Insurance Australia Group is working to make its $720 million investments in Asia profitable as it eyes a long-term presence in the rapidly growing region.
Chief executive Mike Wilkins told investors on Tuesday that IAG’s Asian strategy was on track, with 10 per cent of its total premiums to come from Asia by 2016.
Several years after setting its sights on the region, almost six per cent of IAG’s gross written premium is generated from interests in Malaysia, Thailand, India, China and Vietnam.
The potential for growth is much stronger in Asia, which is home to about three billion people, than the much more developed Australian and New Zealand markets, home to under 30 million, he said.
“It’s a large regional market that’s set to experience substantial growth in demand for general insurance products, as middle class consumption and asset ownership both increase by around 200 per cent by the year 2020,” Mr Wilkins said.
“Asia’s also a region where IAG can bring its proven insurance skills and expertise to bear on currently relatively unsophisticated and lowly penetrated insurance markets.
“It’s relatively close to home, and free from the time differences or distance challenges experienced in other parts of the world.”
IAG, which operates the NRMA and CGU brands, controls two general insurers in Thailand, and owns almost half of AMG Insurance and Kurnia in Malaysia.
It also holds smaller interests in general insurers in India, China and Vietnam, and has options to increase those stakes in the future.
Chief executive of IAG’s Asia business, Justin Breheny, said the company’s focus had moved from entering Asia through acquisitions to generating attractive returns in the medium term.
“We’re now moving on from that market entry stage … and the focus now goes to getting the value out of all the investments, not just the established businesses we have at the moment,” he said.
Mr Wilkins said IAG was continuing to focus on growth in Australia and New Zealand, and restoring the profitability of its business in the United Kingdom.
IAG shares were down 3.5 cents, or 1.0 per cent, at $3.495 at 1453 AEST.
