Winners, waiters and losers, where do Pru, AXA and FWD fit?

For many people all life insurance companies are the same and, in general, I understand their view. The current experience is that you let yourself be convinced of the need to put money away for later, and most likely does is a solid plan. Depending on where you bank, or which company recruited your cousin this time, you look at the promises that are shown in colorful slightly complicated graphs. And while dreaming away hearing about all the millions you are possibly going to receive, you sign an application form and thereafter just pay premiums every month. It is indeed the same with any of the larger insurers in the market.

However when taking a step back, it becomes very clear that some companies have been much more successful than others. Over the past years we have seen a clear distinction in how successful the different players are in acquiring new customers and maintaining and deepening the relation with their existing clients. In the graphs above this is represented by the premium income flow of these companies, using only 10% for single premiums, as that is a common proxy to make these product comparable (as the average single premium is around 10 times the average annually recurring premium).

So which have been the most successful players strengthening their position and growing their customer base and who have failed to do so and saw more customers leave than new ones enter? Just looking at the numbers, I distinguish three different groups; the losers, the waiters and the winners.

The 'losers' are the three companies that had dominant positions in the past, when the market was closed for foreign competition except for some North American companies. While in this relatively uncompetitive market, they built dominant market positions and became well known brands. Even after the market opened in 1997 this allowed them to stay among the top ranked players, but slowly that has been changing. While investments in bank relationships significantly softened the decline, they have structurally lost market share and are struggling to maintain relevant. Just like the Nokia's and Motorola's, they missed to see how customers changed their preferences and behaviors and how their products and business model needed to adapt.

The 'waiters' had an initial period of growth, taking market share from the first group by offering similar propositions in very similar business models. In recent years, Manulife since 2013 and AXA since 2017, they moved into a consolidation phase, not finding the right strategy to continue their growth. Compared to the losers however there is still the possibility that, with some minor adjustments in direction and execution, the strengths that built their positions can be revived. Their strategies should be revisited and updated and subsequently be relentlessly executed to avoid the faith of moving to the group of losers.

The 'winners' are the new companies, FWD and Allianz and Pru Life UK that has been around for 25 years. FWD started from scratch, with the promise to change the way people feel about insurance, and with automating a larger part of their back-office. It's certainly remarkable how they have been able to built a position in a crowded market. Allianz on the other side as at the moment only using the potential they had for years by creaming off the banks client base offering single premium products. It is Pru Uk that is really remarkable, changed their focus from building a professional sales-force in the initial years to maximizing the 'feet in the street', a mass based approach based on agent numbers, to regain their traction in the years after the GFC and is recently including more digital tools in their marketing. Two substantial strategic adjustments with amazing results.

For us, being new in the market, the main lesson is that we have to be constantly aware on how customer preferences and behaviors are changing and how we have to adjust our business model to stay relevant and able to benefit from the growth in specific sectors in the market. Like Apple, launching the iPhone 4, focused on a relatively niche market, reaching a 2-3% market share in mobile phone sales. Currently their target market is much broader and their share in sales exceeds 15% of total units sold (30% of people are using an iPhone).

Clearly as Singlife we will not copy the 'feet in the street' approach, nor create a solution for the bank to park their expensive savings efficiently. We are driven by the idea that we can help the middle class to live their life with confidence, knowing that they realize their financial potential, shielded from financial adversities. We want to let them understand their financial needs and the solutions there are, supporting them to make money less of an issue in many real life situations. And lastly we want them to be in control and offer solutions that are flexible and adjustable without many restriction or high penalties and fees.

We believe that is what the market needs right now and we understand that to stay relevant we will have to adapt and adjust our business model from time to time to best service all our customers and prospects.