Aviva 2009 Annual Report Download - page 32

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Aviva plc Information on the company continued
Annual Report and Accounts 2009
Asia Pacific
Regional overview and strategy
Aviva Asia Pacific operates in eight countries across the region
through both joint ventures and wholly owned operations. India
and China, our ‘must-win markets’, have large populations,
relatively high economic growth and are expected to generate a
significant portion of the insurance growth in Asia in the future.
Most of our ‘developing businesses’ in our other countries
(Singapore, Hong Kong, South Korea, Malaysia, Taiwan and Sri
Lanka) are bancassurance led with strong joint venture partners.
We had an established business in Australia, which we sold on
1 October 2009. We believe that there is potential for growth
in the Asia Pacific market due to low insurance penetration in
most countries, an expanding middle class and relatively high
gross domestic product (GDP) growth.
Aviva Asia Pacific aims to build a high growth and value-
creating region driven primarily by ‘must win’ markets of
China and India by increasing new business sales for long-term
insurance and savings products through development of existing
businesses, investment in new business development, leveraging
shared services and harnessing the benefits of multiple
distribution channels in all of our markets.
Market and competition
The Asia Pacific insurance market includes both mature markets
such as Australia, Hong Kong, Singapore, Taiwan and South
Korea and emerging markets such as India and China. The
mature markets accounted for around 82% of our long-term
and savings sales in 2009. However we expect that large
emerging markets, particularly our ‘must win’ markets of India
and China, will become increasingly more important in the
future. In long-term insurance and savings, we believe that the
long-term outlook is positive and will be driven by a generally
high savings rate, under-penetration of insurance and diversified
savings, relatively higher GDP growth and the growing need for
old age provision.
At a regional level, Aviva Asia Pacific competes mainly with
other large international insurance and financial services groups.
The most significant competitors include AIG, ING, Prudential
plc, HSBC and AXA. These groups are all early entrants into the
region and most have significant operations and experience in
all of the Asian markets. Nevertheless, in our chosen markets,
we believe our strong distribution partnerships, wide footprint
and regional operational model position us well to compete
effectively in the region and create a solid platform for
continued growth.
We consider our competitive factors in Asia Pacific to be:
— Balanced portfolio of markets
— Established presence in “must-win” markets
— Multi-channel distribution, with particular strength
in bancassurance
— Strength in wrap administration platforms
— Brand recognition
— Technical expertise
Asia
Business overview and strategy
Aviva has operations in eight markets in Asia, with businesses
at different stages of development.
In China, through our joint venture with COFCO Limited
(COFCO), we are ranked fourth in terms of total premium
among 28 foreign insurers in China according to China
Insurance Regulatory Commission. We currently have a presence
in 10 provinces, with a total of 40 city branches. Our “new five
year strategy” aims to achieve a top 10 position by 2014 in
terms of life APE.
In India, we operate in partnership with the Dabur Group
through an associate, Aviva Life Insurance Company India
Limited. We currently rank 11th among the private life
insurance companies in India based on first year premium as
at 31 December 2009, according to the Insurance Regulatory
and Development Authority (IRDA) and we aim to be a top 10
life insurer by leveraging our bancassurance expertise and
transforming our agency sales force.
In Singapore, we rank fifth in the life long-term insurance
market by annualised premium equivalent (APE) as at
30 September 2009 according to the Life Insurance Association.
We are one of the leading bancassurance players in the market.
We have recently extended our partnership with DBS Bank
(DBS), one of the largest banks in Southeast Asia, until 2015, to
provide long-term insurance, savings and health and protection
insurance products. Importantly, the agreement now covers
additional markets such as India, China, and Taiwan.
In Hong Kong we are ranked 21st in the long-term
insurance market by APE as at 30 September 2009 according
to the Office of the Commissioner of Insurance. Our strategy
is to leverage our core bancassurance partnership with DBS
and independent financial adviser (IFA) channels to deliver
profitable growth.
In Sri Lanka, we own a 51% stake in Eagle Insurance
(Eagle). Eagle is ranked the third largest life insurer and fifth
largest general insurer in the country, as based on gross
written premiums in 2008 according to the Insurance Board of
Sri Lanka. In the third quarter 2009, we signed a distribution
agreement with Lanka ORIX Leasing Company PLC, a large
leasing company. In Sri Lanka, we aim to attain no.1 position by
2012 in terms of new business, in life business and to become
the fourth largest general insurance player in Sri Lanka.
In July 2007, we entered the Malaysian market through the
acquisition of a 49% stake in two of CIMB Group’s subsidiaries,
Commerce Life Assurance Berhad and Commerce Takaful
Berhad who have entered into bancassurance agreements with
another CIMB Group subsidiary, CIMB Bank. This has provided
Aviva access to over four million potential new customers as
well as introducing takaful insurance to the Aviva group. We
believe there is significant growth opportunity in takaful in the
next few years. We aim to become a top five life and takaful
company in Malaysia by 2014 by APE.