Cathay Insurance Cleared for Nonlife Unit in Vietnam

Cathay Financial Holdings said it received regulatory approval to set up a property insurance subsidiary in Vietnam as part of the financial conglomerate's expansion plan for integrated banking and insurance services in strategic markets.

The new license will enable the Taiwanese financial group to offer complete insurance business in the life and nonlife sectors, along with an existing banking joint venture for banking services in Vietnam, said Chun Te Lee, spokesperson of Cathay Insurance (Vietnam). The expansion follows the group's overseas growth plan in strategic markets such as China and Vietnam.

Vietnam offers great market potential for nonlife insurance business, with an average annual growth rate of more than 25% in the past three years, said Lee. Motor insurance is the biggest nonlife line, accounting for about 30% of the market. As Vietnam posted economic growth of 5.32% in 2009, this continuous development fuels market demand for personal insurance in motor and property protection.

Ho Chi Minh City-based Cathay Insurance will offer both commercial and personal nonlife products, with the focus on motor insurance, along with fire, construction and accident products, according to Lee.

The nonlife insurer will use the existing sales network of Cathay's life unit and banking joint venture for distribution. It will also develop its own sales forces for new market development, along with bancassurance channels, said Lee.

The sales force will seek new business from Taiwanese enterprises in Vietnam as well as local companies. Taiwanese enterprises are the second-largest foreign investors in Vietnam, with total investment amounted US$22.5 billion as of July, according to Cathay, a Taipei-based financial group with operations in banking, insurance and securities.

Cathay Insurance established its representative office in Ho Chi Minh City in 2007. The nonlife insurer will reinforce the group's integrated banking and insurance strategy for expansion in Vietnam, offering diversified insurance products for individual and commercial segments, said Cathay.

The group launched its life unit, Cathay Life Insurance Vietnam, in 2008. The Ho Chi Minh City-based life unit has six offices across the country.

The group's banking unit, Cathay United Bank, teamed up with Vietinbank to set up a banking joint venture, Indovina Bank, in 2000. Indovina Bank now has 30 locations across Vietnam, offering retail banking services to individuals and corporations.</p>

(By Iris Lai, Hong Kong bureau manager: [email protected])