vietnam insurance report q1 2010

SWOT Analysis Vietnam Insurance Industry SWOT Strengths ƒ Both Vietnam’s life and non-life segments are rapidly growing.. Asia Pacific Overview First Nine Months Of 2009 – No Bonanza,

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Report Q1 2010

Including 5-year industry forecasts by BMI

Part of BMI’s Industry Report & Forecasts Series

Published by: Business Monitor International

Publication date: December 2009

CONTENTS

Executive Summary 5

Table: Overview Of Vietnam’s Insurance Sector 5

Key Insights On Vietnam’s Insurance Sector 5

SWOT Analysis 7

Vietnam Insurance Industry SWOT 7

Vietnam Political SWOT 7

Vietnam Economic SWOT 8

Vietnam Business Environment SWOT 8

Global Outlook 9

Asia Pacific Overview 11

Projections And Forecasts 15

Table: Insurance Premiums, 2006-2014 15

Projections And Drivers Of Growth 15

Table: Growth Drivers, 2006-2014 16

Country Update 17

Macroeconomic Forecast 17

Table: Vietnam – Economic Activity, 2007-2014 19

Political Outlook 19

Insurance Business Environment Rating 22

Table: Vietnam’s Insurance Business Environment Indicators 22

Table: Asia Pacific Insurance Business Environment Ratings 23

Regional Context 24

Table: Non-Life Premiums In A Regional Context, 2008 24

Table: Life Premiums In A Regional Context, 2008 25

Major Players In Vietnam’s Insurance Sector 26

Table: Non-Life Segment By Lines, H109 (VNDmn) 26

Table: Life Segment By Lines, H109 (VNDmn) 27

Table: Leading Non-Life Companies By Gross Written Premiums, H109 (VNDmn) 27

Table: Leading Life Companies By Gross Written Premiums, H109 (VNDmn) 27

Analysis Of Regional Competitive Conditions 28

Local Company Profiles 33

Bao Minh 33

Bao Viet 34

PJICO 35

AXA 47

Cardif 49

Fortis 52

Generali 54

Groupama 56

HDI-Gerling 58

HSBC Insurance 61

ING Group 64

Liberty Mutual 65

Manulife 67

MetLife 69

Prudential Financial 72

Prudential Plc 75

QBE 78

RSA 80

Sun Life Financial 81

The Principal 83

Zurich Financial Services 84

Country Snapshot: Vietnam Demographic Data 86

Section 1: Population 86

Table: Demographic Indicators, 2005-2030 86

Table: Rural/Urban Breakdown, 2005-2030 87

Section 2: Education And Healthcare 87

Table: Education, 2002-2005 87

Table: Vital Statistics, 2005-2030 87

Section 3: Labour Market And Spending Power 88

Table: Employment Indicators, 1999-2004 88

Table: Consumer Expenditure, 2000-2012 (US$) 88

Methodology 89

Insurance Business Environment Ratings 90

Table: Insurance Business Environment Indicators And Rationale 90

Table: Weighting Of Indicators 91

Executive Summary

Table: Overview Of Vietnam’s Insurance Sector

CAGR = compound annual growth rate Source: BMI

Key Insights On Vietnam’s Insurance Sector

This report differs from its predecessors in several respects In our analysis of competitive conditions, we provide a much more comprehensive ranking of insurance companies in the major segments from the point of view of the organisation that is providing the data (in practice almost always the national

insurance regulator or the national insurance trade association) In Poland, for instance, the three largest

non-life companies in the first half of 2009 – in terms of Gross Written Premiums written - were PZU

share of Gross Written Premiums is not automatically a bad thing and is often the result of a deliberate corporate decision to focus on more profitable business lines

In this report, we also provide a breakdown of the insurance sector by line – from the point of view of the regulator or the trade association In Poland, for instance, the largest non-life lines in 2008 were

compulsory motor third party liability (CMTPL), land vehicles voluntary insurance (CASCO) and fire and diverse risks These accounted for 35%, 26% and 10%, respectively, of total non-life premiums Over time, we should be able to use this information to bring greater sophistication to our forecasting process

Writing in December 2009, we have been able to ensure that the report includes actual data for 2008 We have generally been able to use data that has been published over the course of 2009 to adjust our

forecasts for the year as a whole We have also extended the forecasts out to 2014 We are looking for total premiums in 2009 of VND21,743,254mn This includes non-life premiums of VND11,757,081mn and life premiums of VND9,986,174mn In 2014, the corresponding figures should be

VND54,079,998mn, VND26,575,793mn and VND27,504,205mn In terms of the key drivers that

underpin our forecasts, we are looking for non-life penetration to rise from 77% in 2009 to 1.08% in

2014, and for life density to rise from US$6 to US$9 BMI’s proprietary Insurance Business Environment

Rating for Vietnam is 44.2

This quarter, we include a discussion of developments within regional markets on the basis of results published by major cross-border companies in relation to Q209 or Q309 and the latest information provided by regulators and/or trade associations Aside from Singapore, most of the markets of South East Asia represent small portions of the regional businesses of cross-border insurers in Asia Pacific The individual markets of South East Asia, other than Singapore, typically represent a small portion of the regional business of the various multinational insurers who are active across the region Nevertheless, it is significant that many of the larger cross-border groups commented favourably on the performance of their operations in Malaysia, the Philippines, Thailand, Vietnam and Indonesia through the first six to first nine months of 2009 Improving perceptions of risk on the part of domestic investors have boosted demand for long-term savings products In many cases, it is the large multinationals that have benefited, at the expense of smaller local groups Thanks to reasonably resilient domestic demand, non-life insurance has continued to develop, in some cases from low bases

SWOT Analysis

Vietnam Insurance Industry SWOT

Strengths ƒ Both Vietnam’s life and non-life segments are rapidly growing

ƒ Authorities are increasingly disposed to the benefits of foreign competition

ƒ The economic conditions are – and are likely to remain – favourable, with a low prospect of risks to the realisation of potential returns

Weaknesses ƒ The high growth anticipated in both the life and non-life segments of the Vietnamese

market is nonetheless coming off a very small base Even if our optimistic projections for 2008-2013 turn out to be correct, both segments will still be, relatively speaking, underdeveloped in 2013

ƒ Small number of players; particularly in the life segment

ƒ GDP per capita is tiny, limiting the market for insurance products

Opportunities ƒ The ceding by large local firms of market share to rivals in the non-life segment

demonstrates the openness of the market to new players

ƒ There are still large numbers of people who are underinsured (or uninsured)

Threats ƒ Increasing prospect of high ongoing inflation represents a general economic threat

ƒ Lack of development, volatility in Vietnamese capital and bond markets are a threat

Vietnam Political SWOT

Strengths ƒ Communist Party government appears committed to market-oriented reforms,

although specific economic policies will undoubtedly be discussed at the 2011 National Congress One-party system generally conducive to short-term stability

ƒ Relations with US generally improving; US sees Hanoi as a potential regional ally

Weaknesses ƒ Corruption among government officials a major threat to Communist Party legitimacy

ƒ Increasing (albeit limited) public dissatisfaction with leadership's control over dissent

Opportunities ƒ The government recognises the threat that corruption poses to its legitimacy, and has

acted to clamp down on graft among party officials

ƒ Has allowed legislators to become more vocal in criticising government policies This

is opening up opportunities for more checks and balances within the system

Threats ƒ The slowdown in growth in 2009 and 2010 is likely to weigh on public acceptance of

the one-party system, and street demonstrations to protest economic conditions could develop into a full-on challenge of undemocractic rule

ƒ Although strong domestic control will ensure little change to Vietnam's political scene

Vietnam Economic SWOT

Strengths ƒ Vietnam has been one of the fastest-growing economies in Asia in recent years, with

GDP growth averaging 7.6% annually between 2000 and 2007

ƒ The economic boom has lifted many Vietnamese out of poverty, with the official poverty rate in the country falling from 58% in 1993 to 20% in 2004

Weaknesses ƒ Vietnam still suffers from substantial trade, current account and fiscal deficits, leaving

the economy vulnerable as the global economy continues to suffer in 2010 The fiscal picture is clouded by considerable 'off-the-books' spending

ƒ The heavily-managed and weak dong currency reduces incentives to improve quality

of exports, and also serves to keep import costs high, thus contributing to inflationary pressures

Opportunities ƒ WTO membership has given Vietnam access to both foreign markets and capital,

while making Vietnamese enterprises stronger through increased competition

ƒ The government will in spite of the current macroeconomic woes, continue to move forward with market reforms, including privatisation of state-owned enterprises, and liberalising the banking sector

ƒ Urbanisation will continue to be a long-term growth driver The UN forecasts the urban population to rise from 29% of the population to more than 50% by the early 2040s

Threats ƒ Inflation and deficit concerns have caused some investors to re-assess their hitherto

upbeat view of Vietnam If the government focuses too much on stimulating growth and fails to root out inflationary pressure, it risks prolonging macroeconomic instability, which could lead to a potential crisis

ƒ Prolonged macroeconomic instability could prompt the authorities to put reforms on hold, as they struggle to stabilise the economy

Vietnam Business Environment SWOT

Strengths ƒ Large, skilled, low-cost workforce has made Vietnam attractive to foreign investors

ƒ Vietnam's location (proximity to China and other South East Asian states and its good sea links) makes it good base for foreign firms to export to rest of Asia, and beyond

Weaknesses ƒ Vietnam's infrastructure is still weak Roads, railways and ports are inadequate to

cope with the country's economic growth and links with the outside world

ƒ One of the world's most corrupt countries Its score in Transparency International's

2008 Corruption Perceptions Index was 2.7,in 20th place in the Asia Pacific region

Opportunities ƒ Vietnam is increasingly attracting investment from key Asian economies, such as

Japan, South Korea and Taiwan This offers the possibility of the transfer of high-tech skills and know-how

ƒ Vietnam is pressing ahead with rivatisation of state-owned enterprises and liberalisation of banking sector This should offer foreign investors new entry points

Threats ƒ Ongoing trade disputes with the US, and the general threat of American

protectionism, which will remain a concern

ƒ Labour unrest remains a lingering threat A failure by the authorities to boost skills levels could leave Vietnam a second-rate economy for an indefinite period

Global Outlook

There is little doubt now that the global recession is over, and that the prospects for 2010 are improving Our global growth forecast for 2009 has been revised up to -2.0% (from -2.1% in September); while for

2010 we project 2.5% global expansion (from 2.3%) One of the distinctive characteristics of this

recovery is the degree to which it is being driven by emerging – rather than developed – markets Our core view for most developed states continues to include deflationary pressures, deleveraging and

sluggish growth going into 2010 But in emerging states, output is rebounding quickly and inflationary pressures are more acute This is reflected in our aggregate estimates for developed market versus

emerging market real GDP growth in 2010, at 1.3% versus 4.4%

The most substantial revision to our global assumptions stems from a significant shift in outlook from our oil and gas team, which now envisages much higher oil prices in coming years Our 2010 forecasts have been raised to US$83.00 per barrel (bbl) for the OPEC basket (from US$60.00/bbl) and US$86.00/bbl for Brent Crude (from US$61.00/bbl), while our long-term forecasts have increased to the low US$90s/bbl from the low US$70s/bbl According to our oil and gas team, these new assumptions are based on a significant and sustained improvement in 2010 oil demand as economic activity picks up

Developed States

We forecast developed state aggregate growth of 1.3% in 2010, up slightly from 1.2% Notably, our forecasts for the eurozone and Canada have been revised modestly upward Our projections for Germany and France have proved slightly pessimistic given the run of increasingly positive economic data, and this has led to an upgrade of the eurozone real GDP growth aggregate to -3.9% from -4.3% previously for

2009, and to 0.5% from 0.4% for 2010 Meanwhile, Canada’s resilience through the global downturn, and the prospects for higher commodity prices, led us to upgrade our 2010 forecast to 2.4%, from 1.6% Our current US forecast remains unchanged, at -2.7% in 2009 and 1.9% in 2010 However, both could be revised depending on incoming data for Q309

Emerging Markets

Emerging market growth is forecast at 4.4% in 2010, up from 4.3% and a significant rebound from the 0.7% we forecast for 2009 We expect to see greater inflationary pressures in the emerging market universe compared with developed states, which will lead to more aggressive tightening among emerging market monetary authorities While our core view is that growth is set to persist in most emerging markets beyond 2010, tightening policy puts a ‘double-dip’ scenario back into play

8.8% in 2010 and 8.4% in 2011 on the back of considerable government stimulus The biggest regional risk stems from China, as we are concerned about a potential double-dip recession over the medium-term

We see Latin America and emerging Europe growing by 2.0% and 2.3%, respectively, in 2010 While our Latin America forecast has remained relatively flat in recent months, our emerging Europe outlook has improved from 1.9% a few months ago, owing to upgrades for regional heavyweights Turkey and Poland Both regions will be negatively affected by sub-par performances by the regional developed economic juggernauts: the US (for Latin America) and the eurozone (for emerging Europe)

Sub-Saharan Africa is the biggest mover in our 2010 forecasts, rising from 3.8% to 4.9%, owing mainly

to our much more optimistic appraisal of the Nigerian economy Our Middle East and North Africa forecast remains relatively flat at 3.5% (3.4% previously), but granted, we had not been nearly as

pessimistic on 2010 prospects in the Middle East and North Africa to begin with as we had for other regions

Asia Pacific Overview

First Nine Months Of 2009 – No Bonanza, But Not Bad Either…

By early December 2009 enough information had been made available by the major cross-border

insurance companies that have a presence across Asia Pacific to gain a clear picture of general trends in non-life and life insurance markets in the various countries Overall, figures pointed to several of the largest players ceding market share and/or by some measures actually losing ground in terms of absolute premiums written Nevertheless, insurers’ earnings generally held up This was partly because of lower expenses and claims, partly because of a sharp recovery in investment earnings thanks to the gains made

by regional stock markets and, in some instances, because of decisions by corporate managements to focus on particular business lines

In global terms, Asia Pacific remains hugely prospective for both non-life and life insurers Structurally, high savings rates, growing populations and under-developed financial services sectors indicate that life insurance should continue to grow – even in countries where penetration and density are already at fairly elevated levels In poorer countries (or, more correctly, poorer parts of countries) demand for non-life insurance is rising sharply as a result of growing incomes

A Glance At Allianz

Allianz, for instance, noted that its non-life premiums written across Asia Pacific rose (after allowing for

currency movements) from EUR324mn in the first three quarters of 2008 to EUR353mn in the first three quarters of 2009 The corresponding figures for Australia, which are counted separately, were

EUR1,158mn and EUR1,290mn Globally, Allianz’s non-life premiums fell from EUR33,959mn to EUR33,500mn

Meanwhile, Allianz’s life premiums in the region increased by 16.3% year-on-year (y-o-y) after allowing for currency movements to EUR985mn in Q309 “This development was mainly driven by an increase of 81.3% or EUR157mn in Taiwan, where consumer confidence returned in line with the stock market recovery For the nine months to the end of September 2009, Allianz’s gross life premiums across the region were EUR2,649mn, or slightly less than the EUR2,821mn in the same period a year earlier Life premiums increased in Taiwan (as noted above), Malaysia (from EUR101mn to EUR127mn), and

Indonesia (from EUR134mn to EUR152mn) However, they fell in South Korea (from EUR1,253mn to EUR1,165mn) and other countries in the region (presumably Allianz’s joint ventures in China and India.)

China’s Life Segment Consolidates

health cover) increased by 6.7% y-o-y, to CNY625,027.1mn China Life’s report to the Hong Kong

Stock Exchange in relation to the period ending September 30 2009 noted that that company’s gross written premiums fell from CNY247,139mn in the first nine months of 2008 to CNY235,434mn in the first nine months of 2009 Although the company did not discuss this in its report, it appears that China Life is taking a selective approach to the risks that it is underwriting, rather than pursuing growth for its own sake

Ping An, in contrast, has been increasing its share of both the life and the (much more rapidly growing)

non-life market As that company notes in its report for Q309, ‘For our life insurance business, the premium income and the number of sales agents exhibited obvious increase [sic] Gross written

premiums, policy fees and premium deposits for the past three quarters reached CNY104,724mn,

representing an increase of 33.5% as compared with the corresponding period of last year.’

Ping An noted that its share of the Chinese life market was just under 17% and that the number of agents had risen by 13% to 403,000 since the beginning of 2009 Ping An spoke for just over 12% of the Chinese non-life market Non-life premiums in the first three quarters of 2009 were CNY29,020mn, up 38.5% y-o-y

CIRC’s latest figures confirm that non-life insurance continues to boom in China Property insurance premiums grew by 21.5% from CNY200,119.7mn in the first 10 months of 2008 to CNY243,179.6mn in the first 10 months of 2009 Personal accident premiums rose by 13.3% to CNY20,222.1mn However, health premiums actually fell by 7.6% to CNY47,665mn

AIG, AXA And Manulife

In part because of more difficult conditions in some of the areas in which it operates, AIG reported that

total revenues from non-US general insurance premiums slipped from US$10,991mn in the first nine months of 2008 to US$9,898mn in the first nine months of 2009 ‘The consumer lines business was affected by the continued global recessionary pressure reducing the number of overseas travellers and auto sales, especially in the Far East region.’

AIG also noted that premiums and other considerations from its Asian life/retirement businesses (Nan

Shan in Taiwan, Philamlife in the Philippines and AIA in other countries) in the first nine months of

2009 amounted to US$10,489mn, or down about 8% lower y-o-y

For its part, French giant AXA achieved good growth in H109 non-life premiums in most of the markets

that it operated in across Asia Pacific Gross revenues in Singapore, for instance, rose by 28% to

EUR15mn, thanks to higher rates AXA’s motor insurance business also fared well in Hong Kong (where the health insurance business expanded), Malaysia and Japan Across the region, AXA’s life business was

hampered by slippage in sales of unit-linked life products which in turn was the result of investors responding to the volatility in global stock markets

The general tenor of comments from Manulife, a Canadian major that is present in many Asia Pacific

markets, was considerably more upbeat ‘In Asia, record insurance sales levels were achieved in the [September 2009] quarter, with overall sales exceeding the prior year by 16% on a constant currency basis Japan sales were up 7% over the prior year, while Hong Kong sales increased by 29%, with strong sales momentum bolstered by new product offerings and distribution initiatives Japan and Indonesia reported significant market share gains in 2009 reflecting consumer flight to quality China sales also continued to grow, up 18% in the quarter, reflecting contributions from new offices opened in the prior year and recent marketing initiatives During the quarter Manulife continued to expand its operations in China, receiving an additional licence in the province of Tianjin This brought the total number of

licences to 38, among the most of any foreign life insurer in China.’

Prudential – Focusing On Margins

Of the international life insurers that have a substantial presence across Asia Pacific, Prudential perhaps

provided the most comprehensive review of developments in the various markets In general, Prudential’s premiums have fallen by double-digit amounts, while earnings have held up as a result of ‘higher margins driven by higher proportions of regular premiums and protection products’ Prudential’s new business sales fell, in annual premium equivalent (APE) terms from GBP648mn in H108 to GBP553mn in H109 New business profits (NBP) dropped by just 4% to GBP277mn Total European embedded value (EEV) operating profit dropped from GBP460mn to GBP401mn However, international financial reporting standards (IFRS) operating profit increased from GBP72mn to GBP212mn Highlights of the H109 that were identified in Prudential’s review included:

ƒ Success across the region of ‘protection’ products (which account for almost one-third of Prudential’s premiums across the region) These products ‘have … proven to be useful in maintaining agency momentum as they address one important customer need and typically have lower premiums, making them more affordable when household budgets are stretched.’

ƒ A number of holders of unit-linked products in South Korea, and to a lesser extent Hong Kong and Singapore, opting to suspend premium payments (take a premium holiday) in response to the global financial crisis Competitive pressures picked up in South Korea, thanks to the promotion by rivals of

‘hot products’ in an ‘increasingly open architecture environment’

ƒ A move towards sales through agents in Hong Kong, where ‘sentiment towards single-premium

business via the bank channel … remains negative due to the lingering impact of the Lehman

Brothers mini-bond issue.’

ƒ A sharp fall in new business APE in India, ‘reflecting a particularly challenging market and our stated policy of concentrating on value over volume.’

ƒ The transfer of Prudential’s agency force and the related back-book, in Taiwan, to China Life

Prudential continues to distribute its products in Taiwan through partnerships with Standard

Chartered Bank and E Sun Bank

ƒ The sharp downturn in new business in Singapore, where results for H108 had been boosted by

‘exceptional volumes of Central Provident Fund’ business ahead of a regulatory change

Strong growth elsewhere in South East Asia [should the previous sentence be the start of a bullet point?] New business APE premiums were up 33% y-o-y in Malaysia in H109 New business APE in Indonesia was down just 6%, ‘in spite of challenging conditions’, particularly in the first three months of 2009

‘Vietnam has seen a good turnaround in agency activity and, combined with the smaller operations in Thailand and the Philippines, APE is down only 7% on the first half of 2009.’

Projections And Forecasts

Table: Insurance Premiums, 2006-2014

CAGR 2008-

would rise steadily from the 2008 level to the level we projected for 2013 In a similar way, we assumed that life premiums were driven by two factors: total population and density (i.e premiums per capita) We assumed that life density would rise steadily from the 2008 level to the level that we projected for 2013

In this report we seek to improve our forecasting technique We will, if possible, project premiums ‘from the bottom up’ Specifically, we seek to incorporate hard numbers published by the regulator and/or trade association in relation to the development of the insurance sector We will also try to incorporate the data that is available in relation to particular lines If, for instance, compulsory third-party motor liability (CTPML) insurance dominates the non-life segment (as it does in some countries), then growth in non-life premiums will depend on factors such as the numbers of motor vehicles and pricing

Table: Growth Drivers, 2006-2014

Country Update

Macroeconomic Forecast

Double Dip Now Our Core Scenario

With Vietnam's balance of payments yet again approaching breaking point, we expect a sharp tightening

of fiscal and monetary policy in 2010, which will see real GDP growth dip to 4.4% from an expected 5.1% in 2009 This will raise criticism of economic policy at the 11th National Congress in January 2011, but we expect the market reform agenda to be maintained

We have shifted our Vietnam growth outlook from expecting a gradual economic recovery in 2010 to a double-dip scenario with real GDP expansion dipping from an expected 5.1% in 2009 to 4.4% in 2010 This is based on our expectations that fiscal and monetary policy will have to be tightened sharply in early 2010 in order to rein in the widening trade deficit and halt inflationary pressures Our outlook for Vietnam has much in common with that for China However, while the policy aims of the respective governments are similar, we view the macroeconomic concerns in Vietnam as more alarming, at least in the short term, as Hanoi's fiscal and monetary resources are considerably more limited

As a consequence, we find it likely that the inevitable shift towards tighter monetary and fiscal policy will come earlier in Vietnam than in China Indeed, while Hanoi's fiscal and monetary stimulus has helped economic growth recover from a low of 3.1% y-o-y in Q109 to 5.2% in Q309, it has also been a key factor, in our view, behind a considerable widening of the trade deficit over the same period to US$1.9bn

in October While the return to positive growth in G3 markets in H209 and 2010 should give some support to Vietnamese exports, we believe a continuation of the current accommodative policy would lead to a further widening of the trade deficit

With Vietnam's foreign exchange reserves in Q409 estimated to be below the three months of imports seen as a minimum, we believe drastic policy action will be needed to avoid a balance-of-payments crisis This will include:

A downward adjustment of the dong towards our VND19,000/US$ end-2009 forecast, from

VND17,862/US$ on November 6, to stem the outflow of US dollars through the trade channel

A hiking of policy rates to uphold public confidence in the dong, stem capital outflows, and contain upward pressure on inflation through higher import prices We are now expecting 500bps of hikes in

A reduction of the fiscal deficit from VND118trn (US$6.6bn), or 7.2% of GDP, to VND105trn

(US$5.9bn), or 5.7% of GDP, in 2010 on the back of reductions in both current and capital expenditure growth

Implications For Growth

We expect the fiscal and monetary tightening to lead to a double dip in growth after the tentative rebound seen in the last three quarters of 2009 We are expecting real GDP growth to come in at 4.4% in 2010, as weak growth in G3 markets will weigh on exports and prevent a marked improvement in net exports in spite of the devaluation of the dong

This will mean that the slowdown in domestic demand will be harder felt With inflation expected to average roughly 9.0% in 2010, we expect government consumption to decrease by 3.5% in real terms, which will shave 0.3 percentage points (pp) off headline growth A more marked effect will be coming from a slowdown in private consumption growth as credit conditions are tightened We expect private consumption growth (in real terms) to slow to 2.3% from an expected 4.9% in 2009 and 9.2% in 2008 This should see the contribution to growth from private consumption decrease to 1.6pp in 2010 from 3.3pp in 2009 and a massive 6.0pp in 2008

We are, on the other hand, expecting an increase in the contribution from gross fixed capital formation from 0.4pp to 1.1pp as FDI disbursements, down 12.1% y-o-y to US$8bn in January-October 2009, recover and state-and [?] aid-financed projects gather pace However, the precarious state of the property market, where activity and prices have been supported by the loan-subsidy programme, is a risk to this forecast While only a minority of property purchases are financed through bank lending, higher interest rates should still have an impact on the market and on commercial and residential construction

Policy Rebalancing Needed At 2011 Party Congress

We expect the slowdown in growth in 2009 and 2010 to make economic policy the main matter of debate during the Communist Party of Vietnam (CPV)'s 11th National Congress scheduled for January 2011 The macroeconomic rollercoaster ride experienced in recent years has raised criticism against Prime Minister Nguyen Tan Dung, the most important proponent of economic reform, from more conservative members in the Politburo We believe the mainstay of the CPV is still behind Nguyen's reform agenda, meaning that there will be no drastic shift in the socio-economic development strategy for 2011-2016

However, we expect measures to be taken to achieve greater macroeconomic stability, including a reduction of official growth targets, a shift in monetary policy towards inflation targeting and increased exchange rate flexibility This is likely to come at a cost to economic growth in the short term, and we are consequently forecasting real GDP growth of 5.5% and 6.0% in 2011 and 2012, respectively, as the global economic environment is expected to be less conducive than in the 2003-2007 boom years A failure to take a decision on rebalancing economic policy would, on the other hand, mean a high risk of a

continuation of macroeconomic volatility as expressed in Vietnam's score of 43.8 out of 100 in our term economic risk ratings

short-Table: Vietnam – Economic Activity, 2007-2014

Relations With China At Forefront Of Internal Power Struggle

Vietnam's relations with China have come to the forefront of an internal power struggle within the Communist Party of Vietnam, pitting economic reformers centred around Prime Minister Nguyen Tan Dung against more conservative Politburo members with links to China With the two factions seeking to strengthen their positions ahead of the 2011 National Congress, we believe the reformists will maintain the upper hand

Faced with ever-increasing internet penetration and an army of bloggers, the Communist Party of

Vietnam (CPV) has in recent years sought to improve its means of monitoring and controlling public opinion Nonetheless, hardliners within the Politburo are now arguing that increasingly unruly

expressions of dissent against public policy on the internet is evidence of Prime Minister Nguyen Tan Dung's reformist agenda getting out of control, thus necessitating a policy redirection Indeed, this is becoming a key theme ahead of the CPV's next National Congress, scheduled for early 2011, which

The rapid economic growth seen in recent years has undermined the base for political dissidents in Vietnam as the general public has seen little reason to oust a regime that has delivered tangible material gains for the majority of the population Nonetheless, the CPV has become notably unnerved by an increasing mass of political opinion driven by the easy access to internet and online forums that a

majority of the Vietnamese population now enjoys Vietnamese authorities have estimated that 21mn Vietnamese use the internet, and there are reportedly between 1mn and 4mn blogs, covering a wide area

of topics To police this immense body of content, the government regulates internet content and usage through a variety of technical and legal means, but users are constantly seeking and finding means to circumvent these measures, in spite of the heavy penalties handed down by the authorities

China Dominating Internet Discussion

The most inflammatory subject on Vietnamese blogs over the past year has been Hanoi's relationship with China, which has been tested by ongoing disputes over the Paracel and Spratly islands in the South China Sea, a controversial Chinese-financed bauxite mining project in the central highlands and a severely skewed trade relationship A number of journalists and bloggers have criticised both the Chinese and Vietnamese government's conduct in these disputes, a criticism that has fallen on fertile ground as the Vietnamese public is highly sensitive to any perceived encroachment of Vietnam's sovereignty by its northern neighbour

With the regime in Hanoi fearful of China's sensitivity to any criticism and aware of the need to maintain

a working relationship with Beijing, the authorities have stepped in to stem any perceived instigation of anti-Chinese public opinion This has seen the arrest of journalists and bloggers who have published articles and blogposts critical of China, on the basis that the criticism threatens efforts by the two

governments to reform the economic relationship between the two countries This has so far been

characterised by a heavily skewed trade flow with an avalanche of cheap Chinese goods flooding the Vietnamese market, driving local competitors out of business, with little but commodities such as coal and rubber going the other way The massive trade deficit with China - which amounted to US$11.1bn in

2008, roughly 12% of GDP - has been a subject of dispute between Chinese and Vietnamese leaders in recent years, and thus a point of discussion during Prime Minister Nguyen Tan Dung's visit to China in April 2009

The perceived solution to achieve a more mutually beneficial economic relationship has been to promote increased Chinese investment in Vietnam This does indeed make economic sense as investment from Vietnam's traditional sources of foreign direct investment - Malaysia, Singapore, South Korea and Taiwan - is likely to be less forthcoming over the next few years as foreign investment partners rebuild their balance sheets and pare back their expansion plans Indeed, foreign direct investment pledges have dropped 85.7% y-o-y in the first three quarters of 2009 to US$7.6bn The crux is that with a

manufacturing sector equally, if not more, competitive than Vietnam's, Chinese interest in investing in

Vietnam has almost exclusively been directed towards the extractive industries, with the aim of securing resources to fuel the Chinese industrial behemoth

This has fuelled allegations in the case of the bauxite mining project in Lam Dong province that China is merely exploiting Vietnam's natural resources, while causing considerable environmental damage in the central highlands, which are both scenic and the centre of Vietnam's coffee industry Added to this is the tendency of Chinese investors to bring their own workers rather than employ locals, making the severe public backlash against the investment plans unsurprising With technical solutions failing adequately to prevent the posting of inflammatory content on the internet, the government has turned to incarcerating a number of bloggers and journalists to deter the voicing of critical opinion

Political Jockeying Ahead Of 2011 Congress

The ability to control domestic dissent has become a key issue ahead of the CPV's 11th National

Congress, scheduled for early 2011, at which key appointments and policy decisions are to be made The increasing leeway of opinion expressed in new media has reportedly become a sticking point for more conservative forces within the CPV to argue that Prime Minister Dung has gone too far in his policy of economic liberalisation and increased openness towards the US and North East Asian countries such as Japan and South Korea at the expense of Hanoi's relationship with its ideological brethren in Beijing This could lay the ground for a serious confrontation at, or before, the 11th National Congress

We continue to expect Nguyen to maintain his authority within the Politburo as a younger, less

ideological generation of CPV members is strongly supportive of continued economic reform However,

he is likely to face continued opposition from a more conservative faction within the Politburo, which believes that his agenda of increased economic liberalisation is putting the CPV's monopoly on public opinion - and, by extension, political power - at risk Members of this faction are said to be at the

forefront of the reaction against bloggers, since the General Department II (GDII), an intelligence unit led

by Vice Defence Minister Nguyen Chi Vinh, has been instrumental in tracking and punishing political dissent on the internet It has been alleged that hardliners have also used the technology at the command

of GDII to monitor ideological opponents within the CPV, thus gaining an upper hand in the scenes jostling for promotions that characterises the CPV and other power structures While there is thus a risk that the internal power struggle could intensify ahead of the National Congress, we see no major risks

behind-the-to policy direction Hence, we maintain our 90 out of 100 rating for Vietnam in the policy continuity category of our short-term political risk ratings With inflation currently in low single digits and the conflict with China over the Paracel and Spratly islands contained, Vietnam scores a high 80 out of 100 in our short-term political risk rating A low characteristics of polity rating (27.6 out of 100) brings

sub-Insurance Business Environment Rating

Table: Vietnam’s Insurance Business Environment Indicators

Limits of potential returns Data Score, out of 10 Rating score, out of 100

Measure of openness 5.0

Measure of openness 5.0

Source: BMI

Since last year we have been taking a much more systematic approach to assessing the current and

potential conditions of the insurance sectors in each of the countries surveyed by BMI We have

calculated the Insurance Business Environment Rating (IBER), which takes into account objective measures of the current state and long-term potential of both the non-life and the life segments It also takes into account an assessment of the openness of each segment to new entrants, and economic

conditions Collectively, these measures enable an objective assessment of the limits to potential returns across all countries and over a period of time The IBER also incorporates an objective assessment of the

risks to the realisation of returns The risk assessment is based on BMI’s Country Risk Rating It

embodies a subjective assessment of the impact of the regulatory regime on the development and the competitive landscape of the insurance sector

In early 2009, the overall IBER for Vietnam was 43.6 By this measure, the country is lower-middle ranking in terms of its attractiveness relative to other countries in the Asia Pacific region that were

surveyed by BMI As shown in the tables, the IBER has five components The last of these – the Country

Risk Factor of the Risks to the Realisation of Returns – boosts Vietnam’s overall IBER To some extent, this compensates for the low scores in other areas of IBER In general, Vietnam’s IBER is held back by the small size of both the life and non-life segments The low GDP per capita has also contributed to a low Country Structure score in the Limits of Potential Returns component of the IBER

Table: Asia Pacific Insurance Business Environment Ratings

Limits of potential returns Risks to realisation of returns Non-life

segment Life segment structure Country Regulatory framework Country risk Rating Rank

Regional Context

Table: Non-Life Premiums In A Regional Context, 2008

Premiums, US$mn Premiums, EURmn Penetration, % of GDP US$ per capita Density, EUR per capita Density,

Table: Life Premiums In A Regional Context, 2008

Premiums, US$mn Premiums, EURmn Penetration, % of GDP US$ per capita Density, EUR per capita Density,

Major Players In Vietnam’s Insurance Sector

In Vietnam, the insurance sector is regulated by the Insurance Supervisory Division within the Ministry

of Finance

(Source: www.mof.gov.vn, May 2009)

The insurance trade association is the Vietnam Insurance Association

Key life insurance companies include: Bao Viet (also a non-life insurance company); Prudential;

Manulife; AIA; Dai-ichi Life; ACE Life; and Prevoir

Key non-life insurance companies include: Bao Viet (also a life insurance company); Bao Minh;

Petrovietnam Insurance Co (PVIC); PJICO; PTI; Cong ty BH lienhiep; Bao Long; Vien Dong; VIA

Table: Non-Life Segment By Lines, H109 (VNDmn)

Table: Life Segment By Lines, H109 (VNDmn)

Analysis Of Regional Competitive Conditions

As in previous reports, we have looked at which cross-border insurers are present in which country across each region We endeavour to describe the competitive landscape in some detail on the basis of official information published in 2009 – whether sourced from the regulator or the trade association

Since Q308 we have included substantially more information than we have in the past about the insurance

companies that operate in each of the countries that are surveyed by BMI With very few exceptions,

foreign multinationals have a significant, if not a dominant, presence in the markets that we survey Because so many multinational insurers consider national markets not as individual entities but as part of

a larger region, or indeed the whole world, we contend that it is difficult to understand the competitive landscape within a particular country unless one also considers the footprints of all the multinationals across the relevant region

Accordingly, for each of the multinationals profiled, we have sought to identify particular issues: the proper name of the holding company in the home country; the activities, in summary, of the company in its home country; the name of the company’s operations in each of the countries in the region; and relevant and specific comments (if any) that have been made by the company in relation to its operations

in each of the countries in the region As much as possible, we have used company websites and annual reports as sources of information For efficiency, we have often quoted verbatim from these sources In such instances, we have always indicated the source that we used Over coming quarters, we will

incorporate considerably more quantitative details about each of the companies that are operating in each market

In Asia Pacific we profile 22 companies These are AEGON, AIG, Allianz, Aviva, AXA, Cardif, Fortis,

Generali, Groupama, HDI-Gerling, HSBC Insurance, ING Group, Liberty Mutual, Manulife, MetLife, Prudential Financial, Prudential, QBE, RSA, Sun Life Financial, The Principal Financial Group and Zurich Financial Services

The size and diversity of Asia Pacific markets are such that generalisations are harder to formulate than in other parts of the world The majority of the multinationals have a joint venture in China – although not necessarily with a local financial institution In some cases, associated asset management businesses of a multinational insurer also have joint ventures in China Many of the multinationals also have insurance joint ventures in India As in China, the local partner is not necessarily a financial institution

For some of the multinationals, their presence in the region is limited by specialisation In some cases, this is because the company’s business revolves around particular lines of non-life insurance – QBE and RSA would be good examples In other cases, it is because the company in question has chosen to offer products that closely resemble those that it provides clients – on a much larger scale – in its home

markets Examples include The Principal Financial Group (offering life products in Hong Kong), The

Hartford (life products in Japan, and in no other country in the region), Prudential Financial (life and

savings products in Japan, Taiwan and South Korea), MetLife (annuities in various markets), Gerling (branches in Japan, Hong Kong and Australia), Fortis (life insurance joint ventures in China, India, Malaysia and Thailand) and Zurich Financial Services (servicing corporate non-life clients in South East Asia and operating in the life segment in Australia, Hong Kong and Japan)

HDI-A second group of multinationals have varied businesses and very broad footprints, which have been developed over a long period of time What these companies have in common is that, worldwide, they are among the largest insurers Furthermore, within their global businesses, their Asia Pacific operations are significant relative to the total and very large in absolute terms In most cases, they have been present in Asia Pacific for well over 50 years AIG, which was founded in Shanghai in 1919, is the largest (in terms

of the total business that it writes across the region) and perhaps the most obvious example AIG ranks among the largest insurers in several of the markets in which it operates (e.g Hong Kong, the Philippines and Taiwan), and is generally regarded as the largest foreign insurer in China, and has long maintained a large and profitable insurance business in Japan HSBC Insurance’s history and geography reflect that of its banking parent Almost one-third of HSBC Insurance’s global business comes from Hong Kong, although the rest of the region accounts for only about 5% Prudential plc is probably the second largest multinational insurance group in the region after AIG, and sees its Asia Pacific business as one of its four core operations As is the case with HSBC, Hong Kong is a key market for Prudential plc, although it has

a significant presence in many other regional markets

A third group of companies are European multinationals whose business in the Asia Pacific is a relatively small part of their global total, but is large in absolute terms These companies have broad ranges of businesses, but are predominantly focused on life rather than non-life lines Perhaps the most important example is ING Group ING generated a premium income of EUR12,632mn in Asia Pacific in 2007, although almost all of this came from Japan, South Korea and Taiwan AXA generated premiums of over EUR8,623mn across the region, of which half came from Japan Australia and Hong Kong are AXA’s other two key markets in the region Aviva has a diverse range of businesses, in Australia, South Korea, Taiwan, Hong Kong, Singapore and Malaysia (as well as China and Sri Lanka) Within some of these markets, and in particular areas, Aviva is one of the largest companies Allianz is a major player in life insurance in Taiwan and South Korea and in non-life insurance in Australia

There are also two Canadian companies with long-standing and significant businesses in Asia As with ING, Aviva and Allianz, the Asian operations account for a minority of these companies’ worldwide

funds and segregated funds from its operations in Hong Kong, China, India, the Philippines and

Indonesia

Finally, there are a number of multinationals that are enormous in terms of the premiums that they write worldwide, and are among the largest insurers in their home countries or in other parts of the world, yet have only a small presence in Asia Pacific Generali, which has one of the largest pan-European

businesses – including dominant market positions in Italy and other countries in or near Europe – is perhaps the best example Generali has operations in India, China, Japan, Thailand and the Philippines, as well as regional headquarters in Hong Kong In 2008 EUR 315mn of the EUR377mn in premiums that the company wrote in Asia came from its joint venture in China AEGON, Cardif and Groupama are three other European giants that have a limited presence in Asia Pacific

In any discussion of the nature of the competition from local groups across the region, it is probably helpful to consider Hong Kong and Australia separately For many companies, Hong Kong is the regional headquarters and/or a support centre for operations in southern China As noted in the company profiles, many multinationals also see Hong Kong as a vibrant market in its own right that, in regional terms, is too

large to be ignored Bank of China (International)’s insurance subsidiaries are also notable players in the Special Administrative Region (SAR)’s non-life and much larger life segment Hong Kong Life, a joint venture between Wing Lung Bank and several other smaller banks is also a notable provider of life,

health and savings products Overall, though, Hong Kong is the only market in the region in which both the non-life and the life segments are dominated by subsidiaries of multinational groups

Over half of Australia’s substantial non-life market is accounted for by subsidiaries of Suncorp Metway (such as Suncorp, Vero, AAMI, GIO, RACQ, RAA and Shannons) or Insurance Australia Group (such as NRMA, CGU, SGIO, SGIC and Swann) Most life insurance products sold in Australia are packaged in products that are formally constituted as superannuation (retirement savings) vehicles AMP and National Australia Bank/MLC are the two largest local life insurance companies Their respective shares of the life segment are 28% and 26% The ING/ANZ Bank joint venture is the third-largest player,

with a market share of 17%

The competitive landscapes of Japan, China, Taiwan and South Korea have many features in common The commercial opportunity, especially for life insurance, has been driven by high savings rates, tax incentives in favour of insurance and/or an absence of alternative ways of laying off risks The

commercial landscape is dominated by truly massive local firms who in the past – and to a certain extent

at present – are protected from full-scale foreign competition The protection comes from gradual

deregulation, access to low-cost capital, opportunities to take advantages of scale economies (even in relation to the largest global firms), established brands and distribution channels and cultural factors

In Japan, for instance, the leading non-life firms are Tokio Marine & Nichido, Mitsui Sumitomo and

Sompo Each of these writes gross premiums of JPY1,600-2,200bn Aioi and Nipponkoa, the next two

largest firms, are each about half this size Nissay Dowa, Fuji, Kyoei and Nisshin all write an annual

premium of JPY164-380bn AIU, the non-life operation of AIG, is apparently the only foreign-owned company in the top 10 In the life segment, the numbers are larger and the rankings different, but the

overall story is the same Between them, Nippon Life, Dai-Ichi Life, Sumitomo Life and Meiji Yasuda account for about one-third of total premiums ALICO Japan, the local life operation of AIG, is the

country’s fifth largest life insurer, with a market share of about 4%

In China the landscape continues to be dominated by former state-owned enterprises (which are now listed companies in which the government retains substantial stakes) and new, but substantial, private

sector firms The People’s Insurance Company of China (PICC) and China Life each account for 50% of the non-life and life segments, respectively Ping An and China Pacific are listed public

40-companies with 10-15% shares in each of the two segments As noted above, AIG’s local operation is the largest foreign insurance joint venture in the country

Local titans dominate the insurance sectors of both Taiwan and South Korea, even though foreign groups

have made more headway than they have in Japan or China According to the Taiwan Insurance Institute,

Cathay Life has a market share of around 23% within its segment Shin Kong (with a market share of

11%) and Chunghwa Post (8%) are the next two largest players However, Nan Shan Life – the local

AIG affiliate – and ING are, respectively, the second and fifth largest life insurance companies, with

market shares of 14% and 8% The non-life segment is more fragmented Fubon’s market share is 21%

It is followed by Mingtai (9%), Shinkong and Union (8% each) and Cathay Century (7%) The Korean

Life Insurance Association notes that, over the last 12 months or so, the combined market share of the

‘big three’ – Korea Life, Samsung Life and Kyobo Life – has slipped from about 66% to 62% of life

premiums The foreigners’ combined share had risen from 18% to 20% ‘boosted by their remarkable performance in bancassurance’ The remainder of the South Korean life segment is accounted for by

‘small and medium’ insurers such as Shinhan Life and Tongyang Life However, with annual premiums

of around US$2bn, neither of these companies would rank as small in most of the countries profiled by

BMI Samsung Fire & Marine accounts for a little more than one-quarter of gross premiums written in

the non-life segment Hyundai Fire & Marine, Dongbu and LIG each have market shares of about 6% The other seven South Korean non-life companies are Meritz, Hanwha, Daehan, Green, First,

HungKuk Ssangyong and Kyobo AXA

The insurance markets of India and Vietnam continue to be dominated by state-owned enterprises In this

non-life segment New India is the largest player and speaks for about 20% of premiums National

Insurance Company, Oriental Insurance and United India each have market shares of about 15% The

next largest firms, with (rising) market shares of 12% and 7%, respectively, are the ICICI Lombard joint venture and the Allianz-Bajaj joint venture There are two purely Indian-owned private sector firms –

Reliance and Cholamandalam – and four other joint ventures that involve foreign partners – HDFC Chubb, Royal Sundaram, Tata AIG and IFFCO Tokio Each of these six companies has a market

share in the low single digits In Vietnam former state-owned monopoly Bao Viet remains by far the largest insurance company PJICO, PVIC and PTI are all owned by different state-owned enterprises

Bao Minh, formerly an element of Bao Viet, has made the transition to being a joint stock company

Elsewhere in South East Asia, Singapore’s Great Eastern Life, a subsidiary of banking group OCBC,

stands out as a regional giant Great Eastern has operations in Singapore, Malaysia, Indonesia, Brunei, Vietnam and China and total assets of around SGD46bn It has around 3mn customers in Singapore and

Malaysia alone Its subsidiary OAC operates in Singapore and Indonesia TM Asia Life, which is active

in Singapore and Malaysia, is a subsidiary of Tokio Marine & Nichido Elsewhere, whether they operate

in the life segment, the (typically smaller) non-life segment or both, most of the local companies would

rank as small to medium-sized insurers in other countries Examples include NTUC Income in

Singapore; Etiqa (a joint venture between Fortis and Maybank), Kurnia and Malaysian Assurance

Alliance (MAA) in Malaysia; and Bangkok Life, Dhipaya, Thai Life, Sampanth and Viriyah in

Thailand Perhaps because of a preference of local business elites to prefer to work with their own – effectively in-house – insurance operation, there is a plethora of small indigenous companies in Indonesia

and the Philippines Insular Life and Malayan Insurance stand out in the Philippines, but there are many other examples from that country Bumiputra 1912 (in the life segment) and Jasa Indonesia (in the non-life segment) are the two largest Indonesian insurers Others include Jasa Raharja, Jiwasraya,

Jiwa Sequis Life, Tugu Pratama and Sinar Mas

We make three other observations in relation to the South East Asian markets The first is that the markets have been open to foreign insurers for a long time Indeed, foreign groups (or joint ventures between foreign groups) feature among the largest players in the non-life and the life segments of the region The main exception, as noted above, is Great Eastern Life The second observation is that unlike, say, Central and Eastern Europe, a surprisingly large number of local companies have survived as independent

entities This may be because their owners have not always been motivated by purely commercial

considerations The third observation is that, in addition to (many of) the 23 multinational companies that

we have profiled in this report, there are two large Japanese non-life groups – Tokio Marine & Nichido and Mitsui Sumitomo – which have significant (if not dominant) businesses in several countries across the region

Local Company Profiles

Bao Minh

SWOT Analysis

Strengths (Internal)

ƒ Significant market share

ƒ Advantages of being an established local company

ƒ Relationship with AXA may provide access to broader skills and capital

markets

Weaknesses (Internal)

ƒ Small by other than local standards

Opportunities (External)

ƒ Strong growth in premiums and new business likely as insurance

continues to gain traction

ƒ Well placed to benefit from development of organised savings

Threats (External)

ƒ Competition from other, larger groups

Overview

Bao Minh was incorporated on November 28 1994 It was a 100% state-owned

enterprise under the auspices of the Ministry of Finance until 2004 In October

2004, it became a joint-stock insurance enterprise

More recently, AXA acquired a 16.6% stake in the company

Corporate Highlights

Bao Minh’s registered capital was VND755bn and, as of 2007, it claimed total

assets of VND3trn It says it has more than 1,800 employees and 8,000 agents and

collaborators There are 59 subsidiary companies scattered throughout the country

In 2007 Bao Minh claimed to have a market share of 21.8%, with a gross premium

income of VND1.71bn

Source: http://www.baominh.com.vn

ƒ Home country: Vietnam

ƒ Status: joint-stock insurance enterprise

ƒ Main source for information:

www.baominh.com.vn

Bao Viet

SWOT Analysis

Strengths (Internal)

ƒ Claims market leadership

ƒ Listed company status

ƒ Relationship with HSBC may provide access to broader skills and

capital markets

Weaknesses (Internal)

ƒ Small by other than local standards

Opportunities (External)

ƒ Strong growth in premiums and new business likely as insurance

continues to gain traction

ƒ Well placed to benefit from development of organised savings

Threats (External)

ƒ Competition from other, larger groups

Overview

Bao Viet was established on November 15 1965, has now become the leading

finance and insurance Group in Vietnam Apart from a network spanning 64

provinces nationwide, Bao Viet is also a strong brand in insurance industry Bao

Viet is the sole enterprise in Vietnam doing business covering both life and non-life

insurance segments

The company has been listed on the stock exchange since a successful initial

public offering (IPO) on May 31 2007

HSBC has a 10% interest in Bao Viet

Corporate Highlights

BaoViet Holdings is a joint stock company The holding company has a head office

in Hanoi and two 100%-owned subsidiaries, BaoViet Insurane and BaoViet,

operating in the insurance industry The holding company’s other subsidiaries

include BaoViet Securities Joint Stock Company (BVSC) and BaoViet Commercial

Joint Stock Bank (Baoviet Bank).

Net profit for calendar-year 2008 was VND494,162,882,579

Source: http://www.baoviet.com.vn

ƒ Country: Vietnam

ƒ Status: public company

ƒ Main source for press releases:

www.baoviet.com.vn

PJICO

SWOT Analysis

Strengths (Internal)

ƒ Significant market share

ƒ Advantages of being an established local company

Weaknesses (Internal)

ƒ Small by other than local standards

ƒ Appears to be focused entirely on non-life segment

Opportunities (External)

ƒ Strong growth in premiums and new business likely as insurance

continues to gain traction

ƒ Well placed to benefit from development of organised savings

Threats (External)

ƒ Competition from other, larger groups

ƒ The company has stated that it expects to lose market share as foreign

insurers enter the market

Overview

Petrolimex Joint-Stock Insurance Company (PJICO) was established on June 15

1995 by Petrolimex and seven other founding shareholders comprising the biggest

economic arms of government

Petrolimex is a petroleum company owned by the Vietnamese government

‘Since its establishment, PJICO Company has constantly developed and is now

ranked fourth in the Vietnamese non-life insurance market PJICO had a more than

10% market share in 2006 with total premium income of more than VND787bn.’

It was the first joint-stock insurance company in Vietnam

Source: http://pjico.com.vn/index.php?act=home

Corporate Highlights

The latest financial data available is for 2007 In 2007 premium revenues grew by

33% to VND885.3bn (US$55.3mn), profit after tax by 44% to VND36.5bn

(US$2.3mn) and total assets by 21% to VND705.1bn (US$44.9mn)

ƒ Home country: Vietnam

ƒ Full name: Petrolimex Joint Insurance Company

ƒ Status: state-owned company

ƒ Main source for press releases:

pjico.com.vn/?&lang=en

Regional Company Profiles

AEGON

Overview

‘AEGON is one of the world's largest life insurance and pension groups and a

strong provider of investment products AEGON empowers local business units to

identify and provide products and services that meet the evolving needs of our

customers, using distribution channels best suited to local markets AEGON takes

pride in balancing a local approach with the power of an expanding global

operation.’

Source: http://www.aegon.com/about/ataglance/, May 19 2008

Corporate Highlights

Operations: AEGON Levensverzekering, AEGON Schadeverzekering, AEGON

Bank, TKP Pensioen, Unirobe Meeùs, OPTAS, The Hague, etc

The vast majority of AEGON's business is in three countries In 2007 the US

generated EUR1,533mn of net operating earnings, on assets of EUR221.60bn In

the UK the equivalent figures were EUR275mn and EUR72.56bn In the

Netherlands net operating earnings were EUR283mn, while the asset base was

EUR65.78bn In the rest of the world, net operating earnings were EUR60mn,

while the asset base was only EUR10.92bn

Source: http://www.aegon.com/about/ataglance/5185, May 19 2008

Regional operations

ƒ China – AEGON – CNOOC joint venture, Guangzhou, etc

ƒ India – AEGON India, Mumbai

ƒ Taiwan – AEGON Taiwan, Taipei

ƒ Parent company: AEGON

ƒ Contact: Group Corporate Affairs and Investor Relations

ƒ Contact phone:

+31 70 344 83 44

ƒ Contact email: ir@aegon.com

gca-AIG

Vietnam SWOT Analysis

Strengths (internal)

ƒ Able to leverage from global presence and resources

ƒ Extremely long history in Asia, AIG having been established in

Shanghai in 1919

ƒ Signed a memorandum of understanding with the Bank of Investment

and Development of Vietnam This will allow AIG to expand into

non-life insurance, consumer finance and other areas

Weaknesses (Internal)

ƒ Image and development may suffer as a result of the problems of the

greater AIG group

Opportunities (external)

ƒ Strong growth in premiums and new business likely as insurance

continues to gain traction

Threats (external)

ƒ Competition from other life groups in Vietnam

Overview

AIG describes itself as ‘a world leader in insurance and financial services’

Operating in 130 countries, it has the most extensive global network of non-life

and life businesses of any insurer

Within the US, the non-life business is handled by the Domestic Brokerage Group,

and the various elements of the Domestic Personal Lines business Outside the

US, most non-life businesses operate under the American International

Underwriters (AIU) brand

AIG American General is the main life operation in the US Outside the US, life

operations operate under the American Life Insurance Company (ALICO), AIG

Life or American International Assurance Company Ltd (AIA) brands The main

exceptions are Taiwan, Japan and the Philippines

Source: AIG Annual Report, pp24-25

Corporate Highlights

AIG Commercial Insurance – formerly Domestic Brokerage Group (DBG) – units:

ƒ Non-life: AIG Executive Liability, Lexington Insurance Company, AIG Excess

ƒ Parent company: American International Group Inc

http://phx.corporate-ƒ Media Contact – Investment Community

ƒ Contact phone:

+1 212 770 7074

ƒ Domestic life units: AIG American General, AIG Annuity Insurance Company,

AIG Retirement and AIG SunAmerica Retirement Markets Also elements of

AIG's asset management and financial services businesses

US non-life premiums written by the DBG were US$31.8bn in 2007 (up from

US$24.1bn in 2006) The main lines were workers’ compensation (16.5%),

general/auto liability (15.8%), property (14.1%), management/professional liability

(11.2%) commercial umbrella/excess (9.7%), programmes (4.7%), accident and

health (4.2%) and multinational property/casualty (4.1%)

Non-US non-life premiums were US$19.8bn US$17.5bn in 2006 The main lines

are property/energy/marine (24.3%), accident and health (18.4%), speciality lines

(16.2%), personal lines (15.9%), casualty (11.9%) and Lloyds (5.7%)

Source: AIG Annual Report 2007, pp24-30

Domestic life premiums and deposits rose from US$7.0bn in 2006 to US$25.2bn

in 2007 The main lines are group retirement products (29.8%), individual fixed

annuities and run-Off (22.0%), individual variable annuities (17.7%), life insurance

(13.0%) and payout annuities (10.4%) Foreign life premiums rose from

US$26.6bn in 2006 to US$67.5bn in 2007 The main lines are life insurance

(56.0%), individual variable annuities (20.4%), personal accident/health lines

(9.2%), individual fixed annuities (7.9%) and group life/health (6.5%)

Source: AIG 2007 Annual Report, pp30-35

A highlight of AIG's Q108 report was the US$9.11bn pre-tax charge in relation to

losses sustained by AIG Financial Products' ‘super senior’ credit-default swaps

portfolio However, AIG's core insurance businesses remained sound In

particular, non-US operations continued to grow According to the company,

‘Q108 Foreign General operating income declined by 6.4% compared with the first

quarter of 2007, to US$818mn Solid core underwriting results and related

premium growth were offset by decreases in partnership and mutual-fund

investment income The Q108 combined ratio increased to 81.94 from 79.22 in

the Q107, due to lower favourable loss development, higher severe but

non-catastrophic losses and increased expenses related to the costs of realigning

certain legal entities, and higher acquisition costs related to an increase in

consumer lines Net premiums written increased by 10.5% in original currency

compared with Q107, as new commercial lines business in Europe, accident and

health production in multiple regions and growth in all lines in Latin America offset

declining premiums in our Lloyd's syndicate, Ascot, as well as in aviation and auto

lines

‘Q108 Foreign Life Insurance and Retirement Services operating income was

US$1.46bn, a 4.1% decline compared with Q107 Net investment income before

policyholder investment income and trading gains and losses was adversely

affected by a sharp decline in partnership and unit investment trust income The

quarter's underlying results reflect strong growth in life insurance reserves and

annuity assets, as well as the favourable effect of foreign exchange translation

Premiums, deposits and other considerations increased 21.5% compared with

Q107 Sales of investment-oriented life products remained strong in Q108,

especially single-premium production in Japan, Asia and the UK Personal

Accident and Health premiums increased in all regions and included strong single

premiums sales of a new product launched in the recently deregulated bank

channel in Japan Group products reported increased production in Europe,

Brazil, the Middle East and Asia Fixed annuity deposits in Japan increased as the

yen strengthened, while variable annuity production increased on continued

strong deposits growth in the UK and a new product launched in Taiwan.’

Source:

http://ir.aigcorporate.com/phoenix.zhtml?c=76115&p=irol-newsArticle&ID=1142489&highlight=, May 9 2008

Regional Operations

ƒ Australia – AIU – American Home Assurance Company, Sydney, etc

AIA – American International Assurance Company (Australia) Ltd,

trading as AIG Life, Sydney, etc

ƒ Bangladesh – ALICO MEASA, Dhaka

ƒ China – AIU – AIG General Insurance Company China Ltd, branches

in Guangzhou, Shanghai and Shenzhen and sub-branch in Foshan

AIA – Shanghai, Beijing, Guangdong, Shenzhen and Jiangsu

‘The China Insurance Regulatory Commission approved our

application to establish a Wholly-Owned Foreign Enterprise under

the name AIG General Insurance Company China Limited AIA China

continued to expand on the provincial licences granted in 2006,

opening 29 new sales and services centers in 2007.’

Source: AIG 2007 Annual Report, p3

AIG is the leader in accident and health insurance in the Shanghai

market

Source: AIG 2007 Annual Report, p.30

ƒ Hong Kong – AIU – American International Underwriters Ltd, Hong

Kong AIA Hong Kong

In 2007 AIG's Asian business generated premiums of US$14.2bn, total

revenues of US$20.1bn and operating profits of US$3.2bn Gross

premiums rose by 9% However, personal accident products and

group products achieved premium growth of 20% and 36%,

respectively Life premiums rose 6% In 2007, life premiums were

US$11.6bn, while personal accident and group product premiums

amount to US$1.9bn and US$661mn, respectively

Source: AIG 2007 Form 10-K, p68

ƒ India – AIU – Tata-AIG General Insurance Co Ltd (joint venture),

Mumbai, etc

Tata-AIG is also active in life

‘In 2007, [Tata AIG General Insurance] had good premium growth and

loss ratios below the industry average.’

Source: AIG 2007 Annual Report, p30

ƒ Indonesia – AIU – PT Asuransi AIU Indonesia, Jakarta PT Asuransi

AIA Indonesia, Jakarta