In this exclusive video, Think Insurtech CEO Olivier LE FAOUDER provides a detailed general overview of the Think Insurtech Saas platform. 

Think Insurtech provides Private Medical Insurance (PMI), and International Private Medical Insurance insurers and brokers, the opportunity to manage the A to Z of sales and distribution of medical insurance in a compliant and connected environment.

We offer a comprehensive approach and process in working with clients to place both international and domestic healthcare cover including group life and income protection.

As you know, every insurance distributor must act honestly, fairly, and not misleading, in accordance with the best of interests.

Intermediaries must follow to rules: Obligation of result & Obligation of means.

Our Saas platform manage both performance taking only a few minutes to do a side by side detailed comparison whilst enhancing the client experience by enabling a live real time interactive discussion evaluating wants, needs and budget requirements and proposing a personal recommendation. The next step that we are working on with some of our insurance/providers partners is to digitize the customer engagement and application form as well as for groups with digital Know Your Customer (KYC) collection.

Related Reading: iPMI Magazine Speaks With Olivier LE FAOUDER, CEO And Brian S. Piper, Co-Founder - Strategic Business Development, Think Insurtech

But increased trade protectionism has potential to damage growth prospects.

The International Air Transport Association expects 7.2 billion passengers to travel in 2035, a near doubling of the 3.8 billion air travelers in 2016. The prediction is based on a 3.7% annual Compound Average Growth Rate (CAGR) noted in the release of the latest update to the association’s 20-Year Air Passenger Forecast.

“People want to fly. Demand for air travel over the next two decades is set to double. Enabling people and nations to trade, explore, and share the benefits of innovation and economic prosperity makes our world a better place,” said Alexandre de Juniac, IATA’s Director General and CEO.  

Eastward shift, developing market focus

The forecast for passenger growth confirms that the biggest driver of demand will be the Asia-Pacific region. It is expected to be the source of more than half the new passengers over the next 20 years. China will displace the US as the world’s largest aviation market (defined by traffic to, from and within the country) around 2024*.

India will displace the UK for third place in 2025*, while Indonesia enters the top ten at the expense of Italy. Growth will also increasingly be driven within developing markets. Over the past decade the developing world’s share of total passenger traffic has risen from 24% to nearly 40%, and this trend is set to continue.

Risks, Challenges and Opportunities

The 20-year forecast puts forward three scenarios. The central scenario foresees a doubling of passengers with a 3.7% annual CAGR. If trade liberalization gathers pace, demand could triple the 2015 level. Conversely, if the current trend towards trade protectionism gathers strength, growth could cool to 2.5% annual CAGR which would see passenger numbers reach 5.8 billion by 2035.

“Economic growth is the only durable solution for the world’s current economic woes. Yet we see governments raising barriers to trade rather than making it easier. If this continues in the long-term, it will mean slower growth and the world will be poorer for it. For aviation, the protectionist scenario could see growth slowing to as low as 2.5% annually. Not only will that mean fewer new aviation jobs, it will mean that instead of 7.2 billion travelers in 2035, we will have 5.8 billion. The economic impact of that will be broad and hard-felt,” said de Juniac. 

Whatever scenario is eventually realized, growth will put pressure on infrastructure that is already struggling to cope with demand.  “Runways, terminals, security and baggage systems, air traffic control, and a whole raft of other elements need to be expanded to be ready for the growing number of flyers. It cannot be done by the industry alone. Planning for change requires governments, communities and the industry working together in partnership,” said de Juniac.

The industry will also need to be able to grow sustainably. Earlier this month airlines supported the establishment of a Carbon Offset and Reduction Scheme for International Aviation (CORSIA). This landmark agreement—the first among governments to manage the emissions growth of an entire global industrial sector—aims to cap net emissions with carbon neutral growth from 2020. “Aviation is at the forefront of industries in managing its carbon footprint. Along with offsetting emissions through CORSIA, airlines are working with partners in industry and government to advance technology, improve operations and generate more efficiencies in infrastructure,” said de Juniac.

Key facts (all figures based on central growth forecast)

Fast-growing markets

The five fastest-growing markets in terms of additional passengers per year over the forecast period will be

• China (817 million new passengers for a total of 1.3 billion)
• US (484 million new passengers for a total of 1.1 billion)
• India (322 million new passengers for a total of 442 million)
• Indonesia (135 million new passengers for a total of 242 million)
• Vietnam (112 million new passengers for a total of 150 million).

The top ten fastest-growing markets in percentage terms will be in Africa: Sierra Leone, Guinea, Central African Republic, Benin, Mali, Rwanda, Togo, Uganda, Zambia and Madagascar. Each of these markets is expected to grow by more than 8% each year on average over the next 20 years, doubling in size each decade.

Regional growth

• Routes to, from and within Asia-Pacific will see an extra 1.8 billion annual passengers by 2035, for an overall market size of 3.1 billion. Its annual average growth rate of 4.7% will be the second-highest, behind the Middle East
• The North American region will grow by 2.8% annually and in 2035 will carry a total of 1.3 billion passengers, an additional 536 million passengers per year
• Europe will have the slowest growth rate, 2.5%, but will still add an additional 570 million passengers a year. The total market will be 1.5 billion passengers
• Latin American markets will grow by 3.8%, serving a total of 658 million passengers, an additional 345 million passengers annually compared to today
• The Middle East will grow strongly (4.8%*) and will see an extra 244* million passengers a year on routes to, from and within the region by 2035. The UAE, Qatar and Saudi Arabia will all enjoy strong growth of 5.9%*, 4.7%, and 4.1% respectively. The total market size will be 414 million passengers
• Africa will grow by 5.1%. By 2035 it will see an extra 192 million passengers a year for a total market of 303 million passengers

The evolution of the Internet of Things, combined with changing behaviors and preferences from Gen Y customers, is pushing the insurance industry towards massive disruption.

Global passenger traffic results for 2015 shows demand rose 6.5% for the full year compared to 2014. This was the strongest result since the post-Global Financial Crisis rebound in 2010 and well above the 10-year average annual growth rate of 5.5%. While economic fundamentals were weaker in 2015 compared to 2014, passenger demand was boosted by lower airfares. After adjusting for distortions caused by the rise of the US dollar, global airfares last year were approximately 5% lower than in 2014.

“Last year’s very strong performance, against a weaker economic backdrop, confirms the strong demand for aviation connectivity. But even as the appetite for air travel increased, consumers benefitted from lower fares compared to 2014,” said Tony Tyler, IATA’s Director General and CEO.

Annual capacity rose 5.6% last year, with the result that load factor climbed 0.6 percentage points to a record annual high of 80.3%. All regions experienced positive traffic growth in 2015. Carriers in the Asia-Pacific region accounted for one-third of the total annual increase in traffic.

International Passenger Markets

International passenger traffic rose 6.5% in 2015 compared to 2014. Capacity rose 5.9% and load factor rose 0.5 percentage points to 79.7%. All regions recorded year-over-year increases in demand.

• Asia Pacific carriers recorded a demand increase of 8.2% compared to 2014, which was the largest increase among the three largest regions. Demand was stimulated by a 7.3% increase in the number of direct airport connections in the region, resulting in time-savings for travelers. Capacity rose 6.4%, pushing up load factor 1.3 percentage points to 78.2%.
• European carriers’ international traffic climbed 5.0% in 2015. Capacity rose 3.8% and load factor increased 1.0 percentage point to 82.6%, highest among the regions. The healthy result in part was attributable to a pick-up in consumer spending in the Eurozone as well as a moderate increase in flight frequencies. Traffic growth slowed toward the end of the year owing to strikes at Lufthansa and the shutdown of Russia’s Transaero.
• North American airlines saw demand rise 3.2% in 2015, broadly unchanged from the growth achieved in 2014. Capacity rose 3.1%, edging up load factor 0.1 percentage points to 81.8%.
• Middle East carriers had the strongest annual traffic growth at 10.5%. As a result, the share of international traffic carried by Middle East airlines reached 14.2%, surpassing their North American counterparts (13.4%). Capacity growth of 13.2% exceeded the demand gains, pushing down load factor 1.7 percentage points to 76.4%.
• Latin American airlines’ traffic rose 9.3% in 2015. Capacity rose 9.2% and load factor inched up 0.1 percentage points to 80.1%. While key regional economies, particularly Brazil, have been struggling, overall traffic has been robust.
• African airlines had the slowest annual demand growth, up 3.0%, although this was a significant improvement over the 0.9% annual growth achieved in 2014. With capacity up just half as much as traffic, load factor climbed 1 percentage point to 68.5%. International traffic rose strongly in the second half of 2015, in conjunction with a jump in trade activity to and from the region.

Domestic Passenger Markets

• Brazil’s domestic air travel rose just 0.8% in 2015, reflecting the country’s deteriorating economic situation. Traffic trended downward throughout the year.
• US domestic traffic climbed 4.9% last year, helped by solid economic growth. This was the fastest rate of increase since 2004 and the first time since 2003 that domestic traffic growth surpassed international growth. The load factor reached a domestic record high of 85.4%.

Aetna have announced fourth-quarter 2015 operating earnings of $482.1 million, or $1.37 per share, a per-share increase of 12 percent over the fourth quarter of 2014. Full-year 2015 operating earnings were $2.7 billion, or $7.71 per share, a per-share increase of 15 percent over full-year 2014. Net income for the fourth quarter of 2015 was $320.8 million, or $0.91 per share. Full-year 2015 net income was $2.4 billion, or $6.78 per share. Net income for the fourth quarter and full year of 2015 includes $0.46 per share and $0.93 per share of net charges, respectively.

“Aetna achieved record annual operating revenue and operating earnings in 2015, and delivered full-year operating EPS that was above our most recent projection,” said Mark T. Bertolini, Aetna chairman and CEO. “Aetna’s strong 2015 results speak to our continued focus on disciplined pricing and execution of our growth strategy. Based on this performance, we are projecting 2016 operating earnings per share of at least $7.75.

“We continue to work diligently with the Department of Justice and state regulators toward final approval of our proposed acquisition of Humana, and we continue to advance our integration readiness plans. We have obtained seven of the necessary state approvals, and we believe we remain on track to close the transaction in the second half of 2016,” said Bertolini.

“We are quite pleased with the strength of our fourth quarter and full year results,” said Shawn M. Guertin, Aetna executive vice president and CFO. “Aetna’s operating results continue to be supported by strong cash flow and operating margins.

“Our Government business saw strong growth in membership and premiums, as well as improved underwriting margins. These reflect our ongoing execution of strategies to improve our margin profile in Medicare, as well as strong performance in our Medicaid business,” said Guertin.

Health Care segment results

Health Care, which provides a full range of insured and self-insured medical, pharmacy, dental and behavioral health products and services, reported:

• Operating earnings were $492.8 million for the fourth quarter of 2015 compared with $447.6 million for the fourth quarter of 2014. Operating earnings increased primarily as a result of higher underwriting margins in Aetna's Government business and higher fees and other revenue, partially offset by an increase in general and administrative expenses as described in Operating expenses above.
• Net income was $360.9 million for the fourth quarter of 2015 compared with $373.9 million for the fourth quarter of 2014.
• Operating revenues were $14.4 billion for the fourth quarter of 2015 compared with $14.1 billion for the fourth quarter of 2014. The increase is due primarily to membership growth in Aetna's Government business as well as higher premium yields in Aetna's Commercial business, partially offset by membership losses in Aetna's group Commercial Insured products. Total revenues were $14.4 billion and $14.1 billion for the fourth quarters of 2015 and 2014, respectively.
• Sequentially, fourth-quarter 2015 medical membership remained flat at 23.5 million at December 31, 2015.
• Aetna's fourth-quarter 2015 Commercial MBR improved over the fourth quarter of 2014 primarily as a result of increased favorable development of prior-period health care cost estimates primarily related to Aetna's Individual Commercial business.
• Aetna's fourth-quarter 2015 Government MBR improved over the fourth quarter of 2014 primarily as a result of actions impacting revenue and medical costs designed to solve for the gap between Medicare premiums and medical costs and other expenses.
• In the fourth quarter of 2015, Aetna experienced favorable development of prior-period health care cost estimates in its Commercial, Medicaid and Medicare products, primarily attributable to third-quarter 2015 performance.
• Prior-years' health care costs payable estimates developed favorably by $840.6 million and $580.8 million during 2015 and 2014, respectively. This development is reported on a basis consistent with the prior years' development reported in the health care costs payable table in Aetna's annual audited financial statements and does not directly correspond to an increase in 2015 operating results.

Full-year 2015 operating earnings for Health Care were $2.7 billion, compared with $2.4 billion in 2014. Operating earnings increased primarily as a result of higher underwriting margins in Aetna's Government business, partially offset by an increase in general and administrative expenses. Full-year 2015 net income for Health Care was $2.4 billion compared with $2.2 billion in 2014.

Group Insurance segment results

Group Insurance, which includes group life, disability and long-term care products, reported:

• Operating earnings were $21.7 million for the fourth quarter of 2015 compared with $21.3 million for the fourth quarter of 2014.
• Net income was $17.8 million for the fourth quarter of 2015 compared with $23.2 million for the fourth quarter of 2014, primarily reflecting net realized capital losses during the fourth quarter of 2015.
• Operating revenues were $618.3 million for the fourth quarter of 2015 compared with $615.6 million for the fourth quarter of 2014. Total revenues were $612.5 million and $618.5 million for the fourth quarters of 2015 and 2014, respectively.

Full-year 2015 operating earnings for Group Insurance were $136.0 million, compared with $171.0 million in 2014. Operating earnings for 2015 decreased compared with 2014, primarily due to lower underwriting margins in Aetna's Long-Term Care and Life products as well as lower net investment income, partially offset by higher underwriting margins in Aetna's Disability products. Full-year 2015 net income for Group Insurance was $135.5 million, compared with $179.6 million in 2014.

AIG has announced a series of strategic actions, organizational changes, and operating improvements to create a leaner, more profitable and focused insurer.

The Board of Directors has committed to return at least $25 billion of capital to shareholders over the next two years via buybacks and dividends without compromising the utilization of the Company’s deferred tax assets (DTA); approved the IPO of up to 19.9% of United Guaranty Corporation (UGC) as a first step towards a full separation; and approved the sale of AIG Advisor Group to Lightyear Capital LLC and PSP Investments.

In addition, the Board approved a number of organizational changes, including the creation of nine “modular” business units with greater end-to-end accountability, each with its own specific financial metrics. AIG will create a new “legacy” portfolio to hold non-strategic assets and has appointed Charlie Shamieh as Legacy CEO.

In related operational actions, AIG also announced targeted expense reductions of $1.6 billion within two years, representing 14% of 2015 gross general operating expenses; a target of improving the Commercial P&C accident year loss ratio by six percentage points; and a consolidated ROE target of ~9% by 2017, reflecting 10.3% to 10.7% in the operating portfolio.

“With these actions, AIG has taken another major step in simplifying our organization to be a leaner, more profitable insurer, while continuing to return capital to shareholders and improve shareholder returns,” said President and CEO Peter Hancock. “The creation of more nimble, standalone business units that can grow within AIG or be spun out or sold allows us to do what is in our shareholders’ best interests.”

Douglas M. Steenland, AIG’s Non-Executive Chairman, said, “The Board’s actions reflect its full support for the plans that Peter Hancock and his management team have put forward, and we are aligned that these steps will deliver strong results while creating more options for shareholder value creation in subsequent years.

“AIG is committed to serving all its stakeholders by delivering first quartile total shareholder returns to its shareholders; providing risk expertise and dependable long-term balance sheet strength for its customers; having a culture of strict adherence to both the letter and spirit of regulatory requirements; and maintaining an environment that attracts and retains world-class employees.

“After careful consideration, AIG believes that a full breakup in the near term would detract from, not enhance, shareholder value. A lack of diversification benefits would reduce capital available for distribution, and there would be a loss of tax benefits. Being a non-bank SIFI is not currently a binding constraint on return of capital,” said Mr. Steenland.

Strategic Actions

Capital Return

AIG is committed to returning at least $25 billion of capital to shareholders over the next two years (via buybacks and dividends), on top of the $12 billion returned in 2015. The capital return is expected to be sourced from a combination of improved operating performance, divestitures, reinsurance transactions, a shift in asset allocation, a modest increase in leverage, and the release of capital over time from low-earning legacy assets. This commitment to returning $25 billion of capital can be achieved notwithstanding the strengthening of reserves and associated capital contribution announced today.

IPO of up to 19.9% of United Guaranty Corporation (UGC)

AIG will pursue an initial public offering of United Guaranty Corporation (UGC) in mid-2016 to sell up to 19.9% of the outstanding shares, subject to regulatory and GSE approval, as a first step towards a full separation.

Divestiture of AIG Advisor Group

AIG has announced the sale of AIG Advisor Group to Lightyear Capital LLC, a New York private equity firm focused on financial services, and PSP Investments, one of Canada’s largest pension investment managers. The transaction is expected to close in second quarter 2016.

Organizational Changes

“Modular” Business Units

AIG is overhauling its management model to improve transparency, accountability and operating performance improvement throughout the organization. The new structure, composed initially of nine “modular” business units within AIG’s Commercial and Consumer segments, will decentralize decision-making, provide more accountability to business leaders, and allow for migration to a more variable cost structure. The reorganization will give AIG options to retain and grow the businesses, or take public or sell the units if they don’t adequately contribute to financial targets, or if it becomes apparent that they are worth more outside of AIG than within, or if they represent an efficient means of returning capital to shareholders. The Company could consider the separation of even the larger modular units of its Commercial and Consumer segments over time with utilization of the DTA, contingent on improvements in the credit risk profile and operating performance. Within AIG’s Commercial segment, the modular business units will be Liability and Financial Lines; Property and Special Risks; U.S. Commercial; and Europe Commercial. Inside the Consumer segment, the modular units will be U.S. Individual Retirement; U.S. Group Retirement; Life, Health and Disability; Personal Insurance (P&C); and Japan.

New “Legacy” Portfolio Management

The Company will create a new “legacy” portfolio composed of non-strategic assets and businesses that it intends to exit or run off. This portfolio will be managed in a way to monetize assets in a timely manner in order to return capital to shareholders. The Company will also introduce new disclosures later in 2016 to clarify sources of financial returns and enhance focus on a goal of releasing $9 billion of capital by 2017.

Operating Improvements

Expense Reductions

AIG is also undertaking further substantial expense reductions of $1.6 billion within two years, representing 14% of 2015 gross general operating expenses. The savings will be driven by an acceleration of our current initiatives to rationalize the Company’s global structure, including consolidation of activities and de-layering, increased utilization of shared services and outsourcing, continued movement of operations to lower-cost locations, and further increased automation.

Underwriting Improvements

Aggressive actions will be taken to improve the Commercial P&C accident year loss ratio by addressing unprofitable clients purchasing one or two products, expanding and optimizing the use of reinsurance, and exiting or remediating targeted segments of underperforming portfolios. These actions are expected to result in accident year loss ratio improvement of six percentage points by 2017. In addition, we will undertake actions to sharpen our consumer focus and improve profitability, including narrowing our footprint in Personal Insurance, expanding reinsurance utilization for inefficient segments of the U.S. life business, achieving maximum benefits from investments in Japan, and growing our U.S. Retirement business.

ROE Improvement

AIG has set a consolidated normalized ROE target of ~9% by 2017, reflecting 10.3% to 10.7% in the operating portfolio. The increase will be driven by the operating improvements, capital actions and profitable growth outlined in the strategic plan. At the same time, legacy assets and liabilities will release low-earning capital over time.

Mr. Hancock concluded, “We have set substantial financial goals for AIG and will continue to improve shareholder return by thoughtfully managing the trade-off between book value per share growth and improving ROE. By overhauling the way the company is organized and creating modular, self-sufficient businesses, we will drive substantial operating performance improvements and maximize value for shareholders.”

​​​The International Air Transport Association (IATA) announced its airline industry outlook for 2016 which sees an average net profit margin of 5.1% being generated with total net profits of $36.3 billion. IATA also announced a revision to its airline industry outlook for 2015 upwards to a net profit of $33 billion (4.6% net profit margin) from $29.3 billion forecast in June.

The strengthening industry performance is being driven by a combination of factors:

• Lower oil prices (forecast to be $55/barrel Brent in 2015 and averaging a lower $51/barrel in 2016) are giving airline profits a boost; however this is strongly moderated in many markets by the appreciation of the US dollar
• Strong demand for passenger travel (+6.7% growth in 2015 and +6.9% in 2016) is making up for disappointing cargo demand growth (+1.9% in 2015; strengthening to 3.0% in 2016). Weak cargo performance reflects sluggish growth in trade
• Stronger economic performance in some key economies (including a faster than expected recovery in the Eurozone) is outweighing the overall impact of slower growth in China and the downturn in the Brazilian economy. Global GDP growth is expected to improve to 2.7% in 2016 (up from 2.5% for 2015)
• Efficiency gains by airlines are illustrated by record high load factors (80.6% in 2015, tapering slightly to 80.4% in 2016). Capacity is increasing and is expected to move ahead of demand growth in 2016. Yields, however, continue to deteriorate amid stiff competition

“This is a good news story. The airline industry is delivering solid financial and operational performance. Passengers are benefiting from greater value than ever—with competitive airfares and product investments. Environmental performance is improving. More people and businesses are being connected to more places than ever. Employment levels are rising. And finally our shareholders are beginning to enjoy normal returns on their investments,” said Tony Tyler, IATA’s Director General and CEO.

In 2016 total passenger numbers are expected to rise to 3.8 billion traveling over some 54,000 routes.

Profitability in Perspective

In both 2015 and 2016 the industry’s return on capital (8.3% and 8.6% respectively) is expected to exceed the industry’s cost of capital (estimated to be just under 7.0% in 2015 and 2016 because of low bond yields).

“This is an historic achievement for an industry that has been notorious for destroying capital throughout its history. But let’s keep that achievement in perspective. With net profit margins still in the 5% range there is little buffer. Achieving returns that barely exceed the cost of capital means that airlines are finally meeting the minimum expectations of their shareholders. For most other industries this is the norm and not the exception. 

And this is coming as expectations build that we are nearing the top of the business cycle. On average airlines will still make less than $10 per passenger carried. The industry’s profitability is better described as ‘fragile’ than ‘sustainable’,” said Tyler.

There are several indicators that improvements in airline profitability are likely to slow. The first is found in the cyclical nature of the airline business. Historically the airline industry profitability cycle is 8-9 years from peak to peak (or trough to trough). The low point of this cycle was 2009. The second is the anticipation of the economic impact of interest rates rising from current exceptionally low levels. And lastly, airlines will soon have realized the maximum positive impact of lower fuel prices with most of the higher-than-market hedges due to unwind in 2016.

2016

2016 will continue the main trends from 2015. Major drivers of performance in 2016 include:

• Revenues: Revenues are expected to rise by 0.9% to $717 billion in 2016. Industry revenues peaked in 2014 at $758 billion, then declined to $710 billion in 2015 with the impact of the strengthening of the US dollar on non-dollar revenues. The increase in revenues in 2016 is expected to be wholly due to the contribution of the passenger side of the business ($525 billion in 2015 rising to $533 billion in 2016). Cargo revenues are expected to decline slightly to $50.8 billion (from $52.2 billion in 2015).
• Demand: The demand for passenger travel is expected to grow by 6.9% (similar to the 6.7% growth expected in 2015) with 3.8 billion passengers expected to travel in 2016. Passenger capacity is expected to grow slightly ahead of demand at 7.1% which is an acceleration from the 5.5% capacity expansion in 2015. Demand for air cargo is expected to accelerate in 2016 to 3.0%, ahead of the 1.9% growth in 2015. This is slightly ahead of GDP growth which is expected to average 2.7% in 2016. Prior to the Global Financial Crisis this pace of economic growth would have generated much faster international trade and air cargo growth, but that pattern of growth appears to have stopped as companies bring supply chains closer to home. In total, the industry is expected to uplift 52.7 million tonnes of cargo in 2016.
• Yields: The cost of travel and shipping is expected to continue to decline with average yields for passengers falling 5% and cargo falling by 5.5% in 2016. The pace of decline is a deceleration from 2015 when cargo yields are expected to fall by 18.0% and passenger yields by 11.7%. About 6.0 percentage points of the 2015 decline can be attributed to the appreciation of the US dollar and the impact this has when accounting for non-US dollar revenues.

Regional Differences

The industry’s performance varies dramatically by region.

North America: North American carriers are leading the industry’s performance and are expected to generate considerably more than half the industry’s total profits in both 2015 ($19.4 billion) and 2016 ($19.2 billion). On a per passenger basis, profits of $21.44 in 2016 also places their performance at the top of the industry.

This is as a result of a strong US economy, the appreciating US dollar, lower oil prices and a restructured industry. Capacity growth by North American airlines is expected to accelerate from 3.7% in 2015 to 4.8% in 2016 on the strength of the US economy.

Europe: European airlines are expected to deliver performance improvements with net profits increasing from $6.9 billion in 2015 to $8.5 billion in 2016. Lower fuel costs (hedging rates of 80-90% for the majority of large airlines has delayed much of the benefit from low fuel prices into 2016), a faster than expected recovery of the European economy and strong performance on business travel on North Atlantic routes is benefitting the region.

However, performance is very patchy with intense and increasing competition on intra-European markets reducing the financial performance of some of those exposed to these markets. On a per passenger basis, however, profits are $8.80 which places their performance significantly behind that of North American carriers. Capacity growth is expected to accelerate from 3.9% in 2015 to 6.2% in 2016 with Turkey being a major driver.

Asia-Pacific: Profits for the Asia-Pacific region are expected to grow from $5.8 billion in 2015 to $6.6 billion in 2016. Overall profits per passenger for 2016 are forecast at $5.13, well behind both the US and Europe. Although the Chinese economy has slowed, air travel remains strong.

The region’s carriers will benefit more fully from the impact of lower fuel prices in 2016 as hedges unwind. The region is, however, in the front line for the impact of continued weakness in cargo revenues. Passenger capacity growth is expected to accelerate from 6.0% in 2015 to 8.4% in 2016 as new aircraft are delivered largely to accommodate growth in the major emerging markets of India, Indonesia and China.

Middle East: Middle East carriers are expected to see collective profits of $1.4 billion in 2015 which is lower than the previously forecast $1.8 billion. The region is expected to recover most of the lost ground with a $1.7 billion net profit in 2016. The Middle East is, however, split between strong Gulf airlines, with successful long-haul super-connector operations, and regionally-focused airlines which are suffering from the impact of lower oil revenues and political conflict.

Profit per passenger of $7.97 forecast for 2016 is slightly less than that expected for European airlines and almost a third of what North American airlines are achieving. Overall the region is still generating double-digit growth. Capacity is expected to expand by 12.1% and 12.2%, respectively, in 2015 and 2016 largely as a result of growth in traffic over the region’s modern hubs.

Latin America: The performance of carriers in Latin America is weak on the back of the deepening economic crisis in Brazil, weak commodity prices and adverse currency fluctuations. The region is expected to finish 2015 with a $300 million loss, recovering to a $400 million profit in 2016. Recent elections in Venezuela and Argentina are expected to result in a more business-friendly environment for airlines.

These are both key markets where government controls have blocked the repatriation of airline profits (some $3.78 billion in Venezuela). The region is still expected to see a robust capacity growth of 5.6% in 2015 accelerating to 7.5% in 2016 on the strength of demand on links with North America.

Africa: Airlines in Africa are expected to be in the red in both 2015 and 2016 with losses of $300 million and $100 million, respectively. The region’s losses per passenger make its performance in 2015 worse than Latin America’s. Political instability is impacting important tourism markets in North Africa. The continent’s carriers in general suffer from weak economies and stiff competition on international markets. Growth is also weak, with a 0.4% capacity expansion expected for 2015 increasing to 1.6% in 2016.

In this RiskMap 2016 video, Henry Smith explains how 2016 will unfold with the lifting of the sanctions prescribed by the Joint Comprehensive Plan of Action for Iran’s nuclear programme.

This third of four “First Monday” episodes examines the U.S. health insurance industry, as A.M. Best Senior Financial Analyst Doniella Pliss explores how a budget change that leaves the collectability of risk corridor payments uncertain is impacting U.S. health insurers.

Aviva plc’s Group Chief Executive Officer Mark Wilson talks to Jon Sopel about the company’s 2014 full year results, including reviewing the Group’s performance and the priorities for 2015.