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Bangkok Post - Securing its future with diversification
Securing its future with diversification
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Securing its future with diversification

Insurer AIA Thailand spreads risk with investments in property and logistics

After 85 years of building its business in Thailand, the Hong Kong-based life insurance firm AIA is pursuing portfolio diversification here to capture future potential and achieve sustainable growth.

Mr Advani is upbeat on the outlook for the Thai health insurance industry, which is expected to grow this year.

Under the company's customer-centric strategies, AIA Thailand devised a new concept for product development this year, focusing on delivering health solutions for customers to serve changing demands and technologies.

AIA is also integrating sustainability into its business practices with a goal of achieving net-zero greenhouse gas emissions by 2050 in an effort to address climate change and contribute to the healthier development for Asia.

"AIA is confident our growth strategy will continue to deliver sustainable value for all of our stakeholders as we help millions more people live healthier, longer, better lives," said Lee Yuan Siong, AIA Group's chief executive and president.

The company's customers in Thailand number 5 million, with more than 7.8 million issued life insurance policies, accounting for one-third of the country's total.

In addition, AIA's Thai unit has a 24.8% market share in the industry as of Jan 3, according to the Thai Life Assurance Association.

PROPERTY PIVOT

Globally the group diversified its portfolios to the real estate sector as part of a strategy to reduce risk. In Thailand, the insurer has invested 14.8 billion baht in three real estate projects.

Starting in 2010, AIA Thailand funded its first office building, AIA Capital Center. It developed a second one, AIA Sathorn Tower, two years later.

The occupancy rate of the two buildings exceeds 90%, said Nikhil Advani, chief executive of AIA Thailand.

"Despite tough competition on the supply side and the negative effects of the pandemic, both AIA Capital Center and AIA Sathorn Tower are holding up well with quality anchor tenants," he told the Bangkok Post.

The third building is AIA East Gateway on Bang Na-Trat Road, which was opened earlier this year adjacent to the Eastern Economic Corridor.

All three properties are located in growing commercial zones where both local and foreign companies seek to expand their business.

Mr Advani said the current trend in the Thai real estate market is large mixed-use developments, using technology and designs from overseas.

"Corporate tenants are being offered more options and are ready to embrace modern spaces with a lower footprint. This means the competition is high among developers and we have to be quick to adapt our strategies," he said.

In addition to office buildings, the insurer is looking to invest in student and senior housing, including lifestyle offices, as they are among long-term and reliable assets likely to serve rising global demand.

An ageing population and the need for a good lifestyle in a safe environment are the main drivers, said Mr Advani.

KEEN ON LOGISTICS

AIA sees promising opportunities for portfolio diversification in the Thai logistics business as more retailers and wholesalers look to transform the way their e-platforms can distribute products and connect with their customer base, said Mark Konyn, chief investment officer for AIA Group.

"In a country with a large population and a high level of consumption, the need for logistics infrastructure has become more important to the Thai economy, which has a large service sector," said Mr Konyn.

The company has not launched a logistics project in Thailand yet, but is in the process of developing a deep understanding of the market before exploring options to enter it, said Mr Advani.

In addition, the company's investments in technology, digital and analytics are under development, said Mr Lee.

Data centres are another infrastructure mega-trend the company is looking to integrate with its environmental, social and governance component, using alternative energy for data storage to achieve a high level of efficiency.

2023 OUTLOOK

According to the AIA Group's 2022 report, the value of new business (VONB) grew in all reportable segments in the third quarter.

The company's VONB accounted for US$741 million, up 7% year-on-year, thanks to an increase in agent productivity.

"Our bancassurance partners delivered another quarter of excellent VONB growth, with very strong performances across our leading Asean operations," said Mr Lee.

Annualised new premiums were up 8% year-on-year to $1.27 billion. Total weighted premium income amounted to $8.65 billion, up 2% year-on-year.

"AIA Thailand reflected a similar trend, growing VONB with a broad-based performance in the third quarter as sales activity across all channels improved, including strong growth from our banking partners," he said.

The company expects the health insurance segment to continue expanding this year, including policies that cover critical illnesses, as Thai customers still need health coverage to prevent health misfortunes.

The AIA Multi-Pay CI product, which covers three severe diseases, recorded outstanding growth in recent years, said Mr Advani.

In 2023, the company expects continued growth in the insurance industry as more customers pay close attention to their health following the pandemic. As a result, this should create a positive effect for Thai life insurance companies, he said.

"Customers will use insurance as a tool for financial planning for the long term," said Mr Advani.

"We expect to see many insurance companies launching new products in the market this year."

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