Posted date: 02/16/2009 at 10:21 AM

(Vietnam Investment Review - February 16, 2009) - Early in 2007, Japanese life insurer Dai-ichi officially entered Vietnam's life insurance market by acquiring the joint venture Bao Minh-CMG, an unprecedented transaction in Vietnam's life insurance market. Takashi Fujii, Dai-ichi Life Vietnam's general director, talks with VIR's Vu Giang about the challenges and opportunities in the past two years and the future market prospects.

Looking back over the past two years, are you satisfied with the take-over of Bao Minh-CMG?

The success of a business is measured by figures. In 2008, we successfully kept our new policies' premium growth at 28 per cent. Over the past two years, we maintained the operation of 52 offices nationwide. In terms of sales, we have increased the agent network from 5,000 to 7,000. In 2007, when we acquired Bao Minh-CMG, we had a 4.8 per cent market share and is now approximately 6 per cent. I can say Dai-ichi Life Vietnam is completely satisfied with this deal.

However, taking over Bao Minh-CMG, a running-at-loss company, has been very challenging for you in the last two years?

Certainly. We have been working hard to restructure the company and now things are much better. Taking over a company is like buying an old house and we have to renovate it. However, we were cautious and have thoroughly considered what should be changed and when we should make the changes. For instance, after two years, we have restructured over 30 branches nationwide applying the standards of Dai-ichi Life. We have invested up to $4 million to reform our information technology system which could not meet increasing business. Another issue is human resources. For improving management practices, we need to recruit people that can meet our demands in line with international management standards.

The priority for the first two years was restructuring, did Dai-ichi Life Vietnam operate under profit pressure from its parent company?

I have realised that I have become much more patient person over the past two years. We cannot change everything overnight. Sometimes I wished I could have changed everything. Fortunately, we have been always fully supported by the parent company. It has patience and is committed to support Dai-ichi Life Vietnam as much as it can. In early 2008, the parent company pumped in cash to raise our chartered capital from $25 to $72 million, becoming the second largest life insurer in the market in terms of chartered capital. I can say that with our current performance, we have no push from parent company. It should be noted that 2008 was the first year that our business ran a profit since its establishment under the name of Bao Minh-CMG. Of course, the growth has yet to reach our desired level as we had to spend most of time to restructure the business, but I believe that from 2009 on, we will grow at a much quicker pace due to the infrastructure we had built up over the last two years. Our target is a 10 per cent market share by the end of 2012.

Was bond trading a major source of your profit similar to other local financial institutions in 2008? This year is expected to be a tough for the economy and financial institutions. So, why are you optimistic?

Bond trading was obviously a plus for many financial institutions in 2008. This investment vehicle contributed up to 70-80 per cent of our 2008's profit.
In 2009, the economy is expected to further slow down, but I think this is a golden opportunity for life insurers. In times of economic recessions, the risks are more obvious. Insurance products traditionally carry two functions protection first and accumulation second. These are exactly what people need right now. Looking back to 2008, insurance products had to compete with banking deposits, investments opportunities in stock market and property market to attract customers. Now the deposit interest rate is falling sharply while the investment channels like stock market and property market are becoming more volatile and it is time for people to think of insurance.
Vietnam's population is around 84 million with 30 per cent living in the cities. Just five million people now have insurance policies. We can see how potential the market is. The key question now is how insurance companies design products that can meet customers' demands. Recently, Dai-ichi Life Vietnam has launched a new product named An Thinh Chu Toan. With its flexibility, we believe that it would meet all the customers' expectations.

 
Vu Giang