Tokio Marine Teams Up With RHB Bank for Life Bancassurance in Malaysia

Tokio Marine Life Insurance Malaysia Bhd., a life subsidiary of Tokio Marine Holdings Inc., has formed an exclusive bancassurance alliance with commercial bank RHB Bank Bhd. to distribute life insurance products in Malaysia.

The distribution partnership is expected to triple sales of new life insurance products in 10 years. "With this agreement, it aspires to become one of the top five life insurance companies in Malaysia with more than 6% market share for 2015," said Tokio Marine in a statement.

Tokio Marine and RHB "have targeted annual first-year premiums of 266 million ringgit (US$82 million) in the first contract year and 547 million ringgit in the 10th contract year," said Tokio Marine.

RHB, Malaysia's fourth-largest commercial bank with total assets of 94 billion ringgit, will promote Tokio Marine's life insurance products through its branches and alternative distribution channels, according to Tokio Marine. The Japanese insurance group's life unit last year captured 2.4% of life insurance market share, ranking it 12th in Malaysia. Its total assets stood at 4.4 billion ringgit in December 2009.

Tokio Marine and RHB will jointly offer simplified financial plans and specialized insurance consultants to the bank's existing customers. The bank is now introducing a guaranteed income endowment life insurance plan, said RHB in a statement.

In Asia, Tokio Marine said in a financial presentation that sales of investment-linked insurance products are expected to rise as the economy recovers. International expansion is an essential growth driver for the insurance group as it plans to increase the share of overseas business to 44% in 2010, up from 20% in 2007.

Tokio Marine's strategy in emerging markets is to develop "various businesses including life and takaful in additional to the nonlife" in markets such as Asia, Brazil and the Middle East to achieve medium to long-term profit growth.

In Malaysia and Singapore, Tokio Marine acquired Asia General Holdings Ltd., which has life and nonlife subsidiaries. The Japanese group also took over a nonlife unit of PanGlobal Insurance Bhd., a nonlife insurer in Malaysia. "Through this agreement, we expect to expand and strengthen our insurance business operations in Malaysia," said Tokio Marine.

The Japanese insurance group said it is reinforcing its corporate brand, changing the names of life operations in Malaysia and Singapore to Tokio Marine Life Insurance Malaysia and Tokio Marine Life Singapore, from TM Asia Life Malaysia and TM Asia Life Singapore, respectively.

Asia is expected to generate "high growth potential" for the group in the medium to long term, said Tokio Marine.

In China, Tokio Marine & Nichido Fire Insurance Co. China has launched a Guangdong branch office to provide nonlife insurance and risk management services in this southern province this month. The Japanese insurer's Shanghai-based nonlife operation converted to a wholly owned subsidiary in 2008.

In the Middle East, Tokio Marine opened a representative office in Cairo this month. The representative office "will strengthen the market intelligence" in Egypt, as well the surrounding markets such as Lebanon, Syria, Jordan and Libya, said Tokio Marine. In January, the Japanese insurer formed a partnership with Egypt Kuwait Holding Co. S.A.E. to launch Nile Family Takaful Co. and Nile General Takaful Co.

Tokio Marine's international life insurance business fell 55% to 40.6 billion yen (US$462 million) in net written premiums for the 2009 fiscal year ended March 31, 2010. However, the group is projecting a 52% rise in net written premiums to 62 billion yen in the 2010 fiscal year.

For nonlife business, Asia reported a 7% rise in net written premiums to 61.4 billion yen in the 2009 fiscal year. The region is expected to post a 9% growth to 67 billion yen in the 2010 fiscal year. Total international nonlife business generated net written premiums of 370.4 billion yen in 2009 and it is expected to increase to 384 billion yen in 2010.

In the 2009 fiscal year, Tokio Marine reported a rise of 454.9% and 1.9% in net income and ordinary income, to 128.4 billion yen and 3.57 trillion yen, respectively. The insurance group expects a 10.4% drop in net income to 115 billion yen in the 2010 fiscal year.

Tokio Marine & Nichido Fire Insurance Co. Ltd. currently has a Best's Financial Strength Rating of A++ (Superior).

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