The Vietnamese life insurance market woke up from a three-year slumber recently as two giant foreign companies announced they were quitting while another decided to make an entry.

The US’s New York Life decided to pull out of the country citing inability to make investments here though analysts said it was withdrawing to focus on more lucrative markets like India and Thailand.

Australia’s Colonial Mutual Life Assurance Society Ltd CMG is pulling out of Bao Minh CMG, one of the three major players in the market and a 50:50 joint venture with the local Bao Minh Insurance Corporation.

Japan Dai-ichi is buying out both the two parties.

The timing of the decisions came as a surprise to analysts who consider it the right time to enter the market rather than quit following Vietnam’s WTO entry and its commitment to opening up the insurance and finance sectors.

Erin Pham, New York Life’s chief representative, said the company had yet to develop its business in Vietnam though it had got a license for a wholly-owned insurance company in 2005.

The insurance business not only required deep pockets but also skilled human resources and management. The company was unable to move staff from China, India, Thailand, or Argentina where it did profitable business.

But she said the Vietnamese life insurance market had big potential.

Bao Minh CMG refused to reveal the reason for selling out but Tran Vinh Duc, general director of Bao Minh Insurance Corporation, hinted the ownership and management models were not too efficient.

Commenting on its business performance and growth, suggested they could have been better with better administration.

The joint venture held around 5 percent of the market last year, up from 2.7 percent in 2004.

Its gross premium income was VND126 billion (US$7.8 million), up 12.5 percent over the previous year.

Shigeo Tsuyuki, Dai-ichi Life’ deputy managing director, said the company saw big opportunity in Vietnam despite the sluggish market now.

The Japanese market had been in the same situation 70 years ago, he said, adding the company was confident because of the products it had to offer.

The life insurance industry also depended heavily on a country’s economic growth rate, he said.

The Vietnamese market is growing at 29 percent a year with premiums topping 2 percent of GDP last year.

Source: Thanh Nien