# Why are we seeing a flurry of exits by Global Insurance players from Asia? Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-07-13 Category: INSURANCE Category URL: https://financedigest.com/category/insurance Meta Title: Why are global insurers exiting Asian markets? Meta Description: Discover the reasons behind the recent exits by global insurers in key Asian markets and understand the challenges they faced in achieving success in these URL: https://financedigest.com/why-are-we-seeing-a-flurry-of-exits-by-global-insurance-players-from-asiahtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/7-1736838180894-compressed.jpg) Axa announced sale of its 49.99% stake in Axa Affin Generali Insurance (“AAGI”) and 49.0% stake in Axa Affin Life Insurance (“AALI”) for a total cash proceeds of c. Euro 140 mn on 22 June 2021. It is one of the latest exits by a global insurer where we have seen similar exits by a number of other players like Aviva (exited Singapore, Vietnam, Indonesia, Taiwan, Hong Kong and trying to exit China and India), Cardif (exited Vietnam, exiting India), Mapfre (exiting Indonesia, Philippines), Axa (exiting Singapore, India), Old Mutual (exited India) and many others. Many exits were carried out by Australian banks too which retreated both their banking operations in [Asia as well as divested insurance](https://www.financedigest.com/understanding-asia-pacific-insurance-regulation-is-key-to-growth-says-aon.html "Understanding Asia Pacific insurance regulation is key to growth, says Aon") business in an attempt to restructure their balance sheet and focus on core Australian banking businesses for example CBA (exited Indonesia), IAG (exited Indonesia, Vietnam and Thailand), QBE (exited Thailand, Indonesia, Philippines) and many more. **So why are these players exiting these markets?** Is it because the market doesn’t have the potential which they initially envisaged, or is it that they [didn’t know](https://www.financedigest.com/3-things-you-didnt-know-about-trading.html "3 Things you didn’t know about trading") how to succeed in these highly competitive markets? To understand, maybe we go back a few decades ago when some of these players entered Asia. A lot of these entries happened because of the booming Asian [economy and everyone wanted to plant a flag in Asia as investors and analysts were asking Global](https://www.financedigest.com/global-economy-seen-facing-a-challenging-year-eurochambres.html "Global economy seen facing a challenging year -Eurochambres") CEOs for their Asia strategy after Jim O’ Neil’s famous ‘Build Better Global Economic BRICs’ report in 2001. Some of these entries were not well thought through and were poorly executed which resulted in a lot of these operations failing to capture the intended growth despite [burning huge amounts of cash](https://www.financedigest.com/europe-burns-cash-to-help-businesses-in-deepening-energy-crisis.html "Europe burns cash to help businesses in deepening energy crisis"). On the other hand, domestic players or well-structured JVs [boomed well and became market](https://www.financedigest.com/concrete-placing-booms-market-notable-developments-geographical-outlook.html "Concrete Placing Booms Market: Notable Developments & Geographical Outlook") dominant players. In fact, we can categorize reasons for their exits in the following four buckets: - **Flawed entry strategy in the first place:** The original entry was more of a flag on the map with no [real effort and intention to make this work](https://www.financedigest.com/get-real-how-to-be-your-authentic-self-at-work.html "Get real: How to be your authentic self at work"). For example, why would a [Spanish behemoth like Mapfre enter markets](https://www.financedigest.com/2017-spanish-property-market-gems-kyero-com-gazes-into-the-crystal-ball.html "2017 Spanish property market gems – Kyero.com gazes into the crystal ball") as diverse as Indonesia and Philippines in the first place. The JV structure that was put in place reflected arrogance of some of these players where they either didn’t opt for a domestic partner or even if they did, due to regulatory requirements, they made them passive. The focus was more on [product capabilities and insurance](https://www.financedigest.com/two-thirds-of-consumers-would-prefer-to-deal-with-a-single-provider-for-insurance-products.html "Two-thirds of consumers would prefer to deal with a single provider for insurance products") know-how versus distribution and local knowledge. This misguided approach resulted in a significant number of these operations not being amongst the [top 10 players for these markets](https://www.financedigest.com/new-research-content-marketing-underpins-integrated-pr-and-communications-strategies-of-top-200-asset-managers.html "New Research: Content Marketing Underpins Integrated PR and Communications Strategies of Top 200 Asset Managers"). - **Entering with an exit-mindset:** The Asian operations were treated as fixed deposits to be withdrawn when [Global operations were hit by losses/ large](https://www.financedigest.com/banks-recover-75-of-defaulted-debt-owed-by-large-corporate-borrowers-finds-new-global-credit-data-report.html "Banks recover 75% of defaulted debt owed by large corporate borrowers, finds new Global Credit Data report") claims. For example, the cash received from the potential sale of Singapore, India, and Malaysia operations would help Axa fill the €1.5 [billion hole created by Covid-related claims](https://www.financedigest.com/cvs-walmart-walgreens-agree-to-pay-13-8-billion-to-settle-u-s-opioid-claims-sources.html "CVS, Walmart, Walgreens agree to pay .8 billion to settle U.S. opioid claims – sources") which even forced it to cancel its special dividend. - **Flawed or under powered execution effort**: They underestimated the efforts required to make Asia work. For example, some of the [insurers sent employees trained in mature markets](https://www.financedigest.com/a-look-ahead-to-2023-in-the-insurance-market.html "A Look Ahead to 2023 in the Insurance Market") like the US to handle their Asian operations, completely overlooking the different culture and channel sensitivities of the region. Also, these postings were treated as either ‘punishment’ or ‘holiday’ postings by these employees [since there was no real benefit of experience gained](https://www.financedigest.com/dollar-heads-for-first-weekly-gain-since-february.html "Dollar heads for first weekly gain since February") here in their core markets. - **Flip-flop in strategy:** In few cases, the [change of strategy or the change of CEO also resulted in big](https://www.financedigest.com/from-boom-to-bottom-and-now-big-change-renault-and-nissan-reshape-alliance.html "From boom to bottom and now big change: Renault and Nissan reshape alliance") bang entries that were followed by quiet withdrawals.  For example, Thomas Buberl (CEO of Axa) acquired XL [Group for USD 15.3 bn in 2018 and changed the focus](https://www.financedigest.com/pizza-group-dp-eurasia-sharpens-turkish-focus-as-russia-risk-high.html "Pizza group DP Eurasia sharpens Turkish focus as Russia risk high") of Axa to Property & Casualty instead of life. Since then [Axa has been disposing of smaller operations to fund](https://www.financedigest.com/axa-unilever-to-join-new-1-billion-euro-regenerative-agriculture-fund.html "AXA, Unilever to join new 1 billion euro regenerative agriculture fund") the XL deal. Another [classic example is HSBC Insurance](https://www.financedigest.com/classic-car-insurance-broker-launches-future-classic-investment-guide.html "Classic car insurance broker launches Future Classic investment guide") which exited its GI business to Axa in 2013 but is not rumoured to be the lead contender to re-acquire Axa’s Singapore business. Above reasons mixed with a myriad of other minor [factors can explain a large majority](https://www.financedigest.com/the-stir-to-be-different-a-major-factor-of-growth-of-the-flax-seeds-market.html "The Stir To Be Different A Major Factor Of Growth Of The Flax Seeds Market") of these exits. However, the good news is that we are now [seeing a strong buying interest from North Asian buyers](https://www.financedigest.com/10-year-david-goliath-crusade-finally-sees-justice-for-off-plan-spanish-property-buyers.html "10 year ‘David & Goliath’ crusade finally sees justice for off-plan Spanish property buyers") including Koreans, Chinese, Taiwanese, and Japanese players who are capturing the grounds ceded by American, European, and Australian insurers. A few of these quitters may also come back to acquire in Asia if their strategy or their [CEO changes](https://www.financedigest.com/bayer-hits-8-month-high-as-investors-welcome-ceo-change.html "Bayer hits 8-month high as investors welcome CEO change"). It would be [interesting to see](https://www.financedigest.com/portugal-pm-welcomes-lufthansas-interest-in-tap-scholz-sees-good-fit.html "Portugal PM welcomes Lufthansa’s interest in TAP, Scholz sees good fit") if we are heading for a bifurcated world where Asia is led by Asian players and Europe & US would be led by Europe & US players in the medium term. As of now, players like Allianz, Manulife, SunLife, Generali, and Zurich, with their [continued investments](https://www.financedigest.com/ils-investment-returns-continue-to-outperform-according-to-aon-insurance-linked-securities-report.html "ILS investment returns continue to outperform, according to Aon insurance-linked securities report") in Asian markets, are proving it to be otherwise. ![Tanay is a seasoned M&A professional](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/picture1-1736838180818-compressed.jpg) Author profile: Tanay is a seasoned M&A professional with more than 14 years of experience in advising Financial Institutions Groups around their M&A needs at reputed firms like Deloitte, [Standard Chartered Bank](https://www.financedigest.com/first-abu-dhabi-bank-reiterates-not-eyeing-offer-for-standard-chartered.html "First Abu Dhabi Bank reiterates not eyeing offer for Standard Chartered") and Ambit Corporate Finance. He has advised over 50 deals with value of USD 10 bn in South East Asia and South Asia with special focus on insurance, bank, non-bank funding companies, [asset management](https://www.financedigest.com/asset-managers-on-alert-after-whatsapp-crackdown-on-banks.html "Asset managers on alert after ‘WhatsApp’ crackdown on banks"), and brokerage clients. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---