Aviva to Withdraw from Taiwan Insurance Market
2012/08/01 | By Judy LiTaipei, Aug. 1, 2012 (CENS)--Aviva PLC, a U.K. insurer, recently announced its withdrawal from Taiwan's life insurance market by unloading its 49% stake in an insurance joint-venture with First Financial Holding Co., a government-linked financial holding company here.
It is reported that First Financial has no idea about Aviva's unilateral announcement and feels confused and hurt by the decision of its partner. The two parties jointly set up in 2008 a life insurance firm dubbed First-Aviva Life Insurance Co. in Taiwan with paid-in capital of NT$2.25 billion (US$75 million); and, of which, Aviva owns a 49% stake.
Currently the joint-venture insurer has a total of about 100,000 effective insurance policies with majority being investment-typed ones, which contribute 80% of its first-year premiums.
Simon Machell, chief executive of Higher Growth Markets at Aviva, said that Aviva's intention is to streamline its business by focusing on some high performing markets. So, it has decided to withdraw from the saturated Taiwanese insurance market.
Insiders noted that Taiwan's life insurance market—crowded with local and foreign players—is characterized by stiff price competition, nearly homogeneous product offerings, and low profit margins. This has triggered the withdrawal of foreign insurers from the island, such as the recent high-profile departures of American International Group Inc. and MetLife Inc., which sold off their shares in local life-insurance joint ventures.
Aviva is said to be awaiting regulatory approval from Taiwan's Financial Supervisory Commission for its exit. However, First Financial still hopes that both sides can sit down and talk about the future of First-Aviva.
First Financial reportedly wants to keep the life insurance subsidiary, although it has accumulated NT$1.33 billion (US$44.2 million) in losses as of March 31 and needs a capital injection next year.