12 Feb 2009
Company emerges as the only insurer to grow in Q4 2008
Singapore, 12 February 2009 – NTUC Income registered one of its strongest sales performances in its history in the second half of 2008, at a time when global financial and economic turmoil were taking turns for the worse.
The insurer emerged a market leader in the second half of 2008 as its life insurance sales jumped 30% in a period characterised by the turbulence that rocked the global financial markets, compared to the industry contraction at -18%.
NTUC Income also emerged the market leader in the annuities segment in the second half of 2008, accounting for more than 50% of the overall industry sales.
NTUC Income also topped the industry for sales through the independent financial advisories channel, which comprises third party firms providing financial advisory services. The insurer garnered a market share of 24.9% and the No.1 position for all sales in this channel, up from its sixth position accounting for 6.6% in 2007. This result is all the more significant considering that NTUC Income started to focus on developing this channel only in late 2007.
In so far Q4 2008 was concerned, NTUC Income was the only insurer in Singapore who posted a sales growth amounting to 8% compared with the same period a year ago. This was in stark contrast to the 42% contraction registered by the whole industry.
In achieving this growth in life insurance, NTUC Income was able to register a full year sales growth of 14% for 2008, compared with the overall industry growth of 3%.
In the motor insurance business, NTUC Income’s sales grew 37% for the full year of 2008, versus an industry growth rate of 19% (projected industry figure based on General Insurance Association’s 2008 3Q results). This means that the insurer is likely to reclaim its No.1 position in the motor insurance business in Singapore, a position last held in 2004.
In 2008, NTUC Income had its AA rating re-affirmed by Standard and Poor’s as a testament to its financial strength and capability to meet its obligations.
NTUC Income’s ILPs Among Top-Performing CPFIS Funds
NTUC Income also outpaced its rivals in the segment for investment performance of its investment linked funds, largely on account of its solid, prudent investment philosophy and its low cost structure.
In the latest Lipper ratings, NTUC Income’s 14 CPF-approved ILP (Investment-Linked Policy) funds put in a strong showing, with about half rated as “Lipper Leader” in the respective, “Consistent Return”, “Preservation” and “Total Return” metrics in Q3 2008.
Based on Lipper’s categorisation, more than half of NTUC Income’s ILP funds were in the first and second quartile in the peers ranking on the absolute return basis for the past three years and five years as of end Q3 2008.
NTUC Chief Executive Tan Suee Chieh attributed the strong performance in 2008 to a range of reasons, and especially its multi-channel distribution strategy and its reputation as a safe and trusted Singapore company.
“Our multi-channel distribution strategy contributed to the substantial growth that NTUC Income achieved in 2008. We engaged independent financial advisors and re-established our ties with corporate agents selling motor insurance. This, and probably some luck, is an important reason for our sales success.” he said.
“NTUC Income’s “Cultural Revolution” which transformed our workforce into a more energized, dynamic and performance-oriented one, helped us rise to the challenges of these difficult times. Our customers turn to us in their flight to safety during the financial turbulence, as they know that we are a financially strong and stable homegrown company with a strong parent in NTUC,” he added.
Income Invests in People for the Future
While the industry outlook for the rest of 2009 remains uncertain, NTUC Income is committed to keeping people at the heart of its decision making process. In the short term, the company will cut costs to save jobs, instead of cutting jobs to save costs.
NTUC Income will continue to hire people to meet its current and future needs in order to support its transformation and to invest for the long term, specifically in the critical areas of Customer Service, Sales and key competency areas like IT.
To invest in people as well as to create jobs, the insurer will use a fraction of the Government’s Job Credits Scheme grant to fund its new Graduate Programme.
A Social Enterprise Committed to Improving Lives of Singaporeans
As a social enterprise, NTUC Income is committed to improving the lives of Singaporeans, a mission which has taken on new urgency amidst the economic downturn.
Last December, NTUC Income announced a $6 million Incomeshield Assistance Scheme, a year-long initiative to off-set the impact of premium increases for lower-income and elderly policyholders.
Also in December 2008, NTUC Income raised about $385,000 through its charity fundraiser Project Love, which stood out for its off-beat wacky activities such as a CEO yoga workshop for staff, charity car wash in costume by senior management and a hair-shaver by its female head of public affairs.
The funds raised will go towards the NTUC Care and Share programmes aimed at helping needy children and the elderly. Part of the proceeds will also go towards the Moral Home for Disabled, the Singapore Children’s Society, and Action for Aids.
The insurer has also made a fresh commitment of S$1 million to help families of retrenched and low income workers under the NTUC Care and Share programme.
Going forward, NTUC Income will be announcing further initiatives to help needy Singaporeans cope with the economic downturn.
NTUC Income’s Transformation – the Next Phase
The next phase of NTUC Income’s transformation will focus on aligning its systems, processes and practices to those of a world-class financial institution. This will help it compete more effectively against its multinational competitors in the local financial services industry, and better meet the changing needs and aspirations of Singaporeans into the future. It will also step up efforts in customer service and branding to reinforce its affinity with Singaporeans.
As it continues its transformation into a leading social enterprise, NTUC Income will hold tight to its social purpose to make essential insurance affordable, accessible and sustainable for all.
Lipper Leaders Rating System
The Lipper Leaders Rating methodology consists of four metrics that rate funds’ success in meeting certain goals, such for total return, consistent return, preservation of capital and ability to keep relative expense low. NTUC Income’s Global Bond Fund and Singapore Bond Fund were assigned Lipper Leader ratings for all three “Total Return”, “Consistent Return” and “Preservation” metrics.
Based on Lipper’s categorisation, more than half of NTUC Income’s investment-linked funds (ILPs) were in the first and second quartile in the peers ranking on the absolute return basis for the past 3 years and 5 years as of end of Q3 2008.