Expansion in Asia on hold
23 Oct 2017
IAG hits the brakes on its Asian growth ambitions saying it is unlikely to make major investments in Asia in the short-term and is focusing on its core Australia and New Zealand markets.
“Over the past 12-18 months, we have been looking for opportunities to increase our investment in our key markets of Thailand, Malaysia and India,” CEO Peter Harmer told group’s AGM in Sydney on Friday. “We have not been able to find the right circumstances, however, so it is unlikely we will make further investments in Asia in the short term.”
When Harmer took the helm at IAG in 2015, the company was predicting that its Asian businesses would provide the company with 10% of its total revenue by 2016 – an outcome that was not realised, with the operations only yielding the company 4% of its total revenue in 2016 and just 3% in the last financial year.
Asia business earnings declined to $10 million last financial year from $26 million the previous year amid increased competitive pressures and adverse claim cost trends in Thailand and Malaysia.
Asia accounts for 3% of IAG’s gross written premium.
Thailand and Malaysia represent about 80% of its investment of about $800 million in the region. It also has interests in Vietnam, Indonesia and India.
Last year IAG said it had tightened its focus in Asia and was particularly interested in consolidation or increased ownership opportunities in Malaysia and Thailand.
No mention was made of China, after institutional shareholders lobbied the group in October 2015 to cancel plans to expand into that market.
- Insurance Business, InsuranceNEWS