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AETNA International is hoping its plan to expand operations in four more emerging markets will win it a major role in the Asia-Pacific's insurance and financial industries.

     Senior vice-president Douglas Henck said business talks were already underway in the Philippines, Thailand, India and Vietnam.

  The move will take its total number of regional operations to 10.

   Mr Henck said he also hoped the firm's representative offices in Shanghai and Beijing would be upgraded to full branches when they fulfilled the requirement to be in China for three years later this year.

  He was confident an emerging middle class, who held most of the insurance policies, would develop faster in the four new countries than had been suggested in statistics.

   'Say in Vietnam, there are many motorcycles on the streets which may cost US$2,000 (HK$15,460) each,' Mr Henck said.

  'But the average annual income [per capita] is US$200 only. You will ask how they can afford [the motorbikes].

  'You'll find there is huge underground economy.'   On Hong Kong, Mr Henck said cultural differences in Chinese communities that had once hindered the insurance industry would soon disappear.

  'It was a tradition that the elder children take care of other family members when accidents happened. Therefore, there was no need for insurance,' he said.

  'But now the culture has changed. People do not expect their children to take care of them. The insurance industry will move to a higher level of maturity.'   Aetna and Bank of East Asia's joint venture, East Asia Aetna Insurance, will celebrate the opening of its own office tower in Hong Kong in May.

  This will concentrate its operations under one roof.

    Aetna International's parent company, Aetna Life & Casualty, is the 14th-largest company by assets in the United States. It has been established for 140 years.

  It has five other operations in Asia, including a Taiwan branch, the mainland representative offices, and joint ventures in Indonesia, New Zealand and Malaysia.

  The combined 1994 revenue for the Asia-Pacific operations was US$630 million, US$135 million more than for the previous year.

  The Taiwan branch, set up in 1987, posted the best performance. Revenue surged 36 per cent to more than US$330 million, from US$242 million in 1993.

   Although delays in China's re-entry to the World Trade Organisation might slow the country's effort at opening its insurance market this year, Mr Henck was positive about Aetna's long-term development prospects, especially as Beijing had stressed the importance of having a comprehensive security net before state enterprise reform.

  'We are not expecting everybody will be allowed to operate in the country at once. But gradual progress will be seen over the next two to three years,' he said.

  'Also to develop the nation's insurance sector, local expertise is not enough, and foreign models can help the country.'   Mr Henck said the priority now was to improve the insurance sector's rules and regulations in China.

  'In the past, there was apparently only one insurance company in the country. Regulations are not developed to [cater] to the complication of the emergence of overseas companies,' he said.

  The People's Insurance Co of China (PICC) is the largest insurance firm on the mainland, and controlled 84 per cent of the domestic market last year.

  PICC handles most of the re-insurance business, although China plans to develop other re-insurance firms in Shanghai.

  Mr Henck said China's attitude towards foreign competitors was also a sign the insurance market was opening up.

  'But I take Taiwan as an example: after Taiwan opened up its insurance sector, Cathay Life's market share dropped from 60 per cent to 50 per cent,' he said.

  'However, the premium [it received] still had an absolute growth.' 



Aetna holds talks to expand insurance operations in Asia