BNP Paribas upbeat on local market, to double stake in Thai Cardif Life
France-based BNP Paribas Cardif plans to nearly double its stake in Thai Cardif Life Assurance to 49 per cent, as it sees a promising future for Thailand's life-insurance market.
Thai Life Group currently owns 75 per cent of the insurer, while BNP Paribas Cardif holds the remaining 25 per cent.
BNP Paribas Cardif has completed talks with Thai Life Group to increase its holding in Thai Cardif, having seen the impressive growth achieved by the company over the past three years.
Thai Cardif will submit BNP Paribas Cardif’s plan to raise its stake to the Office of Insurance Commission for approval by the end of this year, Celine Yeap, general manager of Thai Cardif, said
She said BNP Paribas Group had seen a greater opportunity for life-insurance business in the Kingdom following Thai Cardif’s restructuring of its organisation and adjustment of its strategies over the past three years.
The planned increase in its stakeholding is not only aimed at generating a higher return on equity, as it is also viewed as a wise investment in a market with good potential, she said.
Thailand is a strategic Asean market for BNP Paribas, which has diversified investment into the region and elsewhere in Asia to find better returns after the European market was affected by the financial crisis.
The French financial group’s franchise currently features in both Thailand and Vietnam, she added.
Yeap said Thai Cardif had been able to generate a return of 20 per cent for its shareholders, which is a healthy figure. Yet, she believes the company is able to increase the return on equity to more than 20 per cent in the near future via a niche-market focus.
Swiss Reinsurance recently noted that given the rising number of middle-income earners with more purchasing power in Asia, the life-insurance market could see consistent expansion.
Thailand is expected to see the proportion of its people aged 65 and older rise to 20 per cent of the population by 2030, which is also expected to drive premium income.
Yeap said Thai Cardif had resumed its growth in 2011 after previously focusing on only creditor protection, covering mortgages, credit cards, personal loans and auto leasing.
Premiums from auto leasing accounted for 47 per cent, followed by mortgage reducing term assurance and consumer finance.
Thai Cardif recently added retail as a new point of sale to offer creditor protection to shoppers, but she acknowledged that this channel might require three to five years to generate significant premiums.
“Without the agency channel and bancassurance partnership, as before, we should focus on where we have expertise. We therefore provide creditor-protection insurance products only through tele-marketing, two local banks and auto leasing partners, while savings insurance will be run off this year,” she added.
Gross premiums of Bt500 million in 2011 and Bt2.3 billion last year proved that Thai Cardif has a footprint in the Thai market despite the severe competition in the life-insurance market, Yeap said.
The insurer projects total premiums of Bt3.8 billion for this year.
By 2016, premiums should reach Bt6 billion, as it wants to rank in the top 10 in the Thai life-insurance industry. The company’s current ranking is 14th, with a market share of 1 per cent.
The company now plans to promote brand awareness, as potential customers should know the brand even if they are purchasing insurance from a bank or a hire-purchase company, the general manager said.
“Having positioned ourselves as an insurance provider to the niche market, customers including partners want convenience in services more than pricing, so we have spent time on improving underwriting, claims and IT systems,” she said.
In focusing on tele-marketing as a key distribution channel, the company has invested significantly in an analysis system to assess the behaviour of customers before making sales call to targeted individuals, she added.
