Insurance Australia Group Ltd., (IAG) the Sydney-based insurer formed in 1925, agreed to buy a stake in AAA Assurance Corp., the Vietnamese insurer said.
IAG will hold 30 percent of AAA after the Ho Chi Minh City- based company issues new shares, Do Thi Kim Lien, chief executive officer and chairman of AAA, said yesterday by phone. The stake is valued at less than $20 million, IAG said in a statement to the Australian stock exchange, adding it has the option to raise its holding to 49 percent.
“Vietnam’s insurance market has just started so there are a lot of opportunities to explore,” Lien said.
IAG joins German insurer Talanx AG to tap the non-life insurance market in Vietnam that is growing at a 20 percent annual pace. Talanx in August agreed to buy a 25 percent stake in PVI Holdings for 1.9 trillion dong ($91 million) to seek a foothold in the Southeast Asian nation.
“A strategic priority for IAG is to boost its Asian footprint, with Vietnam identified as a target market,” Sydney- based Andrew Tubb, corporate affairs manager at IAG, said today in an e-mail in response to a Bloomberg News request to confirm the stake purchase. “IAG is currently reviewing opportunities in Vietnam, and will update the market should an agreement be reached.”
The Sydney-based insurer also said in the stock exchange announcement it expects the transaction to be completed by June. It said its goal is for its business in Asia to make up 10 percent of its gross premium by 2016. In the region, the company said it’s targeting India, China, Thailand, Vietnam, Indonesia and Malaysia.
IAG said last week that its Malaysian joint venture, AmG Insurance, entered into a conditional agreement to acquire Kurnia Insurans (Malaysia) Bhd. for about A$480 million that will make it the nation’s biggest general insurer.
Non-life insurance revenue in Vietnam may increase 20 percent to about 24.2 trillion dong in 2012, compared with a 15 percent growth in the life insurance sector, according to a report on the Association of Vietnamese Insurers’ website.
“Vietnam’s insurance market has a lot of potential to continue growing,” said Nguyen Thu Ha, an analyst at Bao Viet Securities Co., a unit of Vietnam’s biggest insurer. “As their income increases, Vietnamese people will spend more money on insurance.”
Non-life insurance density in Vietnam was $10.30 in premiums per capita, compared with $141.80 in Malaysia and $77.60 in Thailand in 2010, according to a report by Swiss Re.
--Diep Ngoc Pham in Hanoi. Editors: Andreea Papuc, Linus Chua
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