Insurance investment funds await for opportunities

Philip Hampden Smith, deputy managing director for Manulife group’s Asia Pacific Region said in a statement that in few next years, Manulife will very succeed in selling investment insurance on Vietnam’s market. The group became the pioneer in many fields in the world and particularly in unit link business in Indonesia. Also, the group was the first insurer in Malaysia to set up a fund management company.

Although manpower and materials are available for establishing a fund management firm, most enterprises without fund managing unites in Vietnam till this time believed that they have to wait for one or two more years. Vietnamese market has not been really boiled so life insurers still are very hesitant in entering the game of investment funds.

Takashi Fujii, Chief Executive Officer (CEO) of Dai-ichi Life Vietnam spoke, the fund management company is the general model of life insurers all over the world. Dai-ichi Life Vietnam is preparing full of infrastructures to become a fund manager. However, factually, Vietnam’s finance market, especially the stock market, currently has not yet been attractive as for this kind of investment.

After 10 years of development, according to the Insurance Monitoring and Supervision Department, to date the insurance firms have created a list of products to ensure their revenue growth in different socio-economic contexts. Though some firms launched the Unit Link Business product, customers still ignored. general link insurance product continues being favourite on Vietnam’s insurance market. Few cancelled the plan of launching the unit link business to the market because they could not forecast a sustainable trend for the stock market. In 2009, when the finance market was gloomy, customers preferred joining the banking insurance product (embedded with savings and protection).

According to specialists, in this period, the birth of unit link business products plays the positive role in founding the development of insurance market in future thanks to the sustainability and good growth of stock market. These could be products for the near future when people are familiar with the combination between insurance and investment on the stock market and accept potential risks of investment results. As the finance market blossoms, customers are expected to shift to use investment associated insurance products.

In Vietnam, there are the fund management companies namely Prudential, Manulife, Bao Viet Fund (BVF) and others. Following units are waiting for new time, may be after 2010 according to WTO roadmap, to form their own fund management companies. Under WTO commitments, after five years from joining the organisation, Vietnam will allow the setting up of wholly foreign invested fund management enterprises. This time is expected to see new milestone on Vietnam’s insurance market.

In fact, Vietnam till now has not had any regulation on the operation of open funds; hence, life insurers are afraid of setting up fund management companies at this time. After knowing the WTO commitment roadmap thoroughly, insurers will have to calculate more carefully before establishing fund management companies here.” a foreign life insurer’s general director shared.

The life insurers, that plan to set up fund management units in Vietnam, need a time for their holding companies to seek special characteristics of Vietnam’s finance stock market.

In Vietnam, Manulife operates in two fields of insurance business and asset management. Being an insurer, Manulife has to invest the source of money raised from customers to realise its commitments in contracts. Manulife’s investment covers Asia as well as Vietnam. Quoting Philip Hampden Smith, his group’s presence in Vietnam will contribute to the development of the country’s stock as well as bond market.

Having a fund management firm is the good condition for life insurance firms to clarify investment efficiency. Manulife is considering the establishment of investment link insurance products in Vietnam. Absolutely in near future, we [Manulife] will found our fund management firm, he confirmed.

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Tags: Vietnam insurance industry, Vietnam insurance sector