Australia’s largest general insurer Insurance Australia Group (IAG) has acquired a 20% strategic interest in a Chinese general insurer.
IAG purchased the stake of specialist motor insurer Bohai Insurance for RMB687.5m (approximately AU$100m).
Speaking with Global Reinsurance, IAG’s CEO Mike Wilkins, said the acquisition fits with the company’s objectives for further expansion in the Asian market.
“If you look at the position of Australia from both a geographic and time zone perspective, as well as the position of the general insurance sector in terms of the depth of the market, and the depth of technical expertise we have in this area and I think we are very well placed to be able to do business in Asia,” Wilkins said.
“The Asian economies are the fastest growing economies in the world and we certainly believe that that is going to continue for the next decade or more,” Wilkins added.
Wilkins also said together with its established businesses in Malaysia and Thailand, the latest acquisition puts the group’s Asia division on track to meet its target of contributing 10% of IAG’s gross written premium by 2016, on a proportional basis.
CEO of IAG’s Asia division, Justin Breheny, said entering China’s general insurance market had been a priority for IAG for some years.
“China’s GDP grew in excess of 10% in 2010 and is forecast to grow 9% per annum for at least the next two years, and we expect the general insurance market to grow 10–15% per annum over the next decade. This strong growth outlook is supported by low penetration rates, a large population, growing per capita income and asset accumulation. Already it is the largest individual market for new vehicle sales, exceeding the US,” he said.
Under the terms of the agreement, IAG will have board representation as well as senior management roles in key technical areas. Completion is expected in early calendar 2012 and remains subject to regulatory approval.