Don’t look now, but two heavyweights in the insurance industry are quietly expanding their operations in the Asia, looking to capitalize on what they see as an underserved market.
The two octogenarian insurance magnates – Warren Buffett and Maurice Greenberg – believe that there is vast opportunity in the Asia’s general insurance market, a sector that remains dominated by local players.
“The insurance market in Asia offers so much potential for growth,” Sally Yim, a senior credit officer at Moody's Investors Service, told the
Wall Street Journal. “That's why these two tycoons are expanding here.”
The Asian market has proven its value to Canada’s
Manulife, which reported impressive growth in Japan and Indonesia, with sales up more than 50 per cent for the first quarter of this year – offsetting an overall sales drop of 15.3 per cent that reflected lower group benefits sales in Canada.
The 83-year-old Buffett and 89-year-old Greenberg have been making the moves through their companies
Berkshire Hathaway Inc. and Starr Cos., respectively, in the recent months.
Greenberg completed the first takeover of China’s Dazhong Insurance last month, the first foreign buyout in that country of a state-backed general insurer.
Meanwhile, Buffett’s firm has been hiring high-level executives from
AIG and others to build its commercial insurance business. (continued.)
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AIG is one of the most significant insurers in Asia, with property-casualty operations in Japan, China, South Korea, Singapore, Vietnam, Thailand, Australia and Indonesia.
The U.K.'s Prudential PLC and Germany's
Allianz SE sell life insurance and general protection policies.
But according to analysts, outside of auto protection, there are large coverage gaps in general insurance from real estate through to aviation. And it is those underserviced markets, combined with a rising middle class and strong economic growth, that have caught the eye of Buffett and Greenberg.
Premiums in Asia outside of Japan for property and casualty insurance grew almost 15 per cent a year in the decade ending in 2012, compared with 3 per cent in the U.S., according to
Swiss Re.
