Insurers rushing to seek strategic partners

Insurance companies are on the lookout for strategic partners to improve their competitiveness. However, it is not easy to find partners, who can be both strategic shareholders and big clients in the post-economic downturn period.

Vien Dong Assurance Corporation (VASS) has announced its two strategic partners, Dong Tam Joint Stock Corporation and Viet Tin Investment and Trade Joint Stock Company.

In reality, VASS has been close to Dong Tam group for the last several years. Now it has become the official strategic shareholder, Dong Tam will use non-insurance products provided by VASS. Meanwhile, VASS can also enjoy benefits after shaking hands with Dong Tam, one of the biggest construction material producers and real estate developers with very large network.

To date, the two new strategic partners have yet to purchase all the shares VASS is issuing. However, VASS Chairman Tran Van Ngoc still believes in the success of the share issue, because insurance remains a good place for investors.

Having been listed on the exchange for the last two years and backed by the national oil and gas giant PetroVietnam, PetroVietnam Insurance (PVI) is still looking for strategic partners. Bui Van Thuan, PVI’s general director said that the company is still negotiating with investors. He said that one of its strictest criteria is a healthy financial capability.

Bao Viet group once had two powerful strategic shareholders, Hong Kong and Shanghai Banking Corporation (HSBC) and the Vietnam Shipbuilding Industry Group (Vinashin) which has hundreds of member companies. However, due to financial difficulties, Vinashin has withdrawn from Bao Viet to concentrate on its main business field of building ships. The State Capital Investment Corporation (SCIC) has replaced Vinashin to become a shareholder of Bao Viet. The insurance group has been indisposed to accept SCIC as the new strategic parner.

Sources said that Agribank Insurance Company (ABIC) has reached an agreement with Swiss Re on cooperating to design agriculture insurance products. In the long term, ABIC aims to cooperate with Swiss Re as a strategic partner and it has every reason to do so, because cooperation between an insurer and reinsurer will be a good choice.

According to the Vietnam Insurance Association, in 2008, the majority of insurance companies made a profit and were able to offset potential losses with financial investments.

However, analysts believe that shares of insurance companies will still attract investors, including foreign ones. Vietnam’s economy continues to enjoy a high growth rate in recent years, while insurance premiums remain modest.

This means there are still a lot of opportunities. Besides, foreign insurers may think that it would be better to purchase stakes of Vietnamese insurers than setting up new companies in Vietnam with very high market admission costs.

VietNamNet/DTCK

Tags: Vietnam business news, Vietnam insurance