HSBC sticking to Asia insurance growth target

HSBC sticking to Asia insurance growth target
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First Published: Tue, Mar 24 2009. 12 25 PM IST
Updated: Tue, Mar 24 2009. 12 25 PM IST
Seoul: HSBC still sees significant opportunities in Asia’s insurance market, particularly in countries like India and China, and will not rule out possible acquisitions, a top executive said on Tuesday.
David Fried, chairman and chief executive of HSBC Insurance (Asia-Pacific) said that he was aiming for the insurance unit to represent 20% of the group’s total profits, versus 16% last year before impairments and goodwill charges.
“With the opportunities in Asia, I would expect that we would be the driver of the lot of the growth going in the future,” Fried said.
Outside of Japan, South Korea and Taiwan, insurance in Asia-Pacific was for the most part extremely underdeveloped, Fried added.
Insurance premiums represent in excess of 8% of gross domestic product in Japan and South Korea but only 1% in Vietnam and 2% in India, he estimated. China spends only 4% of GDP on insurance.
In the face of the ongoing economic downturn, Fried said that needs for safer retirements, children’s education and family protection would remain intact.
In Asia, demographic changes such as a fast-ageing population would present “significant” opportunities, with China, India, Vietnam and Indonesia among the most promising markets, he said.
“I expect... that we will see double digit growth in insurance sales over a ten year period (in these countries).”
Asked whether HSBC, whose banking arm last year pulled out of a $6.3 billion deal to purchase a majority stake in Korea Exchange Bank, would consider fresh deals in the insurance sector, Fried said the group remained open.
“If a right opportunity did present itself, we would definitely consider it.”
HSBC has invested a total of $450 million across the Asia-Pacific region in the last two and a half years, including the establishment of joint ventures.
Fried’s comment came after American International Group put its Asian unit up for sale, drawing preliminary bids from Prudential Plc and Manulife Financial Corp, according to sources.
In South Korea, unlisted Kumho Life Insurance has been up for grabs since late last year by its parent Kumho Asiana Group.
HSBC gained a toehold in the world’s seventh-largest insurance market after it bought a 50% stake minus one share in the insurance unit of Hana Financial Group, South Korea’s No. 4 financial services firm, for $58.4 million last year.
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First Published: Tue, Mar 24 2009. 12 25 PM IST
More Topics: HSBC | Insurance | Asia | India | China |