Asian Insurance Focus: Vietnam & Thailand

The Knowledge Centre (Sheffield Haworth), September 2008, Pages: 345

Globalization is the key source which is bringing about an "irreversible transformation" in the Asian insurance market. Asia is becoming an important growth engine for global insurers due to the changing socio-economic dynamics. According to a latest research report from HSBC, in order to be long-term winners, life insurance companies in Asia need to diversify their income streams such that at least 25% of earnings are sourced overseas, while maintaining a dominant position in the domestic market.

Many Asian financial services companies have exceeded the overall growth rate for their domestic economies and are therefore looking to expand globally or invest their shares in new markets. Another trend predicted by PwC, was that intra-Asian trade would continue to increase, particularly as the West decreased its investment in this region. The increasing wealth and educational development in Asia, has built a good foundation for the development of financial services.

Vietnam has become one of the fastest-growing economies in the world, averaging around 8% annual gross domestic product (GDP) growth from 1990 to 1997 and 6.5% from 1998-2003. GDP in the country rose 8.5 percent in 2007 and has increased by over 50 percent since 2001. From 2004 to 2007, GDP grew over 8% annually. Vietnam's inflation rate, as measured by the consumer price index, which stood at an annual rate of over 300% in 1987, was below 4% from 1997 (except in 1998 when it rose to 9.2%) until 2003. However, in 2004 the consumer price index increased to 9.5%, dropping in 2006 to 7.5%. It is due to these remarkable developments that Vietnam has caught the attention of foreign insurers looking for an alternative to the twin super economies of India and China.

Thailand is the 2nd largest economy in Southeast Asia, after Indonesia, a position it has held for many years. Thailand ranks midway in the wealth spread in South East Asia as its 4th richest nation per capita, after Singapore, Brunei, and Malaysia. It is also an anchor economy for the neighbouring least developed countries of Laos, Burma, and Cambodia. Its economy is expected to grow by 4.2 % in 2007 from 5 % in 2006. The Thai economy in 2008 is forecasted to grow at 5.6% (in the forecasted range of 5.0-6.0%).

SECTION I: INSURANCE – AN OVERVIEW
1. INSURANCE - AN INTRODUCTION
1.1 KEY RATIOS/TERMS
1.2 LIFE INSURANCE
1.2.1 Types of Life Insurance Products
1.2.2 Tax and Life Insurance
1.3 GENERAL / NON-LIFE INSURANCE
1.3.1 Types of Non-Life Insurance Products
1.4 TYPES OF INSURANCE COMPANIES

SECTION II: ASIAN INSURANCE SECTOR
1. MARKET OVERVIEW
1.1 ASIAN INSURANCE MARKET SIZE
1.2 ASIAN LIFE INSURANCE MARKET
1.3 ASIAN NON-LIFE INSURANCE MARKET

2. MAJOR ISSUES, TRENDS AND OPPORTUNITIES

3. PORTER'S 5 FORCES ANALYSIS
3.1 THREAT OF NEW ENTRANTS / ENTRY BARRIERS
3.2 SUPPLIER POWER
3.3 BUYER POWER
3.4 AVAILABILITY OF SUBSTITUTES
3.5 COMPETITIVE / INTERNAL RIVALRY

4. COMPETITIVE LANDSCAPE

SECTION III: VIETNAM INSURANCE SECTOR

1. VIETNAM
1.1 VIETNAMESE ECONOMY
1.2 GOVERNMENT POLICIES

2. INSURANCE SECTOR
2.1 MARKET OVERVIEW

2.2 MARKET SEGMENTATION & PERFORMANCE
2.2.1 Vietnamese Insurance Market
2.2.1.1 Life Insurance Sector
2.2.1.2 Non-Life Insurance Sector

2.3 DRIVING FACTORS
2.3.1 Recent catalysts
2.3.2 Young and vibrant population
2.3.3 Emerging middles class
2.3.4 Literacy rate
2.3.5 War of talent
2.3.6 Increasing foreign direct investment (FDI)

2.4 TRENDS, ISSUES AND OPPORTUNITIES – AN ANALYSIS
2.4.1 Foreign investors targeting Vietnamese Insurance Sector
2.4.2 Entry in WTO
2.4.3 Foreign companies trying to capture Vietnamese Market
2.4.4 Traditional mindset of the people – Insurance still in a nascent stage
2.4.5 Inadequate basic infrastructure and support
2.4.6 Underselling to capture market
2.4.7 Setting up of a national export-credit insurance organisation
2.4.8 Underlying opportunity for life insurance policies – need for risk prevention
2.4.9 Entry of foreign players & staffing concerns
2.4.10 Historical economic growth trends
2.4.11 Establishment of the Laos-Vietnam Insurance Joint Venture (LVI)
2.4.12 Factors driving investment decisions
2.4.13 Transformation at Bao Viet
2.4.14 HSBC enters strategic relationship with top Vietnam insurer, Bao Viet

2.5 GOVERNMENT REGULATIONS

2.6 COMPETITIVE LANDSCAPE & MARKET SHARE
2.6.1 Company Profiles
2.6.1.1 ACE Life Insurance Co., Ltd.
2.6.1.2 AIG General Insurance (Vietnam) Company Limited
2.6.1.3 Bao Viet Holdings
2.6.1.4 Bao Minh
2.6.1.5 Groupama/GAN
2.6.1.6 Nipponkoa Insurance Co., Ltd.
2.6.1.7 Prudential Vietnam Assurance
2.6.1.8 Petrolimex Joint Stock Insurance Company (PJICO)
2.6.1.9 Petrovietnam Insurance Company (PVIC)
2.6.1.10 QBE Insurance (Vietnam) Company Limited

SECTION IV: THAILAND INSURANCE SECTOR

1. THAILAND
1.1. THAI ECONOMY
1.2. GOVERNMENT POLICIES

2. THAI INSURANCE SECTOR

2.1. MARKET OVERVIEW

2.2. MARKET PERFORMANCE & FORECAST
2.2.1. Thailand Insurance Market
2.2.1.1. Thailand – Life Insurance Market
2.2.1.2. Thailand – Non-Life Market

2.3. DRIVING FACTORS
2.3.1. Recent Reforms
2.3.2. M&A or transfer of the business of an Insurance Company
2.3.3. Thai Corporate Finance Legislation
2.3.4. Role of Bancassurance
2.3.5. Recent Regulatory Developments
2.3.6. Insurance Commission replaced Department of Insurance

2.4. TRENDS, ISSUES AND OPPORTUNITIES – AN ANALYSIS
2.4.1. Insurance M&A likely to drop
2.4.2. Pending Legislations
2.4.3. Implications for Foreign Insurers
2.4.4. Skills development remains a key
2.4.5. Issues in Health Insurance Systems in Thailand

2.5. GOVERNMENT REGULATIONS

2.6. COMPETITIVE LANDSCAPE
2.6.1.Life Insurance
2.6.1.1. Life Insurance Renewal Market
2.6.1.2. Single Premium Market
2.6.2.Non-Life Insurance Market
2.6.2.1. Fire Insurance Market
2.6.2.2. Marine and Transportation Market
2.6.2.3. Cargo & Hull Market
2.6.2.4. Automobile Sector
2.6.2.5. Miscellaneous Insurance
2.6.2.6. Industrial All Risks Insurance
2.6.2.7. Public Liability Insurance
2.6.2.8. Engineering Insurance
2.6.2.9. Aviation Insurance
2.6.2.10. Health Insurance
2.6.2.11. Personal Accident Insurance
2.6.2.12. Other Insurance
2.6.3.Company Profiles
2.6.3.1. American International Assurance company (AIA), Thailand
2.6.3.2. ACE INA Overseas Insurance Company Limited
2.6.3.3. Ayudhya Insurance Public Company Limited
2.6.3.4. Ayudhya Allianz C.P. Life Public Company Limited
2.6.3.5. Bangkok Insurance Public Company Limited
2.6.3.6. Bangkok Union Insurance
2.6.3.7. Charan Insurance
2.6.3.8. Deves Insurance
2.6.3.9. ING Life Limited
2.6.3.10. Indara Insurance
2.6.3.11. Manulife Insurance (Thailand) Public Company Limited
2.6.3.12. MSIG Insurance
2.6.3.13. QBE Insurance (Thailand) Company Limited
2.6.3.14. Sri Muang Insurance
2.6.3.15. The Viriyah Insurance Co., Ltd.

List of Charts
Chart 1: Macroeconomic Data: Population (mil.) vs. Nominal GDP ($ billions): 2002-2011
Chart 2: Macroeconomic Data: GDP per capital ($mil.) vs. Real GDP Growth (%): 2002-2011
Chart 3: Vietnam Insurance Market ($million): 2000-2007e
Chart 4: Vietnam Insurance Market Forecast ($million): 2007e-2011f
Chart 5: Vietnam Life Insurance Market Value ($million): 2000-2007e
Chart 6: Vietnam Life Insurance Market Value Forecast ($million): 2007e-2011f
Chart 7: Vietnam Non-Life Insurance Market Value ($million): 2000-2007e
Chart 8: Vietnam Non-Life Insurance Market Value Forecast ($million): 2007e-2011f
Chart 9: Market Share of Life Insurance Companies in Vietnam
Chart 10: Market Share of Non-Life Insurance Companies in Vietnam
Chart 11: Macroeconomic Trends: Population (mil.) vs. Nominal GDP ($ bil.) – 2002-2011f
Chart 12: Macroeconomic Trends: GDP per capital ($ bil.) vs. Real GDP Growth (%) – 2003-2011f
Chart 13: Growth Trends: Inflation (2002-2008f)
Chart 14: Key Economic Indicators Forecast (2007-2012f)
Chart 15: Growth Trend Comparison: GDP Growth vs. Insurance Growth (%) – 2000-2011f
Chart 16: Thailand Insurance Market Value ($billion): 2000-2007
Chart 17: Thailand Insurance Market Value Forecast ($million): 2007-2011f
Chart 18: Insurance Density: Premiums Per Capita in USD
Chart 19: Insurance Premium in % of GDP (2001-2011f)
Chart 20: Thailand Insurance Market: Segment Share 2007
Chart 21: Growth Trend of Life Insurance and Non-Life Insurance ($Million): 2000-2011f
Chart 22: Thailand Life Insurance Market Value ($million): 2000-2007
Chart 23: Thailand Life Insurance Market Value Forecast ($million): 2007-2011f
Chart 24: Thailand Non-Life Insurance Market Value ($million): 2000-2007
Chart 25: Thailand Non-Life Insurance Market Value Forecast ($million): 2007-2011f
Chart 26: Market Segmentation of Non-Life Insurance (%): 2007
Chart 27: Market Segmentation of Non-Life Companies by Ownership 2007 (%)
Chart 28: Comparison of Direct Premiums of Non - Life Insurance Business (2007 & 2006)
Chart 29: Direct Premium per Insurance Policy for 2007-2006 (Baht)
Chart 30: Comparison of Sum Insured Per Premium of Non - Life Insurance Business Segments (2007 & 2006)
Chart 31: Loss Ratio of Non - Life Insurance Business (2007)
Chart 32: Market Share of Top Life Insurance Companies by Total Premium in 2007 (%)
Chart 33: Life Insurance First Year Premium Market Segment in 2007 by Top Companies (%)
Chart 24: Life Insurance Premium Renewal (million Baht) and Growth (%) Year on Year for Top Companies (2006-2007)
Chart 35: Life Insurance Renewal Market Share of Top Companies in 2007 (%)
Chart 36: Single Insurance Premium Company Segmentation 2007
Chart 37: Fire Insurance Companies – Market Share (%): 2007
Chart 38: Marine & Transport Insurance Segment Share (%): 2007
Chart 39: Cargo and Hull Market: Direct Premium Share (%) in 2006-2007
Chart 40: Marine and Transportation Companies: Markey Share by Direct Premium (Unit: 1,000 Baht)
Chart 41: Market Share of Automobile Insurance Sub Sector 2007
Chart 42: Automobile Insurance Top Companies – Market Share by Direct Premium (%) – 2007
Chart 43: Market Share of Miscellaneous Non-Life Sector (%) – 2007
Chart 44: Top Miscellaneous Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007
Chart 45: Top Industrial All Risk Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007
Chart 46: Top Public Liability Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007
Chart 47: Top Engineering Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007
Chart 48: Top Aviation Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007
Chart 49: Top Health Insurance Companies: Market Share by Direct Premium (%) – 2007
Chart 50: Top Personal Accident Insurance Companies: Market Share by Direct Premium (%) – 2007
Chart 51: Top Other Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007

List of Tables
Table 1: Macroeconomic Data: Population (mil.) vs. Nominal GDP ($ billions): 2002-2011
Table 2: Macroeconomic Data: GDP per capital ($mil.) vs. Real GDP Growth (%): 2002-2011
Table 3: Vietnam Insurance Market ($million): 2000-2007e
Table 4: Vietnam Insurance Market Forecast ($million): 2007e-2011f
Table 5: Vietnam Life Insurance Market Value ($million): 2000-2007e
Table 6: Vietnam Life Insurance Market Value Forecast ($million): 2007e-2011f
Table 7: Vietnam Non-Life Insurance Market Value ($million): 2000-2007e
Table 8: Vietnam Life Insurance Market Value Forecast ($million): 2007e-2011
Table 9: Macroeconomic Trends: Population (mil.) vs. Nominal GDP ($ bil.) – 2002-2011f
Table 10: Macroeconomic Trends: GDP per capital ($ bil.) vs. Real GDP Growth (%) – 2003-2011f
Table 11: Growth Trends: Inflation (2002-2008f)
Table 12: Key Economic Indicators Forecast – 2007-2012f
Table 13: Growth Trend Comparison: GDP Growth vs. Insurance Growth (%) – 2000-2011
Table 14: Thailand Insurance Market Value ($million): 2000-2007
Table 15: Thailand Insurance Market Value Forecast ($million): 2007-2011f
Table 16: Insurance Density: Premiums Per Capita in USD
Table 17: Insurance Premium in % of GDP (2001-2011f)
Table18: Growth Trend of Life Insurance and Non-Life Insurance ($Million): 2000-2011f
Table 19: Thailand Life Insurance Market Value ($million): 2000-2007
Table 20: Thailand Life Insurance Market Value Forecast ($million): 2007-2011f
Table 21: Thailand Non-Life Insurance Market Value ($million): 2000-2007
Table 22: Thailand Non-Life Insurance Market Value Forecast ($million): 2007-2011f
Table 23: Thailand Insurance Sector: Projections of Macroeconomic Drivers (2006-2010f)
Table 24: Market Share of Top Players in Life Insurance Sector: Comparison between 2006 & 2007 (Million Baht) and their Growth (%)
Table 25: Life Insurance Total Premium Growth Year on Year by Company 2006-2007 (%)
Table 26: Life Insurance Market Growth by First Year Premium of Top Companies: Comparison between 2006 & 2007 (mn Baht)
Table 27: Life Insurance Market Growth by First Year Premium of Top Companies: Comparison between 2006 & 2007 (%)
Table 28: Life Insurance Premium Renewal (million Baht) and Growth (%) Year on Year for Top Companies (2006-2007)
Table 29: Life Insurance Renewal Market Share of Top Companies in 2007 (mn Baht)
Table 30: Life Insurance Single Premium Market Share of Top Companies in 2007 (mn Baht & % growth)
Table 31: Loss Ratio of Non - Life Insurance Business (2007)
Table 32: Marine and Transportation Companies: Markey Share by Direct Premium (Unit: 1,000 Baht)
Table 33: Automobile Insurance Top companies by Direct Premium (2007)
Table 34: Top Miscellaneous Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007
Table 35: Top Industrial All Risk Non-Life Insurance Companies: Market Share by Direct Premium – 2007
Table 36: Top Public Liability Non-Life Insurance Companies: Market Share by Direct Premium – 2007
Table 37: Top Engineering Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007
Table 38: Top Aviation Non-Life Insurance Companies: Market Share by Direct Premium – 2007
Table 39: Top Health Insurance Companies: Market Share by Direct Premium – 2007
Table 40: Top Personal Accident Insurance Companies: Market Share by Direct Premium – 2007
Table 41: Top Other Non-Life Insurance Companies: Market Share by Direct Premium – 2007

Market Performance:
Between 2000 and 2007, Vietnamese life insurance sector increased from $51.12 million to $586.24 million, CAGR growth of 35.65% during this period. We forecast that the life insurance market in Vietnam would grow at a CAGR of 10.71% and an annual average growth rate of 13.21% between 2007 and 2011. From $596.24 million in 2007, the market will increase by approximately $388 million and reach $975.21 million by the end of 2011.

Within a span of 7 years (2000-2007), Thai Insurance Sector has experienced a growth of 191% currently valuated at $9,434.72 million. We predict the overall market size will increase by 72.5% further and is expected to touch the highs of $13,012.75 million by 2011.

Competitive Landscape:
Some of the largest US, Japanese and French insurers focus exclusively on their home markets. However, multi-national groups who have ‘international’ businesses almost invariably have operations in the Asia-Pacific region, if only because of the size and growth potential of many of the national markets.

Under the Life Insurance Sector, AIG is the biggest in Asia, in terms of country presence and premiums. ING comes second by premiums. However, globally, Prudential tops the list, being the most dependent on the region.

Among the non-life insurance cos., regional player Mitsui Sumitomo, leads the property and casualty side.

Major Driving Factors:
- Globalization
- Deregulation which is opening up the markets
- Opening up of insurance market for foreign investments
- Cheaper and more effective distribution channels
- Increasing foreign direct investments
- Vietnam’s entry into the World Trade Organisation (WTO)
- Ongoing industry consolidation
- Increment in the policy holder firms
- Boost in Merger and Acquisitions activities
- Changing socio-economic dynamics
- Market offering wider margins
- Unique combination of size, age profile and growth prospects
- Many more..

Major Issues, Trends and Opportunities
- Lack of good quality, high yield long term investments in local currency
- Limited availability of products and its limited outreach
- Local players lack both hard and soft capacity to be competitive
- Limited understanding of products
- Continuous increment in intra-Asian trade
- Need for diversification in the income streams
- Chance to compete directly with financial services companies
- Focus on paying out more in claims
- Drastic increment in marine and cargo insurance sectors
- Developments in countries, who were closely regulated by their government
- Lack of proper agent quality
- Change in the distribution method
- Difficulties in building networks and brands
- Risk management concerns in insurance companies
- Global Expansion
- Transformation in the organizational system to win customer loyalty
- Weak equity markets
- Impact of sub-prime
- Regulatory and market obstacles in the emerging markets

Topics covered in the report
- Overview of the Asian Insurance Sector
- Trends analysis of the Asian economy
- Asia’s economic presence as compared to other countries
- Economic performance of Vietnam
- Past and present scenario of Vietnamese Insurance Market & Future Outlook
- Driving factors for Vietnamese Insurance Market
- Trend analysis of Vietnamese economy & macroeconomic factors contributing to the growth of the sector
- Government strategic initiatives to strengthen Insurance Market
- Competitive Landscape & Market Share of foreign and domestic players
- Company profiles of top players
- Thai economy, its performance, future outlook for 2008-09
- Government’s economic policies, macroeconomic factors, trends and analysis
- Market performance and forecast for Thai Insurance Sector between 2000, 2007 and 2011
- Driving factors for Thai Insurance Market
- Major Trends analysis of the market
- Competitive landscape & market share of companies in life and non-life insurance sector
- Company profiles of top players in life and non-life insurance sector

- ACE Life Insurance Co., Ltd.
- AIG General Insurance (Vietnam) Company Limited
- Bao Viet Holdings
- Bao Minh
- Groupama/GAN
- Nipponkoa Insurance Co., Ltd.
- Prudential Vietnam Assurance
- Petrolimex Joint Stock Insurance Company (PJICO)
- Petrovietnam Insurance Company (PVIC)
- QBE Insurance (Vietnam) Company Limited
- American International Assurance company (AIA), Thailand

- ACE INA Overseas Insurance Company Limited

- Ayudhya Insurance Public Company Limited

- Ayudhya Allianz C.P. Life Public Company Limited

- Bangkok Insurance Public Company Limited
- Bangkok Union Insurance

- Charan Insurance

- Deves Insurance

- ING Life Limited

- Indara Insurance

- Manulife Insurance (Thailand) Public Company Limited

- MSIG Insurance

- QBE Insurance (Thailand) Company Limited

- Sri Muang Insurance

- The Viriyah Insurance Co., Ltd.

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