Institutions join with domestic insurers

October 03, 2021 | 14:00
High-quality German funds are channelling into Vietnam’s insurance market, offering different value propositions in the non-life insurance industry.
Institutions join with domestic insurers
Institutions join with domestic insurers

Germany-headquartered financial institution HDI Global SE has bought 4.59 million shares in PVI, Vietnam’s largest non-life insurance company. Transactions were made from August 19 to September 15.

After the agreement, HDI Global raised its foreign ownership ratio of PVI from more than 80.5 million shares to more than 85.1 million shares, equivalent to 38.07 per cent.

HDI Global SE has been one of the leading multinational insurers offering a broad and needs-based range of insurance solutions and accompanying services for decades. The company is also part of Talanx Group, the third-largest German insurance group in terms of premium income and one of the largest in Europe.

Data compiled by the Insurance Association of Vietnam noted that PVI Insurance led with 15.4 per cent of the market share in H1/2021, followed by Bao Viet in second place with 15.3 per cent. A representative from PVI confirmed to VIR that its goal is to become the leading insurance company in Vietnam and across Southeast Asia.

Meanwhile, in mid-August, International Finance Corporation (IFC), along with IFC Emerging Asia Fund and IFC Financial Institutions Growth Fund acquired 6.29 per cent stake of PVI Holdings from HDI Global SE. The investment will help PVI Holdings strengthen its position in Vietnam and support its expansion across Southeast Asia.

HDI Global plans to develop direct insurance in Southeast Asia through PVI Insurance. Meanwhile, IFC is planning to cooperate with HDI Global to promote the development of PVI’s corporate governance, risk management, and compliance policies and to adjust governance policies to ensure they are in line with international standards.

“HDI Global and IFC aim to strengthen PVI’s position as the leading insurance company providing solutions in the commercial and industrial sectors of Vietnam,” a PVI representative noted.

Another German insurer, Allianz Global Investors, is also seeking to enter a new Asian market, following its success in Singapore, Hong Kong, and Taiwan.

According to the group, the asset management business will complement its parent group’s existing insurance operations in the country.

Tobias Pross, CEO of Allianz Global Investors said, “Asia is a growth market for us. While we have a long history of success in the region, we continue to look for opportunities to further expand our presence and grow our client base. We see Southeast Asia as the next growth engine besides China, backed by the solid presence of Allianz SE in Indonesia, the proposed acquisition is a confident stride to accelerate our entry into this fast-growing market.”

In July, AllianzGI acquired PT RHB Asset Management Indonesia from RHB Banking Group, one of the country’s major banking behemoths, at an undisclosed cost.

Vietnam might be the prime target for Allianz. In 2019, the German insurer has embarked on its next stage in Vietnam’s general insurance market with a digital joint venture partnership with FPT Group.

Accordingly, Allianz would provide expertise and advice on best practices in insurance product customisation, financial technology, and asset management in Vietnam.

Vietnam is one of the countries with the highest growth rate of insurance premiums in the world, with an average annual growth rate of over 9.3 per cent. Although continuously recording high growth, Vietnam has a relatively low market penetration rate of only 2.7 per cent by 2019 (non-life insurance is 0.8 per cent, life insurance is 1.9 per cent), much lower than other countries in the region (averagely at 3.3 per cent).

The non-life insurance industry will quickly return to the average growth rate of 15 per cent as in the previous period, while life insurance will maintain a high growth rate of 25-30 per cent annually.

Market watchdogs are looking for further overseas funds, particularly from Germany, to tap into this dynamic insurance market in Vietnam for long-term growth potential. Moreover, the ultra-low interest rate environment in Europe and Germany in particular is pushing foreign capital into Vietnam looking for higher yield.

By Luu Huong

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