Improvements set up insurers for new M&A deals

December 11, 2021 | 12:08
Deep-pocketed actors planning to get into mergers and acquisitions are placing a greater emphasis on Vietnam’s insurance, bolstered by fresh digital capabilities and a supportive legal framework.
Improvements set up insurers for new M&A deals
Improvements set up insurers for new M&A deals

Renowned domestic e-commerce player Tiki secured $258 million last month in a fundraising round headed by AIA Insurance Inc., as the e-commerce firm tries to grow into life insurance and prepares for an initial public offering in the United States.

Tiki founder and CEO Tran Ngoc Thai Son revealed that investors in the Series E round included UBS AG London Branch, Mirae Asset-Naver Asia Growth Fund, Taiwan Mobile Co., and current backer STIC GIGF Ltd. The fresh capital raises the company’s worth to close to $1 billion, Son shared.

In July, Tiki and AIA Vietnam announced the formation of the country’s first exclusive cooperation between a digital platform and a life insurer. Under the terms of the 10-year agreement, Tiki would offer life and health insurance options through its platform.

Meanwhile, Sumitomo Corporation from Japan was reported in September to have poured tens of millions of US dollars into Insmart – an insurtech joint venture between Vietnamese and Malaysian shareholders specialising in third-party administration and managed-care services. Insmart controls 60 per cent of the managed-care market in Vietnam.

“We are focused on pioneering a new benefits strategy, by giving employees the power to make personalised healthcare choices through our Papaya app, and employers the benefits of a corporate administration portal to manage all employee aspects,” said Hung Phan, the CEO and co-founder of Papaya.

In Phan’s view, the digital transformation efforts from incumbent insurers open many more opportunities for insurtech firms to partner with insurers.

“The key for insurtechs is to figure out their own strengths and how their products could complement insurers. In some areas, it might be better for the insurers to work directly with a partner via insurtech capabilities. But in other areas, insurers would still need to rely on digital-native companies to create a fully digital experience for customers,” he added.

Meanwhile, Medici, a healthtech and insurtech platform funded by leading venture capital firms in Southeast Asia, has completed its acquisition of FAD Insurance Distribution and Consulting JSC, an insurance distribution company founded by former deputy general director of Hanwha Life.

Yinglan Tan, general director of Insignia Ventures Partners, a strategic investor of Medici, said, “We believe in the potential for Vietnamese insurtechs to create value in this underpenetrated market. We have invested in several leading insurtech companies in Southeast Asia, and in Medici we see the key elements to become a pioneering insurtech company in Vietnam.”

Tech investment platform VinaCapital Ventures has poured an undisclosed sum in insurtech GlobalCare, which is providing solutions for the sales and administrative processes of insurance agencies and business partners selling non-life insurance policies.

GlobalCare’s distributors and agents include over 3,000 offline and online storefronts where consumers may buy a variety of insurance products, as well as one of the main ride-sharing platforms, which offer insurance coverage to its drivers and users.

Multi-industry corporation Bamboo Capital Group and its subsidiary BCG Financial JSC on December 2 received approval for acquisition of 80.64 per cent of shares of AAA Insurance JSC. AAA Insurance is a non-life insurance company with charter capital of about $48.9 million. The stake will be equivalent to Bamboo Capital’s capital contribution at a par value of $34.7 million.

AAA joined Insurance Australia Group, an international insurance corporation based in Sydney, in 2013. Before Bamboo Capital’s involvement, AAA Insurance’s shareholder structure included IAG International PTY Ltd., owning 80.47 per cent stake, and Eximbank, holding 5.28 per cent stake.

Besides AAA, there are a handful of insurance and reinsurance firms with a considerable number of shares owned by foreign investors, such as Bao Viet Holdings, PTI, BIC, Vinare, among others. Samsung Fire & Marine Insurance Co., Ltd. is also a foreign shareholder in PJICO, while HDI Global SE and IFC are among the major foreign stakeholders in PVI Holdings. Both PVI and BMI have lifted their foreign cap to 100 per cent.

Some overseas shareholders of Bao Minh Insurance and Bao Viet Holding, such as Chevalier International Holdings Ltd. and Sumitomo Life, have allegedly signalled their ambition of raising their ownership ratio, particularly when State Capital Investment Corporation divests its stake in these two firms at the end of this year.

The MoF’s proposed revision to the Law on Insurance Business, which is set to take effect in 2023, could establish a firm cornerstone for further international cooperation and insurtech.

Tri Duong, analyst at KIS Securities, said, “The draft would lay the foundation for the mass application of technology in the insurance sector and support the development of insurtech players. With the exclusion list of investment areas, insurers will have wider choices in investment as they are now allowed to invest overseas.”

By Celine Luu

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