Serving as general director of Singapore-invested Great Eastern Life (Vietnam) as a newcomer to Vietnam’s life insurance market, Andrew Yeo shares with the Daily his thoughts about the challenges and opportunities in the domestic life insurance industry in 2009, as well as the company’s competition strategy in the long run. Excerpts follow.

Do you think now is the right time for Great Eastern to enter the life insurance market in Viet Nam?

- Life insurance is a long term commitment, both from policyholders and life insurance companies. The decision to invest in Vietnam was not made overnight. The evaluation and analysis were rigorous and thorough before the decision was made. We have been here since 2004 and since then we have been actively involved in the development of the insurance industry with the authorities and the business community. As such, our commitment to our investment in Vietnam remains as strong as before, if not more.

The global crisis that we are facing now is an unfortunate situation that will pass by us over time, especially with all the efforts by the relevant authorities to rescue the economy. In the first nine months of 2008, we had seen a decrease of nearly 9% in the number of new business policies as compared to the same period last year. But that is still a whopping 401,000 new business policies being created.

It means you are still upbeat about the future perspective of theVietnamese market?

- Looking at the numbers, we can see that as the general wealth and affluence of the society grows, the need for insurance will increase as well. It means people’s understanding and awareness of life insurance is increasing. In addition, the recent experiences of the stock and property market in Vietnam have also enhanced the general public’s awareness of the need to balance their investment portfolio.

We therefore look forward to meeting their insurance needs. So although Great Eastern has entered the market later than some other foreign insurers, we are optimistic of our development here as we see great potential in the life insurance market.

The world economic upheavals, especially the in-depth impact of the financial crisis in the U.S., are not good signs for life insurance. In the States, the leading life insurer AIG had to rely on the U.S. Government’s bailout. Do you feel any impact for your group?

- Viet Nam will feel bigger impacts of such a crisis as the country gets more integrated with the global economy. This situation has made it more difficult for companies to find suitable investment vehicles to invest and hedge their risks and liabilities. However, I think insurers are less vulnerable as compared to banks because investment is just one of the risks which we faced.

It is widely perceived that 2009 will be a very challenging year. We recognize that fact and have put in place certain contingencies and preparations to the road ahead. There will naturally be some belt-tightening exercises that we have to go through and certain streamlining to obtain efficiencies. This is not all new as these are the constant actions needed to ensure that the business is sustainable and profitable for the long haul.

To date, we have invested VND600 billion to develop here. This commitment is made possible as our head office in Singapore is financially strong.

Great Eastern is the 9th wholly foreign-owned life insurance company to be operational in Viet Nam. Do you think your company is a late comer and what will be your strategy to compete in a market where people are not accustomed to payment for life insurance premiums like here? What is your forecast for Great Eastern market share here in the next five years?

- Currently, just less than 10% of the Vietnamese population holds a life insurance policy but it is very good that 60% of the population is below 30 years old. Yes, the competition will definitely get more intense in the near future with the presence of more insurance companies coming here.

However, this is a good thing for the industry as a whole, because customers will have more choice and all players will need to improve products and services, especially services. Companies will also have to enhance their management capabilities to stay competitive in the market.

We strongly believe that the cooperation of all players will lead to further improvement and development to the whole industry, and we are happy and committed in contributing to the Vietnamese insurance market.

We aim to deliver efficient and quality products and services to our customers by keeping our feet and ears close to the ground for continuous feedback and improvement.

Risk management and portfolio diversification perhaps are the best ways to avoid risks. However, as you know in Vietnam everything is not always easy, I mean this is a young market where the legal corridor is not yet perfect and the environment for business is not really easy. Do you take all these difficulties into account?

- Yes, risk management and portfolio diversification are definitely important, especially so for financial services industry where we are entrusted with the hard-earned money of our customers. In Great Eastern, we hold these two areas very dearly in our operations. The financial environment in Vietnam is still developing and in its infancy stages as such it does not allows us to adopt and borrow the same practices that we have in our other operations in the region. We recognize that but it does not mean that we cannot implement what is needed to ensure we mitigate our risks exposures. We will have to adapt what is needed with the environment that we operate in. (SGT)