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SHC Insurance eyes top 10 position in Singapore

Ergo unit now ranks 14th in property casualty market

[SINGAPORE] Germany's Ergo Insurance Group intends to grow its new acquisition, Singapore-based SHC Insurance, which is ranked 14th in the property-casualty market, to be in the top 10 over the next decade.

This would mean growing SHC's market share from the current 2.0 per cent to 3.2 per cent in the next 10 years, said Andreas Kleiner, board member of Ergo International.

In the first half of 2014, SHC recorded a premium volume of S$41 million and a profit after tax of S$2.4 million.

Describing SHC's performance as "nicely on track", Mr Kleiner, who also heads the Asia business, pointed out that its premium value grew from S$57 million in 2010 to about S$77 million in 2013 - at a compounded annual growth rate of 11 per cent.

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His positive outlook is boosted by the 10 per cent annual growth over the last few years in the Singapore property-casualty market, which showed strong profitability with combined ratios ranging between 85 and 91 per cent.

In the non-life segment, the insurance penetration rate here is 1.6 per cent, which is relatively low, said Mr Kleiner.

He noted that the motor insurance business, which accounts for half of SHC's portfolio, is competitive and that there "may be a few little dents here or there" in the property-casualty segment. Still, he sees strong growth in the long term.

"We're supplementing the Singapore business in a few areas. For instance, we brought in additional actuarial expertise to the company, which will help us become more competitive in our pricing. We are operating on a global basis with predictive models and that should make us better in the motor business."

SHC has been fully owned by Ergo since the start of August, after the latter announced in June plans to enter Singapore's insurance market.

"In the long run, we would like to run South-east Asia (businesses) out of a strong technical hub in Singapore ... the vision for SHC Insurance is that they would become the foundation of that hub," said Mr Kleiner.

Ergo Asia Management's managing director, Cheong Yue Loon, added that the health and travel insurance segments here are not so well-served and the group is toying with the idea of expanding into these areas.

Already, Ergo has presence in two major markets - India and China.

The group has set its sights on South-east Asia, with a focus on the property-casualty business. It currently owns a 25 per cent stake in Global Insurance Company in Vietnam.

To widen its expansion, the group is looking at Malaysia, Indonesia, Thailand and the Philippines. While no detail is given as it is at the primary stage, Mr Kleiner said Ergo has "a couple of potential leads for acquisitions".

The idea to set foot in Asia is inevitably tied to Ergo's operations in "many saturated markets", particularly in reinsurance.

Ergo, the primary insurance arm of reinsurer giant, Munich Re, has had its life insurance business hit as it has been operating in a low interest rate environment in Germany.

"One of the key growth areas that we could see is international primary insurance and in that sense, our expansion as Ergo in Asia plays a key role in also bringing growth to the group," said Mr Kleiner.