KUALA LUMPUR: Tokio Marine Insurance (Malaysia) Bhd plans to invest RM2 million to RM5 million to upgrade its information technology (IT) system to cope with a growing business, said its new CEO Dr Michael Heng Kiah Ngan.

Heng, who assumed the stewardship of the company last Jan 1, said the company had grown substantially over the past few years and needed to ensure its service and efficiency were not affected.

“We have grown by about 67% from our base in 2007 and we feel that we need to have a robust and scalable (expandable) IT system to not only cope with our current but our future business volume too,” he told The Edge Financial Daily via email.

He said Tokio Marine’s business grew by 38.4% after it acquired Asia Insurance (Malaysia) Bhd’s (AIMB) insurance business in 2007. In February last year it acquired the insurance business of Pan Global Insurance Bhd, leading to a further growth of 20.8%.

At a recent press conference, Heng said Tokio Marine had achieved 20% premium growth in 2009 to over RM700 million from RM580 million in 2008. Noting that the company had been running well, Heng said his first priority was to ensure the insurance company remained profitable by having the right business mix.

“If one (insurance) division is losing money, we need to do rebalancing,” he said.

Heng said that Tokio Marine achieved its highest share of the general insurance market in the third quarter of 2009 at 6% and it had set a modest target of 6.5% share this year.

He said an insurer’s performance and profitability had two important components — premium income and underwriting profit from its operations, and investment profits from the funds it held.

“2009 was a very good year for investment profits as equities and some bond rates rebounded strongly from the lows of 2008. We are unlikely to see that type of rebound in 2010 (due to the recovery of the market in 2009). Premium income (and by extension underwriting profits) is influenced by the level of economic activity in Malaysia,” he said.

Heng added that in the near term, regional activity may pick up but with a smaller increase rather than a major rebound as the global demand was still slow. “Malaysia may not see much business growth from our traditional sources of business,” he said.

As for Tokio Marine, he said part of its growth strategy would be the development of bancassurance products, as foreign insurers were now allowed to work with any bank to develop such products following industry liberalisation measures announced in March 2009.

“As such, we would like to work with selected banks to offer our products and most likely we will work with banks with no in-house or captive insurer,” he said.


This article appeared in The Edge Financial Daily, February 8, 2010.