AXA Insurance eyes top-10 entry via M&A deal
Firm outperformed market growth last year with 16% jump in premiums to Bt3.1 bn
AXA Insurance, under the umbrella of France-based AXA Group, is ready to take a giant leap to become one of Thailand’s top 10 insurance companies through a merger or acquisition deal with a similar-sized or larger firm, said Martin Rueegg, chief executive officer of the Thai unit.
With its mother company’s policy to make more aggressive moves to grow in emerging markets such as Asia, the company has set a target not only to outperform but to double the industry’s growth. The company last year saw its ranking in terms of premium income jump five ranks from 22nd to 17th, Rueegg said.
“We are excited to become part of Asia’s robust and vibrant growth,” he added.
The company’s gross written premiums grew 16 per cent to Bt3.1 billion in 2013, outperforming the market growth of 13 per cent to Bt203 billion. AXA enjoyed a profit of Bt408 million last year.
However, with its relatively small customer base of 110,000, the company realised that getting into the top 10 in Thailand might take decades, he said. “Thus if an opportunity arises with a suitable-sized company … we are ready to sign an M&A deal with it.”
Chief business officer Pisit Puntsming said M&A deals initially involved financial advisers’ scrutiny, and so far no official talks at the management level had taken place. He said the company was looking at any of the top 15 insurance companies as a potential partner.
The company’s assets under management stood at Bt7.1 billion last year, with Bt1.3 billion shareholders’ equity and 322 per cent capital adequacy ratio. It currently employs 381 people in Thailand and will continue to add more branches every year. It has 18 branches now.
AXA launched a market survey two weeks ago to learn how to respond to customers’ demands while getting to know them better in terms of age groups, education and expectations, and finding out the differences between customers in Bangkok and the provinces.
Commenting on Thailand’s trend towards an ageing population with extended longevity, Rueegg said he still saw a huge opportunity to grow in this market, not only in Bangkok but also in the provinces, as economic growth would increase the middle class’s disposable income.
“We foresee double-digit growth of over 10 per cent in the next 10 years in Thailand in the insurance industry,” he said.
As the market becomes more mature, there is also opportunity for new insurance products and services.
For instance, AXA recently launched guaranteed asset protection (GAP) as a supplement to automobile insurance policies. It provides financial protection in the event of a total loss of the vehicle, which is not covered by standard insurance. The company expects Bt50 million in GAP premiums this year.
However with the political struggle that threatens to push the country towards recession, it is harder to predict growth, Rueegg said. “If the situation continues, the industry’s growth is expected to slide further below 10 per cent.”
AXA has been ranked by Interbrand as the No 1 global insurance brand for the fifth consecutive year and the 59th-best overall with a brand value that grew by 5 per cent year on year to US$7.096 billion (Bt299.9 billion).
In a campaign against bribery, AXA Thailand last year signed agreements with its partners, suppliers, brokers and agents to accept its policy of helping the local industry improve standards of professional practice, Pisit said.
A ranking of Thailand’s top insurance firms released last week by the Organisation for Economic Cooperation and Development showed Viriya Insurance, Dhipaya Insurance, Krungthep Insurance, Syn Mun Kong Insurance and Muang Thai Insurance as the top five.
