American
government took over AIG, AIA faces new challenges of business expansion
Source:www.jfdaily.com
Author:Fang Yuan
Date:24 Sep,2008 Threatened
with bankruptcy,
American International Group, Inc. (AIG) was taken over by the US
government at 85 billion
dollars. This has influenced
business development of its subsidiary AIA in various regions. The
reporter saw
in AIA Shanghai Office that, a few customers on business held related information of
¡¯¡¯establishment of
insurance protection fund company¡¯¡¯, and someone asked the loss after
surrender
to workers from time to time. With the move of circulating fund
emergency of
AIG, the surrender tide of AIA expanded from Singapore,
HongKong to cities in mainland China
like Shanghai
and Shenzhen.
Business
expansion
becomeing a hot potatoSince
15 September, several insurance salesmen of AIA received calls from
clients
asking if they should keep policies of AIA in hand or surrender? Not
until the
Federal Reserve announced a 2-year mortgage revolving loan of 85
billion us dollars
to AIA that the excitement of clients toned down. More and more of them
chose
to renew.
An
agent of AIA Beijing
said, hardly has one wave subsided when another rises. Clients¡¯ doubt
for
surrendering hadn¡¯t been cleared, then new business met with many
obstacles. On
one hand, unfamiliar clients learned reports about AIA, they refused
directly
the demands of door to door visit; one of the others, rivals of the
same
industry ¡®¡¯recommended¡¯¡¯ strongly AIA case when they expanded business,
making
more and more customers having psychological repellence against AIA.
Professor
Hao Yansu, head of insurance department of
Central University of Finance and Economics, said, there was a crisis
in parent
company of AIG, so a certain amount of surrenders in AIA was not
horrible. But
the brand and credit of AIA was called into question by the public,
which made
it more difficult to do business, this was the biggest challenges
facing by AIA.
In 2008, AIA showed exhausted against the developing trend of the
industry,
which led to a big gap of premium with rivals. According to the
statistics of
CIRC, from January to July this year, the premium income of AIA was
451.2
million yuan, decreased by 4.7%; while at the same time, average
increase of
domestic life insurance reached 66.75%.
Bonus
for customers become unknown
Professor
Hao Yansu pointed out that the falling of
credit ratings of financial organizations would affect its efficiency
in doing
financial activities. The
Federal Reserve
paid the mortgage loan of 85 billion US dollars, they got the right to
sell
assets of AIG at the same time. That is to say, AIA as the best asset,
once
sold, would be difficult to get a good price, then customers¡¯ bonus
would also be
affected.
It
was reported that the
reason for AIG¡¯s financial trouble was the price falling of real estate
and
financial slowdown, not because of its major business - insurance; by
contrast,
those American insurance companies concentrating on insurance were not
affected
so seriously by financial crisis. Comprehensive domestic financial
groups were
in an increasing trend, among which Ping¡¯An have 7 financial
organizations in
different domains. Its investment has stretched to a few fields,
including
foreign financial market.
Foreign
capital financial products have high
risks
¡®¡¯By
way of analogy, we
choose foreign brands like BMW, VOLVO, NISSAN when buying a car. Even
if these
companies would have difficulty in operations, cars are still in the
hands of
customers. Financial products like insurance itself are a long-term,
future
promise, so it¡¯s easy to be influenced by operations of companies.¡¯¡¯
Professor
Hao Yansu thought, for domestic customers, there were more risks for
buying
financial products of foreign-capital corporations, and joint-ventures
than buying
that of Chinese-invested corporations. If domestic policy environment
changed, Chinese-invested,
foreign-capital and join venture insurance companies would face a fair
situation;
if there¡¯s economic friction between China and other countries, or
other
countries themselves have economic troubles, foreign capital,
joint-venture
insurance company would be involved, while influence on Chinese
insurers would
not be serious. He also said, the case of AIG would cause a chain of
effects
among foreign-capital corporations in China.
Domestic consumers may
lower their trust on foreign corporations to a certain extent; even the
possibility of psychological repellence cannot be excluded. Development
of
these foreign-capitals, joint venture life insurance company in
domestic market
cannot be considered stable, the banking channel is the aorta of their
business, at the moment personal business is facing challenge of credit
image.
But
not all Chinese invested insurers are so lucky. It was known that AIG
held 9.9%
share of PICC, the 5-year lock-in period would be relieved in October
2008. On
18 September, HongKong share of PICC property fluctuated widely since
previous
bargain day, the highest fluctuation rate exceeded 11%, the lowest
price that
day was 2.86 HK¡ç.
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