Sompo Japan to open non-life insurance unit with Aya Myanmar General Insurance
YANGON, NNA - Sompo Japan Nipponkoa Insurance Inc. will start up a joint venture with AYA Myanmar General Insurance Co. (AMGI), possibly in early October, in Myanmar where Japanese insurers are converging to tap a growing market.
Sompo Japan Nipponkoa and AMGI, an affiliate of Myanmar’s major financial institute AYA Bank Ltd., signed a memorandum of understanding at a ceremony in Yangon on Saturday on the establishment of the joint firm, AYA Sompo Insurance Co., owned 15 percent by the Japanese firm in the initial stage.
The ratio will be raised within two years to 35 percent, the upper limit allowed for foreign investment in Myanmar, according to Sompo Japan Nipponkoa. The Yangon-based joint firm will be led by Keiji Okada, chief representative in Yangon of Sompo Japan Nipponkoa, as its chief operating officer.
Zaw Zaw, chairman of the Max Myanmar Group of Companies which owns AYA Bank, told the signing ceremony that the opening of the country’s insurance market is a great key to its growth. The parties concerned will do their best to help the new firm strive for centuries to come, he added.
In 2016, Sompo Japan Nipponkoa formed a business partnership with AYA Myanmar Insurance Co., the parent firm of AMGI, to exchange human resources with and provide technical assistance to the Myanmar insurer. Sompo Japan Nipponkoa has also been providing insurance services in Myanmar, with the business limited to the Thilawa Special Economic Zone.
In January 2019, the Myanmar government formally announced the commencement of procedures to liberalize the country’s insurance market to foreign capital. Sompo Japan Nipponkoa and AMGI obtained provisional approval in July for forming a joint venture from the Myanmar Ministry of Planning and Finance.
The joint venture, AYA Sompo, initially aims to boost sales of automobile insurance, a fast-growing business sector, mainly over the counters of AYA Bank branches. As part of its deregulation drive, the Myanmar government is expected to liberalize the businesses of construction insurance and cargo insurance, which have been monopolized by government-run companies, to provide a business chance for private enterprises.
In Myanmar’s fledgling insurance market, several Japanese or Japanese-affiliated firms are lined up with Nippon Life Insurance Co., Taiyo Life Insurance Co. and Thai Life Insurance Co., partly owned by Japan’s Meiji Yasuda Insurance Co., in the life-insurance sector. Non-life insurers are also taking part – Sompo Japan Nipponkoa, Tokio Marine and Nichido Fire Insurance Co., and Mitsui Sumitomo Marine and Fire Co.
Additionally, five foreign companies – Japan’s Dai-ichi Life Insurance Co., AIA Group Ltd. of Hong Kong, Swiss-based Chubb Ltd., Canadian Manulife Financial Corp. and Prudential Financial Inc. of the United States -- have been permitted to set up wholly owned life insurance firms in Myanmar.