ING not worried by merger talks

The Star Malaysia    Saturday May 29, 2010    By DALJIT DHESI

KUALA LUMPUR: ING Insurance Bhd, which is projecting more than 25% in new business premiums this year, is unperturbed by the ongoing merger talks between Prudential Plc and American International Assurance (AIA), saying it will not derail the company's growth over the next few years.

President and chief executive officer Datuk Dr Nirmala Menon said the company was aware of the talks and had their own strategies and plans in place.

"Despite this, we are expecting solid growth over the next few years for all our lines of business," she told StarBizWeek.

"We believe in profitable growth and are not much concerned about the ongoing talks between Prudential and AIA as the company believes there is enough opportunity for everyone in the market."

The penetration rate for life insurance in Malaysia is about 40%, which is still considered low compared with some other countries in Asia.

The core growth strategies for ING Insurance include building its agency workforce and driving productivity for its tied agency as well as maintaining its lead positions in group insurance (employee benefits) and bancassurance.

Insurance giant AIG recently agreed to sell its Asian life insurance unit, AIA, to Britain's Prudential Plc for US$35.5bil despite some objections from Prudential's shareholders in the largest insurance deal ever, paving the way for Prudential to become South-East Asia's biggest insurer. At the moment, the merger talks between the two are still impending.

On May 17, Prudential launched a US$21bil rights issue to help pay for the purchase of AIA where Prudential's existing shareholders will have the right to buy 11 new shares for every two they now own at £1. 04 (US$2.09) each.

Asked whether ING Insurance was looking at mergers and acquisitions to further strengthen its foothold in the industry, Nirmala said it would look into it but was not on a shopping spree at the moment. "We are in a consolidation mode as in the last two years, the company has actually cut expenses and rationalised its business needs."

For this year, ING Insurance is projecting new business premiums in excess of 25% to more than RM500mil compared with RM433mil last year. In 2008, new business premiums stood at RM375mil.

Nirmala said it was on track to achieve the figure (of more than RM500mil) based on its numbers in the first quarter when new business premiums rose by 13% to RM85mil against RM75mil in the same quarter last year. She attributed this growth to its multi-distribution strategy, comprising agency, bancassurance and employee benefits business.

Apart from this, she said, its new product — INGeasi for Health to be launched in July — would contribute between RM50mil and RM60mil of its total new business premiums.

One of the company's major focuses had been to recruit more agents, Nirmala said, adding that number of staff recruited for the first quarter was more than 50% of that of the whole of last year. It now has about 10,000 agents and plans to recruit 5,000 more this year.

Asked whether the risk-based capital framework was good for the industry, she said it was as it would create an even playing field for all insurers.

According to Nirmala, insurers under the framework had to be very careful on the amount of capital they had and the type of businesses they could write as the risk-based approach required capital to match or reflect the risk profile of the insurer.