INTERVIEW: Ergo Eyes Southeast Asian Expansion, Sales Boost
May 12 2009 - 10:08AM
Dow Jones News
Ergo International AG, a unit of German reinsurer Munich Re
(MUV2.XE) and a part of Ergo Insurance Group AG (EVG2.XE), is
looking at expanding into Southeast Asia next year, Chairman Jochen
Messemer said Tuesday.
Due to a scarcity of potential acquisitions, the company would
be relying mainly on organic growth to meet its target growth in
sales, Messemer told Dow Jones Newswires.
"Southeast Asia, for us, is more a topic for 2010 than 2009,"
Messemer said. In that region, the company is studying how to enter
Malaysia and Vietnam, he said.
"There's at least a base for starting business (in those
countries) and the insurance penetration rate and the competition
is not at such a high level. So that makes a lot of opportunity
when not too many have entered the markets yet," Messemer said.
Ergo International is present in more than 30 countries around
the world, mostly in Europe and a few in Asia, including in India
and South Korea.
In its expansion efforts, Ergo prefers to buy companies but
would be open to joint-ventures and bancassurance deals, Messemer
said.
He said that AIA, the Asian insurer being sold by American
International Group Inc. (AIG), "is not a top priority" for
Ergo.
Instead, Ergo is looking for targets that are more "medium
sized," are "easier to integrate" and which could contribute around
EUR300 million to EUR700 million in annual premiums, he said.
Messemer said the company is currently not in active talks to
buy other companies.
But even if acquisitions don't materialize, the company will
persevere in its sales from its ongoing businesses to meet a
"doable but ambitious" target of raising annual premiums to EUR6
billion in 2012, up from EUR3.4 billion last year.
That translates to forming around a third of Ergo Insurance
Group's expected annual premiums, up from last year's contribution
of 20%.
This growth will be led by its best-performing markets like
Poland, Austria, South Korea, Belgium and the Baltic region -
places where the company is benefiting from a "flight to quality"
as customers "have no problem in terms of the reputation of our
brand," he said.
He said the company has for now avoided other markets like the
U.S., South America and the Middle East because it wants to
prioritize its expansion efforts in Asia and Eastern Europe, where
the company currently feels more comfortable in.
For the rest of this year, he said Ergo International has "got
its plate full" in looking for joint-venture partners in China and
India.
In China, "we hope to announce by late summer, or latest by the
end of this year, a partner to open a life insurance company," he
said.
Company Web site: www.ergo.com
-By Vladimir Guevarra, Dow Jones Newswires, Tel. +44 (0)
2078429486, vladimir.guevarra@dowjones.com