News eDaily15 May 2017

Vietnam:Insurance market abuzz with M&As

15 May 2017

As the trend among foreign insurance companies to acquire 100% stakes in insurance companies progresses at a stable pace, the Vietnamese insurance market expects to witness several major brand name changes.

“Mergers and acquisitions in the insurance industry, life and non-life alike, are not limited to foreign markets and will spread to Vietnam as well,” reported Vietnam Economic Times citing an industry expert.

At the same time, M&A is seen as important as insurance companies are seeking different ways to grow.

A few years ago, entering the Vietnamese insurance market by forming partnerships with local enterprises, especially banks and conglomerates, was a common trend among insurers, mainly in the life insurance segment. However, Vietnam’s current rising insurance market is also opening new investment paths for foreign financial and insurance corporations.

Foreign corporations making an initial capital contribution and then buying up all the local enterprises’ shares after a few years to turn the company into a 100% foreign-owned entity has become a new trend. The insurance market has witnessed such cases recently, like the acquisition of Sun Life Vietnam. Experts forecast this trend to continue.

Another type of M&A in the insurance industry is at the corporate or regional level. These transactions have a certain impact on the development strategy of local branches, including those in Vietnam.

“Buying brands with small market shares and slow development, then investing to rebuild and renew the business, and eventually selling when the time comes, is a common trick of the trade for many financial groups. This trend is not only popular in Vietnam but also in other markets,” said an expert in the field.

A CEO of an insurance company said that M&As in the life insurance sector have become more fashionable than joint ventures because of the latter’s inconspicuous results.

In the non-life insurance segment, foreign financial giants remain enthusiastic in investing in insurance companies with large market shares in Vietnam.


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