Life insurance industry sees increasing M&A activity

July 01, 2017 | 14:53
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As an attractive industry in Vietnam, the life insurance market is luring a wide range of international investors.
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Recently, Mirae Asset Life Insurance, an insurer from South Korea, has signed an agreement to purchase 50 per cent of Prevoir Vietnam. Detailed information of the deal, such as the deal value, and the reasons why Prevoir Vietnam chose this partner, has not been revealed yet. However, it seems that the deal will open a new page for the French insurer, which now holds about 1 per cent of the market share in Vietnam.

Prevoir Vietnam was established in 2005 and it started to sell its first insurance products in Vietnam in 2006. It is a subsidiary of Groupe Prevoir, a French insurance firm, which now holds 91.55 per cent stake in Prevoir Vietnam, while the rest is held by Scor Global Vie.

Vietnam Post and the banking system are the two main distribution channels of the French insurer. However, after ending the exclusive cooperation with Vietnam Post, Prevoir Vietnam stopped selling insurance products through this channel, leaving the banking system its only distribution channel. Afterwards, Dai-ichi Vietnam, another insurer in the Vietnamese market, signed an exclusive contract with Vietnam Post.

Prevoir Vietnam used to develop its own agents, but failed. Currently, bancassurance (insurance distribution through banking system) is still its main distribution channel, as Prevoir Vietnam has teamed up with nearly ten banks. Many of them signed long-term exclusive contracts with Prevoir Vietnam.

Mirae Asset Life Insurance is a newbie on the Vietnamese insurance market, but in South Korea, it is a giant, ranking among the top five insurers by assets after it purchased PCA Life Insurance Co., Ltd., a subsidiary of London-based multinational life insurance and financial services company Prudential Plc.

This deal came as little surprise as the Vietnamese insurance market keeps luring in big financial corporations from around the world.

“M&A is the fastest way for this Asian investor to join the Vietnamese market,” an industry insider said.

Recently, M&A in the Vietnamese life insurance market has become quite popular. In April 2017, Aviva Group, a multinational insurance company headquartered in London, completed the purchase of a 50 per cent stake in VietinBank Aviva (Aviva Vietnam) from Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank).

At the end of August last year, Sun Life Assurance Company from Canada purchased the entirety of the stakes of PetroVietnam Insurance Corporation (PVI) in their affiliate PVI Sun Life Co., Ltd., renaming it Sun Life Vietnam Co., Ltd., with 100 per cent of foreign capital.

One of the reasons for the attractiveness of the Vietnamese life insurance market is its annual growth rate of about 20 per cent.

By the end of the first quarter of 2017, Bao Viet Insurance held 21.81 per cent of the market share. Next, Prudential’s market share was 19.68 per cent, Manulife 13.91 per cent, Dai-ichi Life Vietnam 13.44 per cent, AIA Vietnam 10.64 per cent, Generali Vietnam 7.33 per cent, Chubb Life 4 per cent, Hanwha Vietnam 2.98 per cent, BIDV MetLife 1.47 per cent, and Sunlife 1.09 per cent. Other small insurers held less than 1 per cent of the market in terms of revenue from first-time premium collection.

By By Ngoc Lan

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