American International
Assurance Bhd (AIA) plans to operate under a
single licence in Malaysia by June after acquiring ING Group's local insurance operations.
AIA CEO, Bill Lisle.
AIA
chief executive officer, Bill Lisle stated that the company would be
returning its ING insurance licence to Bank Negara, and looking at
completing the integration of both entities in the next 18 to 24 months. The
company plans to have a bigger scale to benefit the customers from the bigger
financial entity. Soon, it comes up with an enhanced range of product suite
under a single licence.
On
the other hand, AIA Group Ltd had completed the US$1.7bil (RM5.13bil) deal for
ING's Malaysian insurance business, valuing it at 2.2 times book value in
December. In this case, the enlarged group is ranked the first in terms of
total premium revenue and the third in terms of new business value.
In addition, the company intends to be the
undisputed number one. To reach this goal, their current focus would be on their
new partnership with Public Bank.
AIA is an oligopoly
company, which means that it contains a market structure of having few large
sellers which are mutually interdependent selling differentiated or
undifferentiated goods in the consideration of pricing policy formulation.
AIA
has high entry barriers such as economics of scale and copyrights in order to
prevent new firms from entering the market.
AIA Berhad acts as
a dominant firm oligopoly as it is the largest independent listed pan-Asia life
insurance group in the world. The price it sets is usually acts as a model of
other smaller competing firms to maximize its profit which is known as
traditional oligopoly model.
In this case, it has a
characteristic of non-price competition in brand loyalty, advertisement and
marketing. AIA plans its strategy in order to get more market shares.
To
sum up, AIA had succeeded by merging with ING insurance Berhad and soon it will
create a new partnership with Public Bank. This makes it a bigger firm and
reduces the number of firms under oligopoly. Gradually, they will reach their
goals on being the top one in future.
Reference:
4. http://top10malaysia.com/home/index.php/news-and-events/top-10-s-insurance-companies-in-malaysia/
By Low Chia Yin 0315659
Solid article.
ReplyDeleteI look forward towards more articles from this person on economics
ReplyDeleteThis article is a very interesting take on AIA's merger with ING
ReplyDeleteThe author has a good understanding of both business and economics
ReplyDeleteComprehensive
ReplyDeleteDear Low,from your perspective..do you think this will benefit AIA in terms of business growth
ReplyDeleteYes because they will garner a higher turnover,which in turn benefits stakeholders such as employees and shareholders. Therefore,they will have more captial for external growth
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ReplyDeleteYour sources are good
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDeleteSaw this link on facebook.Your use of basic business principles is well
ReplyDeleteIts indeed a great article with many useful information about business , look forward for more article from you
ReplyDeletepretty informative.
ReplyDeletethanks for the comments.
ReplyDelete