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Non-life insurers seeking foreign partners   2010-07-20 - Dau tu chung khoan

Vietnamese insurance companies need to mobilize more capital, professionalize their operations and expand their market share and they are seeking foreign partners to meet all three requirements. Yet foreign partners, are not easy to locate because Vietnam’s non-life insurance market is not yet big enough to attract foreign investors.



Among the 18 domestic non-life insurance companies, only three are holding big market shares: Bao Viet, Bao Minh and PVI. All three also have foreign partners.


Other companies hope to find foreign partners to improve their competitiveness.


With approval from the Ministry of Finance to run as joint-stock company instead of a 100 percent state-owned enterprise, BIDV Insurance Company (BIC) plans to organise its first meeting with investors on July 21 before it makes IPO (initial public offering) on August 5, 2010. After equitization, making IPO and listing shares on the bourse, BIC will seek a foreign investor.


BIC will begin seeking a strategic partner in August 2010 and will complete its search in the first quarter of 2011. These partners will be prestigious foreign insurance and reinsurance companies that can assist BIC in corporate governance, risk management, new product design, market share expansion, and foreign clients.


Analysts have warned that it will not be easy to call for strategic partnerships now, when the global financial market has not yet fully escaped the crisis. Besides, Vietnam’s small insurance market cannot draw special attention from foreign investors. Economists suggest that insurance companies should increase chartered capital to meet the requirements set by the Ministry of Finance through the domestic market, rather than seeking foreign capital sources.


BIC Director Pham Quang Tung affirmed that they are not looking for a foreign partner because they need capital. What BIC needs is a partner committed to long-term investment in Vietnam, who can assist BIC develop products, manage risks, and improve corporate governance. Tung stressed that only a foreign partner with the same strategic vision can cooperate well with BIC.


When asked why BIC is so confident as to only consider famous foreign insurers as strategic partners, when other domestic insurance companies find it difficult just to increase capital and find domestic investors, Tung replied that BIC trusts its capability.


BIC is a member company of BIDV, a big bank in Vietnam, and BIDV has decided that insurance will be one of its two operational ‘pillars’.


“Big insurance companies in the world and consultants seeking strategic partners have both contacted BIC already,” Tung revealed. “BIC is not trying to beat the clock in order to find a foreign partner. This will be done when BIC meets one that is suitable.”


Vietnamese insurance companies insist on foreign partners for many reasons. Explaining why they chose OIF as their strategic partner, PetroVietnam Insurance Company (PVI) leaders noted that OIF also operates in the field of energy, one in which PVI has advantages. Therefore, OIF can assist PVI in the risk management and assessment and cooperation will pave the way for PVI to open the door to potential Middle East markets.


Duong Duc Chuyen, Senior Executive of Bao Viet Group admitted that the deal to sell HSBC shares has helped Bao Viet develop more strongly. Bao Viet is now one of a few Vietnamese enterprises that make financial reports in accordance with international standards. Meanwhile, Bao Minh Corporation has also witnessed considerable changes after ‘getting married’ to French AXA Group.


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