Evolving insurance industry in South Africa

KPMG, global audit and advisory services firm, recently revealed the findings of its annual South African insurance industry survey, reporting robust financial results for both life and non-life insurers for 2010.

According to the survey, there are new forms of competition, an uncertain regulatory landscape and concerns over market and economic conditions.




Gerdus Dixon, the insurance industry leader for KPMG SA, explains: “It appears that the conventional thinking that life and non-life brands should be kept separate is no longer true.”


One of the trends emerging from KPMG's 2011 survey is the cross-selling of products. This is especially true among established insurers who are seeking to capitalise on an existing brand by moving the brand into a new market space.


For example, Discovery, which offers health and life insurance, has recently launched a short-term product and Old Mutual is now marketing short-term insurance in the form of iWyze. Conversely, short-term insurance giant Outsurance now has a life offering in its portfolio.


The insurance industry is hampered by the threat of a double-dip recession as well as a volatile investment market due to the debt markets crisis and this does not bode well for the life insurance industry. According to the report, the next six months will be vital.


“The short-term insurance industry is less dependent on the investment market, and more dependent on good claims experience, which has been favourable in 2011 to date, with no large corporate fire claims and a general improvement in the loss ratios for motor insurance. However, the traditional short-term insurers have been struggling to achieve growth in recent times and a strained economy will not make it easier,” Dixon explained.


In addition to the economic challenges, the industry also has to deal with a regulatory environment subject to significant change.


“There is a wave of new regulations that will all come into force at roughly the same time. The Solvency Assessment and Management (SAM) regime will become effective in 2014, as well as the Treating Customers Fairly (TCF) requirements. In addition, micro-insurance legislation and binder regulations are also on the horizon. This coupled with taxation uncertainties on the life insurance side make for a very fast-paced rate of change in the industry,” said Dixon.


For the time being, the impact of the proposed national health insurance (NHI) is still an unknown, with not enough solid information in the form of facts and figures emerging.


“It's definitely influencing the strategic thinking of players in the industry but the uncertainty around it makes it difficult to act,” said Dixon.


KPMG's 2011 insurance industry survey also highlights the expansion of the more established life and non-life insurers into Africa, with offices and offerings in sub-Saharan Africa and further into the continent. Often insurers' African expansion is in the form of joint ventures with local players or technology companies.


This mixed bag of challenges and opportunities will see insurance companies being more cautious in their trading and operational updates for the remainder of 2011, despite a relatively strong start to the year. - I-Net Bridge


Source -http://iol.co.za
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SA Inflation on the rise once again

FOOD and beverage inflation from July last year to July this year was at its highest level since July 2009, according to the National Agricultural Marketing Council’s quarterly food monitor, released on Friday.


The food inflation rate for this period was 7,4% .


Speaking at a Group of 20 meeting in June this year, Agriculture Minister Tina Joemat-Pettersson said that in SA and the rest of Africa, price volatility had hit poor people the hardest. Such households spend up to 70% of their income on food. Price instability is estimated to have pushed 44-million people into extreme poverty and hunger since June last year. The minister also warned that price instability had the potential to create the kind of political upheaval seen in many countries during the 2008 food crisis.


Last month was the fifth consecutive month that inflation for food and nonalcoholic beverages was higher than the consumer price inflation rate, which rose 5,3% between July last year and last month , the council said in a report.


The annual increase of 7,5% in the food and nonalcoholic beverages index was largely driven by the annual increases in oils and fats (24,1% ), meat (11,4% ), bread and cereals (9,5% ) and sugar (8,9% ).


The prices of processed food products rose 8,9% from July last year to July this year, and the price of unprocessed food products rose 6,2% over the same period.


Rural consumers paid R12,06 more than urban consumers for the same food basket, a significantly lower price difference than usually reported, the council said in its report. The cereals price index showed the largest increase, 76% annualised, followed by a 64% increase in the sugar price index. Oils increased 57% , meat 22% and dairy products 17% on an annual basis.


The council expected food inflation to rise at a faster rate from next month to November . "Higher commodity prices and increasing costs in the food-value chain are gradually working their way into food prices, and given the typical lag between producer and consumer prices, it is likely that food prices will increase at a faster rate over the outlook period." With Hopewell Radebe


Source -http://iol.co.za
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Market jitters keeps investors on their toes

Market players may be making decisions with all the savvy of headless chickens. Investors stampeded out of equity markets last week. And, in all the chaos that followed, some long-standing market correlations broke down.


Econometrix chief economist Azar Jammine identified one anomaly. Gold is seen as a hedge against inflation while bonds are seen as a hedge against deflation. So prices usually move in opposite directions. Yet last week both assets were on a winning streak.




Chris Hart, the economist at Investment Solutions, pointed out another anomaly. Although the gold price soared, the rand remained weak; and, while the value of US treasuries rose, the dollar did not.


The immediate trigger for the flight from equities was poor economic data from the US and Germany earlier in the week. Without economic growth, the US and heavily indebted European governments won’t be able to reduce their debt burdens, extending indefinitely the threat to global financial stability.


The danger for investors is that the recent scramble into gold and bonds could be building up two bubbles. And what will happen when the bubbles burst?


Last week’s sell-off in equity markets was the third since the downgrading of US debt by Standard & Poor’s earlier in the month. The re-rating alerted markets to the extent of the threat to the economic recovery in the US.


Jammine commented last week that he was surprised that it had taken financial markets so long to wake up to the danger.


Last week’s losses came despite the undertaking by the US Federal Reserve to hold its key interest rate at virtually zero for two more years, and despite the efforts of the European Central Bank to stabilise markets by buying Italian and Spanish bonds. This is an expensive remedy because it’s effectively printing money – a process that reduces the buying power of the euro. And the remedy hasn’t worked.


We have now started a new episode in the saga that began in 2007, when the US subprime market started unravelling. But are we getting any closer to the end?


We probably are because governments and central banks no longer have much fire power, after three years of intervention. But how will it all end?


Jammine predicts several years of very slow growth globally. While this is a gloomy prospect, it’s preferable to the alternative scenario of a series of asset bubbles – and their aftermath.


US and European bankers have been blamed for the financial and economic disaster that started in 2007. Rightly, because they were in the driving seat at the time, careening heedlessly through economic realities with offers of endless credit to fuel the consumer boom.


But they were not alone in their folly. One of the problems in advanced economies is that voters expect cradle to grave security – and life doesn’t provide that sort of blank cheque.


Politicians colluded in the illusion to get themselves into power. One of the ways they achieved this was by paying social pensions out of current revenue – unlike private retirement schemes which are obliged to have assets to cover their liabilities. The formula worked for decades but its efficacy is about to expire.


Europe, in particular, can see the writing on the wall as its working age population shrinks in relation to pensioners. So reality intrudes.


And, after being fed a steady diet of wishful thinking, since the end of World War II, voters won’t like reality. This creates a new challenge for politicians.


Source -http://iol.co.za
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Goolge buys Motorola Mobility at $12.5 billon

Google just announced that it is acquiringMotorola Mobility. The search and online advertising company is buying the company for approximately $12.5 billion (or $40 per share), in cash. The price represents a premium of 63 percent to the closing price of Motorola Mobility shares last Friday. Google had about $39 billion in cash at last count.

Here’s the other important part of the PR (the why, and what happens to Android now):

The acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing. Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business.

In a blog post, Google co-founder and CEO Larry Page writes that Google has acquired Motorola not only because of its strength in Android smartphones and devices, but also for being a “market leader in the home devices and video solutions business.”

It’s also a move to build up the company’s patent portfolio, he adds, as it will “enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies”.

According to Motorola Mobility’s website, the company holds approximately 14,600 granted patents and 6,700 pending patent applications, worldwide, as of January 2011. Update: You can find updated numbers on this – based on the conference call – in our follow-up post.

Motorola Mobility is what used to be the Mobile Devices division of Motorola until January 2011.

A few years ago, Motorola bet its future in the mobile devices market by going full Android, launching the “Droid” – initially on the Verizon network – on November 6, 2009. The “Droid X” and “Droid 2″ followed in 2010.

Big question now is: how will HTC, LG, Samsung, Sony Ericsson, Acer, Lenovo and other Android device makers respond to this news? Update: Google points out some of them already have.

We’re jumping on the conference call soon, and doing thorough analysis later. For now, whoa.

Full press release:

Google to Acquire Motorola Mobility

Combination will Supercharge Android, Enhance Competition, and Offer Wonderful User Experiences

MOUNTAIN VIEW, Calif. & LIBERTYVILLE, Ill.–(BUSINESS WIRE)–Google Inc. (NASDAQ: GOOG) and Motorola Mobility Holdings, Inc. (NYSE: MMI) today announced that they have entered into a definitive agreement under which Google will acquire Motorola Mobility for $40.00 per share in cash, or a total of about $12.5 billion, a premium of 63% to the closing price of Motorola Mobility shares on Friday, August 12, 2011. The transaction was unanimously approved by the boards of directors of both companies.

“Motorola Mobility’s total commitment to Android has created a natural fit for our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers.”

The acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing. Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business.

Larry Page, CEO of Google, said, “Motorola Mobility’s total commitment to Android has created a natural fit for our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers.”

Sanjay Jha, CEO of Motorola Mobility, said, “This transaction offers significant value for Motorola Mobility’s stockholders and provides compelling new opportunities for our employees, customers, and partners around the world. We have shared a productive partnership with Google to advance the Android platform, and now through this combination we will be able to do even more to innovate and deliver outstanding mobility solutions across our mobile devices and home businesses.”

Andy Rubin, Senior Vice President of Mobile at Google, said, “We expect that this combination will enable us to break new ground for the Android ecosystem. However, our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community. We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices.”

The transaction is subject to customary closing conditions, including the receipt of regulatory approvals in the US, the European Union and other jurisdictions, and the approval of Motorola Mobility’s stockholders. The transaction is expected to close by the end of 2011 or early 2012.

Source -http://techcrunch.com
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Huge price tag to run NHI in SA

Plans to roll out national health insurance should not be seen as a declaration of war on the private health sector, but an attempt to design a system that works, using existing resources, to provide affordable care for all.



Announcing Friday’s release for public comment of the green paper that spells out broad policy proposals for the scheme, Health Minister Aaron Motsoaledi said: “The NHI is not a war between the public and private health care sectors – it’s not even a competition between these two health care delivery systems.

National Health

“If we view matters in this light, and try to tear each other apart, the people will be the real losers.”


Pilot projects would be launched in 10 districts in April, the start of what Motsoaledi calls a crucial five years in which the management, staffing, infrastructure and equipment at public facilities would be overhauled and an NHI fund set up. The entire roll-out would be phased in over 14 years. Motsoaledi said the first five years would be the “most complex”.


Establishing a NHI service was agreed on at the ANC’s 2007 Polokwane congress, and President Jacob Zuma’s administration is under pressure to deliver amid mounting public dissatisfaction with the ailing public system.


Questions about the NHI’s costs were referred to Finance Minister Pravin Gordhan.


He said the R125 billion price tag mooted for the first year – and cited in the green paper – was only “indicative” as “a linear projection of what it will cost once the pilot projects are under way”.


“There’s money in the system at the moment,” Gordhan said. The details would have to be “worked out” during the pilot period.


There were many ways of rationalising costs, he said.


Infrastructure projects would include six new referral hospitals, Motsoaledi said, and would cost “more than the 2010 World Cup stadiums”.


Putting “the right people in the right places” would be crucial.


Motsoaledi said he would soon announce the country’s first health human development strategy “that will show clearly who needs to be where and how they are going to be trained” – including doctors, nurses, pharmacists and allied health professionals.


Hospitals would be redesignated as district, regional, tertiary, central or special – for treating tuberculosis, for example – in a uniform system, with the employment of managers who had the correct qualifications, for appropriate pay.


Motsoaledi said one of the reasons for the poor quality of public health care was that “anyone can wake up and think they want to run a hospital”.


“That’s one of the things we have to change if we want a good health care system,” he said.


South Africa spent 8.6 percent of its gross domestic product on health – far beyond the 5 percent recommended by the World Health Organisation – an average of R2 700 a person a year.


That health outcomes were so poor showed there was something very wrong with the system.


The quality of care in public health facilities was “often totally unacceptable”, and “radical measures” were needed to correct this.


“But we need to appreciate the sheer scale of the service provided by public health facilities in ensuring care for 84 percent of our people who totally depend on these facilities.


“In many cases this involves a heroic effort day in and day out by men and women in our hospitals under very trying conditions.”


While the private sector was held up as an example of good service and quality care, the price tag that came with this was “not only a burden to people using private health services, but a disservice to our country as a whole because it distorts pricing across the board”. There were clear signs that this might, in the long term, be unsustainable, Motsoaledi said.


The challenge was to get the best out of both systems. “(With) this green paper on NHI we’re making a real effort to design a system that works with the resources we have and build on these.” Even if it was affordable, extending the current model of private care to all citizens would overwhelm the sector.


“The bulk of South Africa’s health infrastructure resides in the public sector and our task is to overhaul it so that people will choose to go to public facilities once they have options.”


While this might sound impossible, it could be done, Motsoaledi said. Not too long ago, public hospitals were an automatic choice for people who could afford private care.


Achieving NHI would be a “long journey” and “at times things will be tough”, Motsoaledi cautioned.


For the scheme to be viable, the quality of service at public sector facilities had to be improved. Private health care pricing had to be tackled equally seriously. - Political Bureau


Source -http://iol.co.za
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Launching gr8insurance new logo

Gr8insurance's new logo

Logo symbolizes a company and provides an image nothing else can provide. It is one of the many important yet missed elements for many businesses. Either the company doesn’t have one or it isn’t good 

enough. I will provide some few tips on how to make a logo that can help you brand a business. It is crucial to have one for branding purposes and gives a company an identity. A company without a logo will raise questions about your business and a lost of identity.

First of all, the shape of the logo is either a make or break scenario. The shape either has to correlate with the name or relevant to your business. Best not to have your logo be something that the customer has to guess to bring out the traits of your business. Also the shape has to tie in with your business and something that sticks out so people will remember. For example, a logo for an eyeglass retailer can be an eyeglass case that is open with the eyeglass inside. It is easy to remember, sticks to the mind and the logo forces customer to remember you when they use their cases to get their eyeglasses out or placing it back in.

Color also plays an important role on catching the eyes of viewers. The color has to be catchy but not awkward for the logo. Finding the color for a logo can be hard at times to separate yourself from the competition that may have a similar logo. Just experiment the colors and see what you like or better yet do a survey with customers and engage with them on the best color for your logo.

Once you have the logo you should register the trademark from trademark infringement. Put the logo next to your Business Name and start promoting it to create awareness and retention. Put your logo next to the name of the products offered in your business and start building brand image of your business. Logo is a must to build brand image because it conveys the qualities and thoughts of the business to the people.

Hope Gr8insurance's new logo can reach the marketing standards it aims to archive. Please comment on our new logo.


Source -http://marketingdeviant.com/
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10 reasons for possible US market slump

1. The market is already expensive. Stocks are about 20 times cyclically adjusted earnings, according to data compiled by Yale University economics professor Robert Shiller. That's well above average, which, historically, has been about 16. This ratio has been a powerful predictor of long-term returns. Valuation is by far the most important issue for investors. If you're getting paid well to take risks, they may make sense. But what if you're not?


2. The Fed is getting nervous. The central bank recently warned that the economy had weakened, and it unveiled its latest weapon in the war against deflation: using the proceeds from the sale of mortgages to buy Treasury bonds. The move should drive down long-term interest rates. That's great news for mortgage borrowers, but it's hardly something one wants to hear when the Dow Jones Industrial Average ($INDU) is already north of 10,000.
 

3. Too many people are too bullish. Active money managers are expecting the market to go higher, according to the latest survey by the National Association of Active Investment Managers. So are financial advisers, reports the weekly survey by Investors Intelligence. And that's reason to be cautious. The time to buy is when everyone else is gloomy. The reverse may also be true.

4. Deflation is already here. Consumer prices have fallen for three months in a row. And, most ominously, the drop is affecting wages. The Bureau of Labor Statistics reports that workers earned 0.7% less in real terms per hour last quarter than they did a year ago. No wonder the Fed is worried. In deflation, wages, company revenues, and the value of your home and your investments may shrink in dollar terms. But your debts stay the same size. That makes deflation a vicious trap, especially if your among the people who owe way too much money.

5. Many people still owe way too much money. And not just households -- corporations, states, local governments and, of course, Uncle Sam owe, too. It's the debt, stupid. According to the Federal Reserve, total U.S. debt -- even excluding the financial sector -- is basically twice what it was 10 years ago: $35 trillion compared with $18 trillion. Households have barely made a dent in their debt burden; it has fallen a mere 3% from last year's all-time peak, leaving it at twice the level of a decade ago.

6. The jobs picture is much worse than they're telling you. Forget the "official" unemployment rate of 9.5%. Alternative measures? Try this: Just 61% of the population age 20 or over has any kind of job right now. That's the lowest since the early 1980s, when more women stayed at home by choice. Among men today, it's 66.9%. Back in the '50s, incidentally, that figure was around 85%, although allowances should be made for the higher number of elderly people alive today. And many of those still working can find only part-time work, so just 59% of men age 20 or over currently have a full-time job. This is bullish?

7. Housing remains a disaster. Foreclosures rose again last month. Banks took an additional 93,000 homes in July, says foreclosure specialist RealtyTrac. That's a rise of 9% from June and just shy of May's record. We're heading for 1 million foreclosures this year, RealtyTrac says. And naturally the ripple effect hurts all those homeowners not in foreclosure by driving down prices. See deflation (No. 4) above.

8. Labor Day is approaching. Ouch. It always seems to be in September-October when the wheels come off Wall Street. Think 2008. Think 1987. Think 1929. Statistically, there actually is a "September effect." The market, on average, has done worse in that month than any other. No one really knows why. Some have even blamed the psychological effect of shortening days. But it becomes self-reinforcing: People fear it, so they sell.
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9. We're looking at gridlock in Washington. Election season has begun. And the Democrats are expected to lose seats in both houses in November. (Betting at InTrade, a bookmaker in Dublin, Ireland, recently was giving the GOP a 62% chance of taking control of the House.) As our political dialogue seems to have collapsed beyond all possible hope of repair, let's not hope for any "bipartisan" agreements on anything of substance. Do you think this is a good thing? As Davis Rosenberg at investment firm Gluskin Sheff recently pointed out, gridlock is only a good thing for investors "when nothing needs fixing." Today, he notes, we need strong leadership. Not gonna happen.

10. All sorts of other indicators are flashing amber. The Institute for Supply Management's manufacturing index, while positive, weakened again in July. So did ISM's new-orders indicator. The trade deficit has widened, and second-quarter GDP growth was much lower than first thought. ECRI's Weekly Leading Index has been flashing warning lights for weeks (though the most recent signals have looked somewhat better). Europe's industrial production in June turned out considerably worse than expected. Even China's steamroller economy is slowing down. Tech bellwether Cisco Systems (CSCO, news, msgs) has signaled caution ahead. Individually, each of these might mean little. Collectively, they make me wonder. In this environment, I might be happy to buy shares if they were cheap. But not so much if they're expensive. See No. 1 above.

Source -articles.moneycentral.msn.com
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