Agribank joins parade of banks selling insurance

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Agribank joins parade of banks selling insurance

The Bank for Agriculture and Rural Development of Viet Nam (Agribank) yesterday launched Agriculture Bank Insurance Joint Stock Corp (ABIC), which will operate non-life insurance services.

The corporation has VND160 billion (US$10 million) in chartered capital, of which Agribank holds a ruling stake of 47.81 per cent, Viet Nam Reinsurance Joint Stock Co holds 10 per cent and Agribank Leasing I&II companies hold 11.12 per cent.

At the launch ceremony, Agribank signed a contract to provide IT solutions to ABIC. At the same time, ABIC also signed two other contracts to supply insurance services to TMT Motor Joint Stock Co and Long Hai Technologies Applying and Transferring Joint Stock Co. Financial terms of the three contracts have not been released.

"With a very large operational network, the company will provide special insurance services to support remote rural areas. Our network coverage will be considered as our main advantage over competitors," said Chief Executive Officer of ABIC Nguyen Huu Luong.

The corporation would also try to achieve targets ratified by the Prime Minister so that by 2010, revenues from insurance services in rural areas will reach VND9 trillion ($562.5 million), equivalent to 4.2 per cent of GDP, he added.

"We are keen to encourage competition in this sector. It is likely to heat up rapidly among domestic insurance enterprises in such areas as quality, operational network capacity and human resources," said Director of the Insurance Department under the Ministry of Finance Trinh Thanh Hoan.

In the first half of this year, revenues from the non-life insurance services fetched nearly VND4 trillion ($250 million), an increase of 38 per cent compared with the same period last year. And the total revenue in this sector increased to over VND8.3 trillion ($518 million).

According to Phung Dac Loc, chairman of the Viet Nam Insurance Association, the nation’s entry into the World Trade Organisation was expected to open more opportunities for enterprises but the competitive pressures on the market would also significantly increase.

Insurance enterprises are also getting ready to compete with other diversified financial institutions such as banks, securities firms and real estate investments.

Agribank is the third state-owned bank to join this sector and ABIC is the corporation with biggest charter capital among existing domestic insurance enterprises.

Early this year, Vietcombank announced a new partnership designed to help the bank break into the insurance market, signing a VND140 billion ($8.75 million) deal with Cardiff, the insurance provider for BNP Paribas Assurance, and the Southeast Asian Bank (SeABank), to create VCB Cardiff Life Insurance ltd.

Following this event, Bank for Investment and Development of Viet Nam (BIDV) bought interests in Australia QBE Insurance Co and in the Viet Nam-Australia Insurance Joint Venture. The bank founded the Bank Insurance Co with capital of VND80 billion ($5 million).

HSBC has also opened a representative office for HSBC Life International ltd in Ha Noi. The office will serve as spearhead for the bank to penetrate the domestic life insurance market.

Source: Vietnam News