu
36、larly from start up operations set up by the major banks.We selected 7 major markets in which direct distribution of retail insurance,both life and non life,had been attempted with varying degrees of success.We used these examples to identify the 10 critical factors which determine success or failur
37、e of direct distribution.We then measured the market concerned against these 10 criteria to draw conclusions about the likely success of direct writing.Having demonstrated that direct writing had a high chance of success at the expense of the companys broker channel,we developed a market proposition
38、 for the company to adopt in the direct channel,bearing in mind the need to move from a broker brand to a consumer brand.We also developed the entry plan for the direct channel,and the product strategy.,18,PwC Credentials,Major Composite InsurerOur client was looking to enter a number of potential g
39、reenfield sites in Asia,whilst at the same time reviewing its existing representation in a number of markets.Working in partnership with the client,our role was to challenge and advise,both as to the approach that the market evaluation should take and the strategic implications.From an initial high-
40、level scan,we made recommendations on the markets which appeared most attractive and which should be explored further.We produced proformas against which the client carried out a detailed market evaluation per country,looking at opportunities,growth potential,competitors,and its own position in the
41、market,both from a strategic and an operational standpoint.A European High Street Drug StoreWe developed a strategy for a high street retail store to sell health insurance to its customers.The study involved customer research and the development of innovative products and sales techniques.Tomorrows
42、Leading Life InsurerWe performed a forward-looking analysis of what a successful life insurance operation might look like in 5-10 years time.This was based on international research,and an extensive series of interviews with senior life insurance executives in the USA,Europe and Asia Pacific.In part
43、icular the study considered the demographic changes impacting the European markets and the implications for providers of Retail Financial Services.,19,Resume of team members,David CampbellActuary PartnerDavid has over 20 years experience as a consultant to the insurance industry.He was a member of t
44、he firms Global Insurance Leadership Team before moving to China in 2001.He led the development of the thought leadership initiative:Tomorrows Leading Non-life Insurer.Recent relevant experience includes:Product design and business plan development for two start up insurers in China,one involving a
45、JV with a foreign insurer.Member of the team supporting the proposed IPO of a major Chinese life and non life insurerLeader of a team performing due diligence for a proposed investment in a leading Chinese life and non life insurerMember of the team supporting the proposed IPO of a life insurer in C
46、hina,2.Resumes of Team Members,Strategy development for three global business ventures for a top 10 global life and non life insurerDevelopment of advice led service proposition and direct distribution channel for a major Canadian insurer Insurance market entry project for a UK high street retailer,
47、including strategy development and joint venture negotiations Strategy projects for Aviva and ZFS(both described in our credentials section）,20,2.小组成员,Grace JiangASA,ManagerShe joined Shanghai actuarial team of PricewaterhouseCoopers shortly after it was established.Before that she has four years ex
48、perience in biggest insurance company of China,was in Operational Dept,Actuarial Dept and Marketing Dept.She also spent a period of time in Hong Kong working in the actuarial department of an international life insurance company,involving pricing,valuation,dividend distribution and operation of the
49、Mandatory Provision Fund.,Recent Experience：Product pricing,product profitability,risk management,regulatory and accounting requirements for a variety of products of a start up life insurance company in China.Appraisal value assignments as well as Statutory valuation verification and IAS calculation
50、s.Product Design and Business Plan for a Local life insurer start up;Prepare CIRC products documents for a JV company;Transfer CIRC reserve to US GAAP reserve for one of the biggest insurance company in China.,2.Resumes of Team Members,Resume of team members,21,Resume of team members,Freddy ZhuSenio
