IAG’S PASSAGE TO INDIA
India presents a unique opportunity for IAG, with a powerful combination of low insurance penetration and increasing consumer demand.
India’s general insurance sector has grown at a compound annual growth rate of 14% over the last five years, and is predicted to grow 15%–20% per annum over the next 10 years.
Not surprisingly, the market has attracted the attention of many insurers worldwide.
IAG now has a significant advantage ahead of a number of major international insurers, having entered exclusive negotiations to form a general insurance joint venture with the country’s largest bank, the State Bank of India.
With over 100 million customers, State Bank of India has one of the most trusted brands in India, a heritage dating back over 200 years and is included in Fortune’s Global 500.
A joint venture will allow us to combine our core capabilities with the local knowledge and distribution network of one of the largest and most recognised financial services organisations in India.
IAG will bring to the partnership technical and underwriting expertise and capability in pricing and risk management, as well as a proven ability to work successfully with partners in the Asian region.
We expect the joint venture to commence operations in 2009.
This will be a significant step in IAG’s Asian expansion strategy, designed to provide medium term growth to supplement our operations in our home markets of Australia and NZ.
| Financial performance |
2008 |
2007 |
| Gross written premium |
$174m |
$168m |
| Net earned premium |
$132m |
$130m |
| Insurance profit |
$3m |
$9m |
| Insurance margin |
2.3% |
6.9% |
Major events in 2008
- Industry market growth in Thailand and Malaysia constrained, reflecting prevailing economic conditions.
- GWP growth in IAG’s existing businesses achieved in local currency terms.
- Continued to pursue selective growth in Malaysia, Thailand, India and China.
Operational review
IAG’s Asian division, which represented around 3% of the Group’s GWP, plays an important role in the Group’s future strategic growth.
During the year, the two markets in which we currently have insurance interests—Thailand and Malaysia—both grew, but at more subdued levels than in recent years.
Our Thai businesses grew GWP around 5% in local currency terms, reflecting strong personal insurance lines growth. However, lower investment income contributed to a decline in the insurance margin of these businesses.
Our 30% joint venture business in Malaysia, AmAssurance, increased GWP around 15% during the year, and recorded a breakeven
insurance result.
Plans to increase our Malaysian presence progressed as we continued to work towards increasing our 30% interest in AmAssurance, and AmAssurance entered discussions to acquire the general insurance business of Malaysian Assurance Alliance Bhd.
India and China remained priority growth markets. In India, we entered negotiations to form a general insurance joint venture with the largest bank in that country, the State Bank of India.
Outlook for 2009
We expect our Thai operations to deliver organic growth over 8% in GWP and improved profitability, despite ongoing difficult economic conditions. GWP growth in excess of 10% is anticipated from our joint venture in Malaysia.
We expect the joint venture with the State Bank of India to commence trading in 2009. We will also continue to pursue selective strategic growth opportunities in Thailand, Malaysia and China.
