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BIZCHINA> Top Biz News
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Aviva Group foresees a growing insurance market
By Hu Yuanyuan (China Daily)
Updated: 2009-10-19 08:55 For Lord Sharman, chairman of Aviva Group, this year's location for the group's board of directors meeting held special significance. After meeting in North America two years ago and in Paris last year, the leadership of Aviva this year came to the Asia-Pacific region - a rising growth engine for the world's fifth-largest insurance group. The British insurance company's Asia-Pacific business now contributes less than 5 percent to the group's global business.
"We hope that this figure grows to 10 percent in the near future, and China is indeed a 'must-win' arena for Aviva Group," Sharman told China Business Weekly. When the group's other top managers visited Singapore, India and South Korea, Sharman came to China, a country he had not visited for more than a decade. Joint venture Currently, Aviva has a 50-50 joint venture life insurance company with China National Cereals, Oils & Foodstuffs Corporation (COFCO) Ltd. The company opened for business in 2003. "We are satisfied with the developments of the Aviva-COFCO Life Insurance Co in the past seven years. In our future plans, we shall position ourselves to compete with all life insurers in China and to become one of the top 10 by 2014," Sharman said. In terms of total premiums, Aviva-COFCO ranked second among 26 foreign insurers in 2008, with a presence in 10 provinces and 40 cities. "As China's insurance market is still at the initial stage of development, it boasts more growth potential compared with Singapore and other mature markets," Sharman said. "Moreover, we attach great significance to markets where individual wealth is growing fast, as the rapidly growing wealth will largely increase people's demands for life insurance and saving," he said. According to the fourth annual Asia-Pacific Wealth Report recently released by Merrill Lynch Global Wealth Management and Capgemini, the Asia-Pacific region's population of high net worth individuals (HNWIs) with net assets of at least $1 million, excluding their primary residence and consumables, fell 14.2 percent to 2.4 million in 2008 amid the global economic downturn and ongoing market volatility. Wealth market
In China, there were an estimated 364,000 HNWIs at the end of 2008, a decrease of 11.8 percent from the previous year. Their combined wealth shrank 20.7 percent to $1.7 trillion. Despite the decline, China surpassed the United Kingdom to become the world's fourth-largest HNWI market. "The relative strength of China's economy last year explained the milder decline in HNWI numbers compared to other markets in the region," said Amy Fong, market director for China operations at Merrill Lynch Global Wealth Management. "China is expected to be a main driver of the region's future HNWI wealth as the recovery takes hold," Fong said. To better transform this potential into reality, Aviva and COFCO decided to inject a combined 230 million yuan into their joint venture. This boosted Aviva-COFCO Life Insurance Co's registered capital to 1.866 billion yuan and makes it one of the more powerful joint venture life insurers in terms of registered capital. "The capital injection is aimed at strengthening the joint-venture insurers' solvency abilities when we are expanding geographically," Sharman said. While strengthening the business of Aviva-COFCO Life Insurance Co, Aviva is also applying for a license to set up a joint venture asset management company. "We've been actively seeking another partner in launching the asset management company, and I hope there will be a big breakthrough before the end of the year," Sharman said. Kathleen Jiang, head of the strategic planning sector at Aviva China, told China Business Weekly in an earlier interview that setting up a new firm will make the structure clearer, although it will be more time-consuming compared with acquiring an existing company. "We prefer the partner to be a security firm or a trust company," Jiang said, adding that industry regulators are supportive of Aviva's initiative. (For more biz stories, please visit Industries)
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