The nation's general insurance environment is a challenging one because of frequent earthquakes, floods and typhoons, while the trend of businesses migrating to China has also hollowed out the sector. But the market is likely to see good growth in the longer term, an American International Group Inc (AIG) executive said in a recent interview.
"Taiwan's growth rate in general insurance has been relatively low compared to other countries in Southeast Asia because the market is quite mature in some respects. But we believe the market can grow a lot more in the future," Ross Matthews, president of AIG Greater China Ltd, said in Hong Kong on April 28.
Between 2001 and last year, the nation's non-life market posted an average growth rate of 6.88 percent, compared with double-digit growth recorded in China, Thailand and Indonesia, according to statistics provided by AIG.
The nation's non-life insurance premiums last year were estimated to top US$3.7 billion, up 2.6 percent from 2004.
Matthews believes the local market still has a lot of growth potential as incomes are increasing and a growing number of people are traveling and spending more money on leisure activities.
While the fundamentals of the sector are stable, analysts have said growth would depend on the ability of individual companies to cope with change, consolidation and economic conditions in the global reinsurance market.
For its part, AIG is both optimistic and excited about the complementary synergy to be created from a takeover of a local insurer earlier this year, Matthews said.
AIG announced in February a plan to absorb Taipei-based Central Insurance Co (中央產險) through a share-swap transaction. The NT$6 billion (US$188 million) deal is expected to create the nation's third largest non-life insurer after Fubon Insurance Co (富邦產險) and Mingtai Fire and Marine Insurance Co (明台產險).
The group currently operates subsidiary AIU Insurance Co's network of 12 outlets. After the takeover of Central Insurance, AIU will have 52 outlets nationwide, Matthews said. The group is currently working on regulatory preparations and approval and expects to close the transaction in late July or early August, he said.
"We also signed a distribution agreement with Polaris Securities Co (寶來證券). That agreement will enable us to sell our insurance products through Polaris' distribution chain to their customer base. We expect that will also generate a lot of additional revenue for Central Insurance and AIG," Matthews said.
The Polaris Financial Group (寶來集團) -- which owns Polaris Securities, the nation's third-largest securities firm -- holds 37 percent of Central Insurance.
Matthews, who also serves as AIU's senior executive for Taiwan, joined AIG in 1989 and has held several leading positions in the group's general insurance business.
During the interview, he said that AIG has no plans to cut Central Insurance's 900-strong workforce following the takeover. Instead, he anticipates increasing staff numbers to expand amid intensified competition.
The non-life insurance sector began to consolidate in 2002 after Union Insurance Co (
In April last year, First Financial Holding Co (