Posted on Jan 24, 2011 by Sergio Ulloa
The German based Ergo Insurance Group has announced that it has entered into two separate insurance ventures to strengthen its presence in Asia. In China, Ergo has entered into a life insurance joint venture with a local assets investment company. In Vietnam, Ergo has acquired a stake in a Vietnamese non-life insurance specialist.
Ergo Insurance, a subsidiary of global reinsurer Munich Re, announced in January 2011, that it is setting up a 50-50 Chinese joint venture with the Shandong State-owned Asset Holding Company (SSAIH). The deal was signed in Jinan - the capital of Shandong province - by SSAIH President Liu Changsuo and the ERGO Chairman of the Board of Management Dr. Torsten Oletzky.
Speaking on the significance of the Chinese insurance venture, ERGO Insurance Group Board of Management member, Dr. Jochen Messemer, said: "China is one of the strongest growth regions in Asia. As a consequence, both private customers and companies have an increasing requirement for provident products and a safeguarding against risks."
Ergo has been present in China for several years with a representative office in Beijing and the new 50-50 life insurance joint venture will see the German insurer opening up a head office in Shandong province. The decision to enter the market in Shandong province was taken because the region plays a pivotal economic role in the Chinese economy and it has become the third largest domestic insurance market in China. The region has a population of 92 million citizens, offering Ergo huge potential to generate high premiums with their Chinese partners.
During Ergo's time in Beijing, the German insurer has been analyzing the Chinese insurance market, and foreign insurer competition operating in the country and now feels that the time is right to enter the life insurance sector with SSAIH. Ergo plans to use their experience in the Chinese insurance market and continue developing a suitable business and sales model for the new SSAIH joint venture.
The Duesseldorf based insurer Ergo's Chinese joint venture will see the German insurer providing expertise in areas of sales, risk management and product development. The Ergo and SSAIH partnership is still subject to the Chinese Insurance Regulatory Commission's (CIRCs) final approval.
The Vietnamese joint venture will see Ergo acquire a 25 percent stake in the Global Insurance Company (GIC), a local insurer specializing in non-life insurance products in Vietnam. GIC was founded in 2006 and specializes in motor vehicle, fire and transport insurance; in 2009 the company recorded premiums of approximately €11 million (US$ 14.5 million).
"We are aiming for a long-term strategic partnership to develop Global Insurance Company into a leading insurer in Vietnam. This investment is part of our strategy to become active in the highly attractive non-life insurance markets in South-East Asia." said Dr. Jochen Messemer on the potential benefits of the Vietnamese venture.
Vietnam's economy has enjoyed bumper growth in recent years and has become a prime market for global insurers trying to capitalize on the growth in prosperity in the country and the expanding Vietnamese insurance industry. The Vietnamese non-life market is reported to have grown by more than 20 percent annually in recent years, with this sort of trend forecast to continue. The Ergo - GIC venture is planned to be formalized in February 2011 in the capital Hanoi.
The two new Asian insurance ventures will augment Ergo's presence in the region, and will help the German insurer to continue its international growth, offering the company scope to access two emerging markets with soaring rates of economic expansion.
The two ventures will increase Ergo's exposure in emerging international markets and is part of the German insurer's plans to grow on the global stage. Asia has become a vital region of the world for multi-national insurers to generate growth in written premiums
. Vietnam has a growing insurance sector
, which has expanded rapidly over recent years and is set to continue. China has become a crucial global economic powerhouse in recent years driven by the growing prosperity of the massive population in the country. This has created a high demand for insurance products and made the Chinese insurance sector on the most desirable markets in the world. Ergo's initiatives are expected to produce a significant increase on the 40 million clients currently supplied and generate profitable new business.
In the Asia-Pacific region, Ergo maintains a presence in South Korea, Singapore and India. It is understood that in addition to the recently announced joint ventures in China and Vietnam, the German insurer plans to further increase its presence in the region. Outside Asia, Ergo has a high exposure across Europe and in Canada operating in travel, life, property-casualty, direct, legal protection and the health insurance sectors though such brands as Deutsche Krankenversicherung AG (DKV).
Insurance Companies Mentioned:
Ergo is a subsidiary of Munich Re and offers a wide spectrum of insurance provision and services across 30 countries; it currently has more than 40 million customers. Ergo has a strategic focus in Central and Eastern Europe and certain Asian markets. The German insurer has become one of the leading health and legal expenses insurance companies within Europe. Additionally Ergo provides property and personal accident insurance in India.
Munich Re stands for exceptional solution-based expertise, consistent risk management, financial stability and client proximity. This is how Munich Re creates value for clients, shareholders and staff. It operates in all lines of insurance, with around 47,000 employees throughout the world. Especially when clients require solutions for complex risks, Munich Re is a much sought-after risk carrier. The primary insurance operations are mainly concentrated in the ERGO Insurance Group. ERGO is one of the largest insurance groups in Europe and Germany and 40 million clients in over 30 countries place their trust in the services and security it provides. In international healthcare business, Munich Re pools its insurance and reinsurance operations, as well as related services, under the Munich Health brand.