Insurance Industry Sees Significant Growth in Asia

Strategic Insights -

Asian insurance firms are experiencing significant growth, with major players posting substantial increases in profits. EON CMG Asia, a joint venture between Colonial Ltd and EON CMG Life, has seen a 136% rise in profits to $A33 million ($US20.09 million) in 1999, attributing the success to strong new business growth and improved economic conditions across Asia. Meanwhile, the Reserve Bank of India has set a 50% upper limit on bank equity in joint venture insurance companies, while Australian financial services giant AMP Ltd does not expect the proposed Commonwealth Bank takeover of Colonial Ltd to have a significant impact on its business.

Key Takeaways:

  • CMG Asia, a subsidiary of EON CMG Life, has chalked up a 136% jump in profits to $A33 million ($US20.09 million) in 1999, attributing its success to strong new business growth and improved economic conditions across Asia.
  • EON CMG Asia's operating companies in Hong Kong and Thailand achieved increased market prominence in 1999, with Hong Kong emerging as the fourth-largest market for new business after a 149% growth in sales.
  • The Reserve Bank of India has set a maximum limit of 50% for a bank's equity contribution in the paid-up capital of a joint venture insurance company.
  • The RBI has also set guidelines for banks' entry into the insurance sector, requiring banks to have a net worth of not less than Rs 5,000 million, a capital to risk-weighted assets ratio of not less than 10%, and a reasonable level of non-performing assets as of March 31, 2000.
  • AMP Ltd's CEO, Paul Batchelor, does not expect the proposed Commonwealth Bank takeover of Colonial Ltd to have a dramatic impact on competition in Australia.
  • CMG Asia's excellent performance is a significant development for the Asian insurance industry, which has been growing at a rapid pace.
  • The RBI's guidelines are aimed at promoting healthy competition and stability in the insurance sector.

Statistics:

  • CMG Asia's profit jumped by 136% to $A33 million ($US20.09 million) in 1999.
  • EON CMG Asia's operating companies in Hong Kong and Thailand achieved a 149% growth in sales in 1999.
  • The RBI has set a maximum limit of 50% for a bank's equity contribution in a joint venture insurance company.
  • Banks must have a net worth of not less than Rs 5,000 million to participate in a joint venture insurance company.
  • The RBI's capital to risk-weighted assets ratio requirement is not less than 10%.
  • AMP Ltd's CEO, Paul Batchelor, expects the proposed takeover to have little impact on AMP's business.

Sources:

  • Asia Pulse, "CMG Asia Announces 136% Rise in Profits" (March 20, 2000)
  • Asia Pulse, "Malaysia-Australian Firm EON Posts 136% Profit Rise" (March 20, 2000)
  • Asia Pulse, "Reserve Bank of India Sets Upper Limit on Bank Equity in JV" (March 20, 2000)
  • Asia Pulse, "Australia's AMP Sees Little Impact from CBA-Colonial Tie-Up" (March 20, 2000)