Emerging markets in Asia to drive global life insurance growth

Tuesday, 23 November 2010 00:01 - - {{hitsCtrl.values.hits}}

Life insurers will obtain one third of their profits from emerging markets by 2020 as the economies of countries such as China and India expand, reports the Dow Jones news agency citing Robert Henrikson, the Chief Executive of MetLife which is the largest life insurance company in the US.

“Emerging markets are going to drive growth in the next 10 years,” Mr Henrikson said at a conference in New York on Wednesday. “They’re growing three times faster than the developed markets.” He projects that the entire life insurance industry will grow from US$188 billion to US$273 billion by 2020, with emerging markets growing at 5% to 9% a year and developed markets growing 1% to 4%.

Brazil, Russia, India and China—known collectively as BRIC countries--present “great growth opportunities,” he says, but each also has unique issues that present challenges to foreign players. India, for instance, requires foreign insurance companies to own a minority stake of up to 26% in a partnership with a domestic company.

Recent financial results reported by other insurers appear to back Mr Henrikson’s bullish views. The UK-headquartered life insurer, Prudential, earlier this month posted a 17% increase in third-quarter sales for this year to £809 million (US$1.3 billion), boosted by expanding Asian insurance markets. Prudential’s CEO, Mr Tidjane Thiam, said: “Southeast Asia, with its high rates of GDP growth, saving habits and low penetration of insurance products, remains the most attractive long-term opportunity in our industry and the primary focus for our growth and investment.”

Belgium-based insurer Ageas – formerly known as Fortis – also announced third-quarter net profits, that totalled €153 million (US$211 million), from its global insurance operations. Ageas says that its Asian operations had been notably robust with inflows totalling €4.7 billion – a 55% increase for the year-to-date, while European business inflows were up by 20% to €13.7 billion for the same period. Separately, Zurich Financial Services completed a deal last month to acquire 80% of PT Mayapada Life of Indonesia that will give the Swiss insurer immediate access to the Indonesian life insurance market and that help it expand in Asia. The Swiss insurer is also pumping an additional US$420 million to maintain a 20% stake in the Chinese life insurer, New China Life.