VietNamNet Bridge – More foreign insurers have come to Vietnam in recent years.
Joining forces with domestic partners in doing business is the way many of them
have chosen to penetrate the local market.
More players …
In early 2013, Sun Life Financial from Canada made its official presence in
Vietnam by becoming a partner in PVI Sun Life, a joint venture between the
Canadian insurer and PetroVietnam Insurance (PVI).
PVI is believed to have big advantages in non-life insurance with 21 percent of
the market share in 2011. Meanwhile, Sun Life Finance has 150-year experiences
in the life insurance sector and it is considering expanding the Asian market.
Cooperating with domestic partners to penetrate the domestic market proves to be
the choice of many global insurance groups. In 2012, Australian AIG bought 30
percent of AAA’s stakes in a deal worth $20 million. The move served AIG’s
strategy to increase its ownership ratio to 49 percent and more deeply exploit
the domestic non-life insurance market.
The post of manager in AAA has been recently assigned to a person from AIG,
Jonathan Delalande, who has experiences in doing business in Asia.
The best known affair in the insurance market was the one undertaken by Japanese
Sumitomo Life late last year. The insurer officially set its foot in the
Vietnamese market after spending 340 million dollars to buy 18 percent of Bao
Viet’s stakes from HSBC to become the strategic shareholder in the biggest
insurance group in Vietnam.
Earlier this year, Italian Generali announced the plan to increase its chartered
capital to VND800 billion to scale up its business in Vietnam. Bao Viet has got
the nod from the watchdog agency to increase its chartered capital from VND1,500
billion to VND2 trillion. Meanwhile, AIA Vietnam said one of its important tasks
is to increase the chartered capital by 30 million dollars in 2013 to reach 100
million dollars.
…even though the market is not attractive enough
A report showed that less than 10 percent of the Vietnamese population has taken
life insurance policies. Meanwhile, the annual revenue from non-life insurance
is roughly one billion dollars. These are really modest figures for a developing
economy like Vietnam.
Insurers have experienced a difficult year 2012, having reported the growth rate
of 11 percent – a modest growth rate in a market with the high natural growth.
Prior to that, the sector always obtained the high 18-20 percent annual growth
rates in the years before.
Some insurers have released the finance reports, showing the satisfactory
business result in 2011. However, analysts say these do not reflect the common
situation of the insurance industry.
According to the Ministry of Finance, the total insurance premiums in 2012 was
VND40,591 billion, up by 11 percent over 2011. This included VND22,675 billion
worth of non-life insurance premiums and VND17,916 billion worth of life
insurance premiums.
Forecasting about the insurance market performance in 2013, the Vietnam
Insurance Association has given a modest growth rate of 12 percent.
Nevertheless, big guys still have arrived in Vietnam. Generali Vietnam’s CEO
Simon Lam said there are still great opportunities in Vietnam to be exploited.
Foreign investors would have more opportunities to jump into the insurance
sector when state owned economic enterprises have to withdraw their capital from
insurance companies by 2015, and focus on their core business fields as per the
request by the government.
SGTT