VietinBank will have a new partner after its current partner Britain’s Aviva insurer finalises the sale of its business in Viet Nam. — Photo VietinBank

Roughly half a dozen big names, including Allianz, Nippon Life, MS&AD Insurance, Sun Life Financial and Manulife Financial Corp are vying to buy the Vietnamese and Singaporean businesses of Britain’s Aviva, Reuters cited people with knowledge of the matter as saying last week.

According to the sources, who declined to be named as the talks are confidential, the combined deal value for the businesses is estimated to be between US$2 billion and $2.5 billion. Talks were at an early stage and terms could change, they said.

In Viet Nam, Aviva started operating in the life insurance in 2011. It was formerly known as VietinBank Aviva – a joint venture between Aviva and Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank).

As of April 2017, Aviva completed the acquisition of a 50 per cent stake in VietinBank and officially wholly owned the unit. It signed an exclusive 18-year agreement to distribute life insurance products through VietinBank’s network. Thus, if the transfer is successful, VietinBank will have a new partner.

Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) is also likely to announce an insurance distribution agreement with a foreign partner in the near future as it was reported that Hong Kong billionaire Richard Li’s FWD Group has surpassed many rivals, including Prudential, to co-operate with Vietcombank.

Vietcombank is expected to receive an initial payment of about $400 million from the deal and could get more based on the performance of the business. Previously, Bloomberg estimated that the total agreed value may reach $1 billion, the biggest bancassurance deal to date.

Meanwhile, it was reported that Bank for Investment & Development of Vietnam (BIDV) is also exploring selling its stake in a life insurance joint venture with MetLife Inc.

In early September, two life insurance firms with large market shares in Viet Nam, including Prudential and Manulife, also officially announced their new banking partners.

On September 9, Asia Commercial Joint Stock Bank (ACB) and Manulife held a signing ceremony for a co-operation agreement on the distribution of insurance products. Accordingly, during the initial rollout, ACB customers will have access to Manulife’s two key life insurance products – one unit-linked and the other a critical illness product called ‘Enhance’.

On the same day, Prudential Vietnam Assurance also signed a bancassurance agreement with Korea’s Shinhan Bank Vietnam Ltd to distribute its life insurance solutions. Shinhan is the seventh bank in Prudential’s bancassurance network.

Experts have so far remained upbeat about the Vietnamese insurance industry’s health in the coming years, forecasting that it would maintain an annual double digit growth rate. The insurance industry expects a growth rate of 20 per cent this year.

The fast-growing domestic insurance market should thrive thanks to rising living standards and a high gross domestic product (GDP) growth of more than 6 per cent annually over the next three years, experts said.

The growth potential is great as the country has one of the world’s lowest life insurance penetration levels at less than 1 per cent of GDP. The average insurance premium in Viet Nam stands at $30, much lower than the global average of $595 and Southeast Asia’s average of $74.

The Ministry of Finance’s Insurance Supervisory Authority reported that the country has 64 insurance companies, including 30 non-life insurers, 18 life insurers, two reinsurance companies and 14 insurance brokerage companies. — VNS

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