At the end of July 2019, the insurance market was almost shaken by the news that two insurance corporations were competing for the right to distribute insurance through Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) network with an initial value of up to $400 million (according to Bloomberg).
One of the two corporations was FWD Group and there were immediately many questions about the size and potential of that insurance group.
Bancassurance is becoming “hot”
In recent years, there are many reasons for bancassurance in Vietnam to be developed by insurance companies and investment banks. The level of income and knowledge about insurance of the people increases, so many Vietnamese people not only care about the usual accumulation problem but also want to protect health and finance against risks. This is a ripe time for insurance businesses to approach and introduce insurance services to customers.
When developing bancassuarance, insurance companies will have the opportunity to access more potential new customers from partner banks. In addition, insurance companies also take advantage of available resources and facilities from banks. On the side of banks, commission from selling insurance products is estimated to be one of the important revenue sources. Moreover, the distribution of insurance services helps banks have more products and services to meet the financial needs of customers. Bank branches will become the place providing most financial solutions, investment, protection solutions for people.
Experts identified that the trend of bancassurance would become more and more exciting and attract large investments. Besides, with the development of technology, the deployment of bancassurance should be based on modern technology foundation. Strong technology enterprises would have advantages in deploying that distribution channel.
What does FWD Group rely on to join the largest bancassurance service in Vietnam?
Suppose, a hundred-year and experienced insurance group joint the deal worth more than $400 million, there is nothing to discuss. But according to Bloomberg, one of the two candidates competing to become a partner of Vietcombank is FWD insurance group with six years of operation in Asia.
FWD is known for acquiring Great Eastern Life (Vietnam) Company Limited three years ago. After entering Vietnam, this group quickly signed with two domestic banks, An Binh Commercial Joint Stock Bank (ABBank) and Nam A Commercial Joint Stock Bank (Nam A Bank), to carry out bancassurace model. During the time in Vietnam, FWD Group has made a lot of breakthroughs in the insurance market such as pioneering the introduction of the simplest exclusion list in the market and being the first company digitised 100 percent of the customer experience when participating in insurance.
That’s what everyone knows about FWD Group before announcing that the group went to the finals of the bancassuarance deal in 2019. In Asia, FWD Group is growing very fast. Through many large-scale cooperation and acquisition deals that have been successfully implemented recently, this insurance group is proving its superior financial strength.
In July 2019, FWD overcame well-known rivals to reach a long-term cooperation agreement with Siam Commercial Bank (Thailand). The total amount agreed was 92.7 billion Baht and regular additional payments during the two parties’ cooperation. That was the largest transfer of total value in life insurance in Southeast Asia. At the end of June, FWD also announced the acquisition of MetLife Hong Kong life insurance company, enhancing its presence in this potential market. Previously, FWD Group also became a strategic partner of many major banks in Asia such as in the Philippines as Security Bank Corporation, in Malaysia as HSBC and in Indonesia as Commonwealth of Australia.
FWD is an insurance group based in Singapore, directly under Pacific Century Investment Group of billionaire Richard Lithe youngest son of Hong Kong billionaire Li Ka-shing. FWD was founded in 2013, through the acquisition of ING Insurance Company in Hong Kong, Macau and Thailand. Subsequently, by spending more than $6 billion in M&A investment, FWD rapidly expanded new markets such as Indonesia, Philippines, Singapore, Vietnam, Japan and Malaysia. Today, FWD is an insurance group with widespread presence in nine Asian countries with total assets of more than $30 billion with 5 million customers and 4,600 employees.
In the near future, FWD plans to expand its business to China and become an insurance group with a wide network across Asia Pacific. According to Reuters, this group is planning to IPO in Singapore.
Meanwhile, after more than half a century of operating in the market, Vietcombank is now one of the largest commercial banks in Vietnam with over 15,000 employees, more than 500 branches and representative offices. In addition, Vietcombank has developed an Autobank system with more than 2,407 ATMs and over 43,000 Card acceptance units nationwide. Banking operations are also supported by a network of over 1,726 correspondent banks in 158 countries and territories around the world.
The bancassurance deal between FWD and Vietcombank is heating up not only because of the scale and value of the deal but also because of its influence on Vietnam’s insurance market in particular and Vietnam’s economy in general.
