Muang Thai Life to expand into Cambodia in early 2016
Muang Thai Life Assurance (MTL) aims to open its first life-insurance business outside the country in Cambodia early next year.
Sara Lamsam, president and chief executive officer, said yesterday that the company has formed a 49:51 joint venture called Sovannaphum Life Assurance with its partner Canadia Investment Holding, the holding company of Canadia Bank, Cambodia’s second-largest bank.
The JV, with registered capital of US$7 million, is applying for a life-insurance licence in Cambodia, which it expects to be granted early next year.
MTL hopes to start operating in the period.
MTL is one of the Thai life-insurance companies that are keen on expanding in Asean because besides the benefits from market integration, the ratio of life-insurance premiums to gross domestic product in many countries in Asean is low.
Two years ago, MTL set up a representative office in Myanmar to explore opportunities there and to prepare for operating a life-insurance business once the country opens up to foreign insurance companies.
In August this year, MTL tied up with Ageas, a Belgium insurer and its strategic partner, and Military Commercial Joint Stock Bank, a local bank in Vietnam, to launch a JV called MB Ageas Life. MTL holds 10 per cent of the JV.
MTL is ready to venture abroad using JV, branch or fully owned company models depending on the regulations and the opportunity in each market.
"Channels to access consumers can be bancassurance, agency, tele-sales and digital.
"We will develop distribution channels following customer-centricity," Sara said.
Thailand is a good stage from which to launch life-insurance businesses in Asean because its total premium income ranks second behind Singapore, while MTL has strengths in various distribution channels and traditional life products such as protection, endowment and health.
The company can also learn something from neighbouring countries to apply back in Thailand.
Cambodia has 11 insurance companies, of which three are only in the life-insurance business and two are in both life and non-life.
The premiums-to-GDP ratio of Cambodia is less than 1 per cent, compared with 4 per cent in Thailand. The low penetration in Cambodia presents a huge opportunity for MTL.
The ratio in Vietnam is 0.7 per cent, and in Indonesia is 1.1 per cent.
The company is studying Laos and is interested in Indonesia and the Philippines.
The middle class in Asean is well educated and is well aware of insurance, so the learning curve of customers in Asean will be less steep than in Thailand.
The company has spent more than 10 years educating consumers here about insurance products.
The premium ratio in Thailand in the past decade was only 1.5 per cent but it is now 4 per cent.
MTL will disclose its regional premium-income target and business plan for Thailand next month.
The company is also looking at business opportunities beyond Asean because it is confident in its strength in having various distribution channels and products that respond to each segment.
Muang Thai Life Assurance’s gross premiums and new premiums expanded by 17 per cent and 8 per cent this year to date, while the life-insurance market grew by 5 per cent in terms of gross premium income and contracted by 4 per cent in terms of new premiums.
