French insurer AXA grows in China with partnerships, joint ventures

French insurance giant sees huge prospects in Chinese market and wants to expand there through acquisitions and joint ventures

PUBLISHED : Tuesday, 25 June, 2013, 12:00am
UPDATED : Tuesday, 25 June, 2013, 7:10pm

French insurer AXA is looking to expand its footprint on the mainland through acquisitions, reflecting its upbeat outlook for the market in the coming decades.

"In 30 years, China will be massive in our industry, and we want to be there for that growth," said Mike Bishop, the chief executive of AXA in Asia.

Europe's second-largest insurer agreed in April to buy a 50 per cent stake in Shanghai-based Tianping Auto Insurance for 3.9 billion yuan (HK$4.9 billion), expanding its presence in a property and casualty insurance market dominated by local players.

"The Tianping deal comes from taking a 20 to 30-year view on what is already the largest car consumer market in the world," Bishop told the South China Morning Post.

He said the car insurance market on the mainland had improved greatly over the past decades, with reduced claim frequency and improved laws.

Mainland car sales grew 12.6 per cent on the year to 9.03 million units in the first five months, according to the China Association of Automobile Manufacturers. That boosted the premium income of insurers.

Ping An Insurance, PICC P&C and China Pacific Insurance saw premium income from property and casualty insurance grow between 11.1 per cent and 21.7 per cent in the same period, mainly because of strong car sales, according to Shenzhen-based Great Wall Securities.

The business of car insurance has improved, which bodes well for future profitability, Bishop said. "We see this as the ideal time to develop our presence in the country."

Owning a stake in Tianping gives AXA a direct sales channel, according to Bishop.

AXA is one foreign insurer seeking partnerships and acquisitions on the mainland. It formed a joint venture, ICBC-AXA Life, with the country's largest lender, Industrial and Commercial Bank of China, 10 months ago.

Bishop said ICBC's distribution network - 280 million individuals and 4 million corporate customers - helped boost AXA's business. AXA ranked No1 among foreign insurers on the mainland in terms of premium income in April, he added.

"Our deals with ICBC and Tianping confirm that for us China is of great strategic importance," Bishop said.

AXA would continue to seek acquisitions while maintaining its discipline, he added.

"The current environment offers many opportunities for acquiring new clients and talents, to which the group is particularly attentive," he said.

Both partnerships and joint ventures would be used to distribute its insurance, he added.

AXA, which acquired HSBC's general insurance assets in Hong Kong and Singapore last year, wants to do more business in Asia in general, Bishop said. He added that as Asia became richer, there would be more scope to sell insurance, with the current penetration rate not high.

In 2011, AXA sold its Australasian operations and then bought back the Asian part of the business in a transaction with Australian insurer AMP.