South Korea's Mirae Asset Life Insurance has recently announced that it has officially replaced Previor Vietnam after the former completed the final step in the contribution of 50% stake to Previor Vietnam, marking its foray into the rapidly growing Southeast Asian financial market.
Vietnam is one of the attractive insurance markets in Asia.
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Aviva Group, a multinational insurance company headquartered in London, last year completed the purchase of a 50% stake in VietinBank Aviva (Aviva Vietnam) from Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank).
Earlier, Sun Life Assurance Company from Canada also 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% of foreign capital.
Industry insiders said that Vietnam is one of the attractive markets in Asia so that foreign finance and insurance groups have invested strongly in their Vietnamese businesses.
According to the Vietnam Insurance Association (VIS), up to 18 companies are active in Vietnam's life insurance market. Except for Bao Viet Life Insurance which is a Vietnamese business, the remaining ones are joint ventures and wholly foreign-owned insurers, including the presence of the world's leading finance and insurance groups.
However, opportunities for M&A deals in Vietnam's insurance market are not many because the world's major insurers do not want to give up their opportunities in this market.
Meanwhile, there are still businesses waiting to officially enter the market through M&A deals as it is the fastest way for them to join the potential market.
Among the names rumored to have officially stepped into the Vietnamese market during the past years, Samsung Life Insurance Co Ltd was mentioned the most. So far, the most recent move of this company is the decision to extend the license to locate a representative office in Vietnam till April 2023, and continue doing market research to promote business decisions in the Vietnamese market.
Benefits from foreigners
The participation of foreign investors in Vietnam's insurance market will develop the market while enriching domestic insurers with experience and governance, experts said.
According to a report of Bao Viet Securities Company (BVSC) on Vietnam's insurance industry, the number of life insurance products in Vietnam rose from 100 in 2009 to 350.
BVSC also predicts that new products will continue to increase in the domestic insurance market.
Meanwhile, modern distribution models of the local insurance industry have also been gradually developing, thanks to the participation of foreign investors.
According to BVSC's report, the capital hike, with the participation of foreign investors, has helped domestic insurers enhance their insurance capacity through training, legal framework and operation of products.
Many insurers, such as Generali and Prudential, have recently decided to increase charter capital and enlarge business operation as they forecast the market will grow further next time.
Phung Ngoc Khanh, director of the Ministry of Finance's Insurance Supervisory Authority, said that Vietnam's insurance market has high potentials as the number of participants remains low while income and awareness of local people are rising.
The insurance industry is also expected to benefit from the country's projected GDP growth of more than 6% annually over the next three years.
It also has great potential as the country has one of the world's lowest life insurance penetration levels, at less than 1% of the GDP. The average insurance premiums in Vietnam stand at US$30, much lower than the global average of US$595 and Southeast Asia's US$74.
