Dynamic growth again for Prudential

  • Business
  • Tuesday, 18 Feb 2003

by leanos fernandez

PRUDENTIAL Assurance Malaysia Bhd, considered by many in the life insurance industry as the fastest growing insurer in terms of new business is holding up well, going by its latest record-breaking sales performance. 

Corporate results of the Britain-based company for the FY2002 showed it had registered more than RM333mil in terms of new business (annualised premium) for the full year, due in large part to a dynamic and rapidly growing agency force. 

Its chief executive officer Ng Keng Hooi said in an interview that this meant the company had gained a 42% increase over the FY2001 period (RM234mil), a development he pointed out meant only one thing – the path is now clear for greater business expansion. 

Ng Keng Hooi

“Our consistent year-on-year growth rates have proven that expansion has become more of a norm rather than an exception, motivating the agency force to scale greater heights in the coming years,” he said. 

The growth rates also proved that in so far as new business was concerned, the company has also managed to achieve a 30% above-the-industry performance level for annualised premiums, which stands at 12% (for the first nine months of FY2002). 

“We have been growing at a compounded rate of more than 30% over the past 10 years, but last year the growth of 42% was especially impressive, given the very difficult operating environment. The last time we saw an even higher growth rate was seven years ago when we grew by 78%,” Ng said. 

There are two types of life insurance premiums generally included in a life player's year-on-year financial report, namely annual premium – which is the principal component – and single premium, which is sold mainly for investment purposes. 

According to Ng, a US-trained qualified actuary, the difference (in importance and impact on company business results) between the two components becomes evident when seen within the context of revenue and profitability over the longer term. 

The quantum achieved in terms of annual premium business is much more “preponderant” because it is a more regular and fixed revenue for a life player, unlike that secured from single premium, which is a one-off payment made by a policyholder, he explained. 

“For this reason, in most markets, new business performance is measured by annualised premium equivalent (APE), which is the sum of 100% of annual premium sales and 10% of single premium sales. We hope the APE benchmark will be more frequently used in the local market to provide greater transparency for performance and be a more consistent basis for the purpose of business comparison between companies,” Ng said. 

On the much improved business results, Ng said there were many contributing factors, but the single most important one was the “critical role of the agency force.” 

“Much of what we have managed to achieve could not have taken place without the hard work, expertise and talents of our agents in both Peninsular and East Malaysia,” he said. 

Elaborating further, he said, there was a 20% increase in agency productivity in the specific ambit of sales, while agency managers also improved their output, judging by the amount of sales they were generating. 

Productivity of agency managers went up by nearly 50%, and on average a Prudential agency leader produced RM840,000 new business annual premium, which is several times higher than the industry average. More than 100 of them exceeded RM1,000,000 in sales. 

Also for FY2002, Prudential produced a record 1,000 “PRU Centurions”, who are the life agents who brought in more than RM100,000 in new business sales. 

Individual performances were also outstanding for FY2002. Asked for specifics, Ng said one senior manager had done more than RM8mil worth of sales in Sibu, Sarawak, while another from Kuala Lumpur had secured more than RM7mil in new business. The number one agent was from Kuching, who produced a million ringgit worth of new business. 

Such outstanding successes have attracted many potential recruits. The company contracted more than 2,000 new life agents and to ensure “quality service,” 25% of those deployed were university students, while 28% were diploma holders from both local as well as foreign institutions of higher learning. 

While Prudential is moving into FY2003 with renewed gusto and determination, it is also mindful of its equally competitive peers in the market who are “not too far behind” and that it would be just a matter of time before a neck-and-neck scenario emerges. 

To ensure it stays well ahead of its competitors, the company has taken a number of proactive measures to continuously upgrade the agency force and push up their productivity even higher, and to cope with the big jump in business, it recently implemented a state-of-the-art imaging and work-flow system costing nearly RM10mil. 

“The systems in place have transformed our previous form of business processing into a completely new and highly automated operation. What we now have is a paperless and cost-efficient working environment,” Ng said. 

The latest results confirm two of the most vital aspects of the company's corporate progress – namely the speedy pace at which Prudential has been growing, and its gradual transformation into a “magnet” for many young and enterprising entrants seeking a professional career in the life business. 

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