International insurers fortify local presence

Local insurers like BMI are being eyed on by foreign shareholders, Photo: Le Toan

Just a few days ago, leading pan-Asian insurer FWD Group confirmed securing regulatory approval to proceed with the previously announced acquisition of Vietcombank-Cardif Life Insurance (VCLI), a joint venture between leading state-owned Vietcombank and French partner BNP Paribas Cardif.

The tie-up, rumoured to be worth anywhere between $400 million and $1 billion, is slated to strengthen FWD’s presence in Vietnam as well as underline the company’s continued confidence in the long-term growth potential of Vietnam. FWD is looking forward to officially welcoming the newly-acquired business’ employees, business partners, and customers in due course.

“I’m thrilled that we can finally begin this new exciting chapter and I’d like to personally welcome all the staff, salesforce, and customers of VCLI to FWD and look forward to working together to grow our business, bring fresh and positive experiences to our customers, and ultimately change the way people feel about insurance,” said FWD Group CEO Huynh Thanh Phong.

In another case, German-based HDI Global SE expanded its presence in PetroVietnam Insurance (PVI) in last December by pouring $5.5 million to raise its stakes from 41.05 to 42.78 per cent. Funderburk Lighthouse Ltd., is another foreign major shareholder of PVI with 11.73 per cent.

“We are the clear winner of the industrial insurance race in Vietnam, which will be a contributing factor of our expansion to the non-life insurance sector,” said Jens H. Wohlthat, chairman of the board at PVI Holdings cum member of HDI Global SE’s board of directors. “Investing in PVI is our trump card to keep one step ahead of competitors in the Southeast Asian market as well as in other countries,” he added.

Notably, State Capital Investment Corporation (SCIC) recently reaffirmed its ambition of divesting 85 state-owned enterprises, including local insurers such as BVH and Bao Minh Insurance (BMI), among others.

A few months ago, Japan-headquartered insurer Sumitomo Life registered to purchase more than 41.4 million shares of local insurance and finance group Bao Viet Holdings (BVH). The additional investment of VND4 trillion ($174 million) has lifted Sumitomo’s ownership at BVH to 22.09 per cent.

Even though BMI’s foreign ownership is capped at 49 per cent, its two major shareholders – AXA from France and Firstland from Hong Kong – are expressing their appetite about buying more stakes in BMI.

With SCIC’s strong will in speeding up equitisation, BVH and BMI could catch the eyes of overseas groups that wish to hold all the aces in Vietnam’s insurance sector, such as Prudential.

As a subsidiary of Prudential Plc. – a leading global financial group headquartered in the United Kingdom – Prudential Vietnam has been operating here for over 20 years. Prudential Vietnam offers products focused on protection, savings, and investment via its nationwide network of partnerships with eight reputable banks and 366 hospitals and clinics as of March.

South Korean insurer Hanwha Life, meanwhile, increased its charter capital to $233 million in 2018 – a bold move demonstrating its long-term development in the country.

Previously, Mirae Asset Life Insurance – another South Korean business – also increased its footprint in the local insurance sector by acquiring a 50-per-cent stake in Prevoir Vietnam Life Insurance, marking its first venture into the Southeast Asian country’s market.

Other international players have entered ventures in Vietnam, with Samsung Fire & Marine acquiring a 20-per-cent stake in PJICO, the insurance arm of Petrolimex. British insurer Aviva and Canadian counterpart Sun Life have also bought out the entirety of their Vietnamese joint ventures.

As the Vietnamese market is full of potential, Sun Life has continued to increase charter capital from VND2.57 trillion ($109.37 million) to VND5.07 trillion ($215.76 million). This has enhanced its financial capacity to invest in a leading client experience through digitalisation and investment in distribution, such as a partnership with TPBank.

Vietnam is home to 17 service providers in life insurance businesses and 29 service providers in non-life insurance. As of March, there were five insurance companies with the charter capital over VND5 trillion ($212.83 million) while FWD is the only insurer surpassing VND10 trillion ($425.66 million).

Vietnam has set the minimum capital requirement of companies that offer life insurance products at VND400 billion ($17 million) and non-life insurance products at VND1 trillion ($43.47million). Therefore, the recent moves of international companies to inject more capital into the Vietnamese market reflect the attractiveness of the market as well as their preparation for a marathon.

According to the General Statistics Office, despite the impact of the pandemic, Vietnam’s insurance business activities reached record highs in the first quarter of 2020 with an estimated increase of 16 per cent compared to the same period last year. Life insurance premium revenue increased by 21 per cent, while non-life insurance rose by 8 per cent in the given period.