Two weeks ago, the UK's biggest insurer, Aviva Plc, announced a 50-50 joint venture with First Financial Holding Co (
Then earlier last week, German insurance giant Allianz confirmed that it was in talks with its local partner, Uni-President Group (
These companies are the first in a long line of foreign insurers who hope to expand or consolidate their foothold in Taiwan, a financial analyst said yesterday.
"Taiwan's insurance market is highly competitive, but overseas operators still deem it a place where they can make money," said Susan Chu (朱素徵), director of Taiwan Ratings Corp (中華信評), a local arm of Standard & Poor's Ratings Services.
For Aviva, Taiwan is the fourth largest market in Asia and has ample potential. But tapping into this particular market also represents the British insurer's ambition to expand its presence outside the UK.
Last Thursday, the London-based insurer reported ?8.79 billion (US$16.58 billion) in new UK business sales for the nine months ending Sept. 30, up 31 percent from ?6.69 billion in the same period a year earlier. That compares with ?10.3 billion in new international business sales, an increase of 8 percent from ?9.57 billion over the same period, according to figures posted on the company's Web site.
In the UK, Aviva's new life and pension business profit for that period rose 26 percent to ?254 million, and that compares with an increase of 10 percent to ?412 million in its international business, figures on the company's Web site revealed.
These figures justified Aviva's July 13 decision to acquire US insurer AmerUs Group Co through a ?900 million equity placing as well as its latest attempt to expand in Asia, after it failed to acquire rival Prudential Plc earlier this year. Aviva made an all-stock bid of ?16.9 billion for Prudential in March, which was later rejected by the UK's second-largest insurer.
To Aviva and its global rivals, Taiwan is certainly a market they have in mind because of its long-term potential. Their interest has been greatly fueled since the market began deregulating a few years ago, allowing increased flexibility for foreign insurers, Chu said.
Five percent stake
It all started in early 2004 when Prudential announced it would buy a 5 percent stake in E.Sun Financial Holdings (玉山金控) to develop bancassurance and asset management.
Bancassurance refers to the distribution of insurance products through a bank's distribution channels, a service that can fulfill both banking and insurance needs at the same time.
That was followed by New York Life International, the US' largest mutual insurance company's, plan last October to invest US$20 million in the Bank of Overseas Chinese (華僑銀行) in exchange for a 5 percent stockholding in the local lender.
David Skinner, chief executive for New York Life's Asia region, said at the time that he saw a lot of potential in developing protection products in Taiwan as "there is a tremendous amount of the population that is under-insured for life, accident and retirement services."
Taiwanese recorded an average insurance expense per capita last year of US$2,145.5, placing the nation 20th worldwide, trailing behind neighbors, including Japan in seventh place (US$3,746.7) and Hong Kong in 15th (US$2,544.9), according to tallies shown on the Insurance Bureau's Web site.
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