Five foreign companies have been granted provisional licences to issue life insurance policies through 100/% subsidiaries as the authorities are finally opening up the Myanmar market.
UK-headquartered Prudential, Dai-Ichi Life (Japan), AIA (Hong Kong), Chubb (US) and Manulife (Canada) have been approved to establish wholly-owned life insurance subsidiaries in Myanmar, reported Nikkei Asian Review.
The Ministry of Planning and Finance published on 5 April the list of foreign insurers as "preferred applicants" to operate as life insurance business through a 100% wholly-owned subsidiary.
The announcement came as a surprise as the government had earlier said it would allow only up to three foreign companies to own wholly owned life insurers in the country.
The five subsidiaries are expected to begin operating by the end of this year after completing procedures for the establishment of subsidiaries and other requirements.
Foreign investors had previously expressed frustration at the multiple delays in the long promised liberalisation of Myanmar’s insurance market.
Since 2013, 11 local insurers have been granted licences to operate, while 14 foreign insurers have set up 30 representative offices. But none have been allowed to conduct business except in the Thilawa special zone where three Japanese companies were granted permission to operate non-life insurance businesses—Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance and Mitsui Sumitomo Insurance.
The Ministry’s announcement suggested that if the five selected companies fulfilled the pre-licensing requirements, they would be allowed to operate 100% insurance subsidiaries.
“The successful foreign life insurance companies will be required to submit an irrevocable and unconditional proposal bond of $400,000 within 10 business days from the date of announcement,” DFDL Myanmar legal advisers Bhawna Bakshi and Rohan Bishayee commented.
Unsuccessful applicants still have the opportunity to form a joint venture with existing local life insurance companies. The government will decide later which foreign insurers will be allowed to form joint ventures with local companies.
In addition to the five companies approved on Friday, the government will choose other foreign insurers to be allowed to form joint ventures with local providers under a 35% ownership cap.
Japanese players Taiyo Life Insurance, Mitsui Sumitomo Insurance, Sompo Japan Nipponkoa Insurance and Tokio Marine & Nichido Fire Insurance are discussing terms with potential local partners. Thailand's Muang Thai Life Assurance and Thai Life Insurance are also in talks with potential partners.
Myanmar: A US$2.8 billion market awaits?
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