Summary
Asia is becoming an important growth engine for global insurers. The
changing socio-economic dynamics present attractive opportunities.
Without Asia, AIG and Prudential (UK) could see half their value
evaporate. Yet, the challenges are real. No single foreign operator
has a dominant position across the region. Regulatory barriers and
competition from domestic players show little sign of abating.
Investing for the future is important, but how, and at what cost?

Summary
Asia is becoming an important growth engine for global insurers. The
changing socio-economic dynamics present attractive opportunities.
Without Asia, AIG and Prudential (UK) could see half their value
evaporate. Yet, the challenges are real. No single foreign operator
has a dominant position across the region. Regulatory barriers and
competition from domestic players show little sign of abating.
Investing for the future is important, but how, and at what cost?

…and even the right approach won’t guarantee success
The decision by a foreign insurer to develop a presence in Asia Pacific is a long-term commitment with
no short-term or assured pay-back.
Prudential of the UK kicked off in 1994 its expansion drive in Asia, which only became a net cash
contributor in 2006, largely because of the cash flows coming from existing, mature operations in Hong
Kong, Singapore and Malaysia. Embedded values create the illusion of success, but real, tangible returns
to shareholders will be a long time in coming.
In emerging markets, global players aren’t necessarily in control of their destiny. With few exceptions,
they are minority players in joint ventures with uncertain timing as to when they can realise any benefit
other than that provided by someone willing to buy them out for a higher price. Even when they have
established partnerships, some have found to their cost that “exclusive” may not mean “exclusivity”.
What the experience tells…
Emerging markets are full of regulatory and market obstacles. Companies shouldn’t set up shop just
because they want to be perceived as global. They can always jump on the bandwagon given most
markets are still under-penetrated. But the issue is whether they can deploy the resources, management
attention and capital efficiently.
Once you decide to do it, do it right. A presence without substance adds little value.
Of the global operators we identify above, only two stand out as having Asia as a significant driver of
their value creation – AIG and Prudential of the UK, which are both present in 12 markets. Manulife,
Axa, ING and Allianz form the second tier. However, strip away Japan and Hong Kong, then the
emerging portfolio can be relatively small. Prudential plc provides the best regional exposure.
We sum up the prevailing market themes and the lesson foreign insurers learn (or the faux pas) in the
section “The Asian Experience” on page 6.
“Meeting the Sevens” on page 9 offers some broad views as to why the region appeals to overseas
companies. We have chosen seven markets: China, India, Indonesia, Malaysia, South Korea, Taiwan and
Vietnam. They range from underdeveloped (China, India, Indonesia and Vietnam) to fairly mature (South
Korea and Taiwan). More details on the individual countries begin on page 14.
“Greeting the globetrotters” on page 12 summarizes how the major global players are positioning
themselves in Asia. More analysis on nine companies – AIG, Allianz, Aviva, Axa, Fortis, Generali, ING,
Manulife and Prudential plc – can be found in the company section starting on page 41.
This report does not offer investment opinions. Disclosure on the region is inadequate and the earnings
contribution remains tiny for most foreign insurance companies. The report serves more as a primer on
the insurance industry in Asia so that those outside the region can gain insight from those on the ground.

Contents

5
Insurance
Emerging Markets
13 March 2008
abc
The Asian experience 6
The Asian lesson 7
Meeting the Sevens 9
What’s on offer 9
Greeting the globetrotters 12
The life insurance league 12
The non-life insurance league 13
Country overview 14
China 15
India 19
Indonesia 23
Malaysia 26
South Korea 30
Taiwan 34
Vietnam 37
Company overview 40
AIG 41
Allianz 43
Aviva 45
Axa 47
Fortis 49
Generali 51
ING 53
Manulife 55
Prudential plc 57
Appendix –Country macro profiles 59
China 60
India 61
Indonesia 62
Malaysia 63
South Korea 64
Taiwan 65
Vietnam 66
Disclosure appendix 67
Disclaimer 70