Representatives of BIDV Insurance and Fairfax Asia sign a contract in Ha Noi on May 4. — Photo bic.vn

HA NOI (Biz Hub) — Canada's Fairfax Asia Limited will acquire some 41 million shares, or 35 per cent, of BIDV Insurance Corporation, thus becoming a strategic investor in the firm.

The two parties signed a contract at BIDV Insurance headquarters in Ha Noi on May 4. Officials said they expect to carry out the sale in the third quarter of this year, adding that this process would depend upon the approval of Vietnamese authorities.

Fairfax Asia is a subsidiary of Toronto-based global insurer and reinsurer Fairfax Financial Holdings. After completing the acquisition, Fairfax will have two members on the management board and two on the supervisory board of BIDV Insurance. Approval for seating these representatives will need to be voted upon at a shareholders meeting.

The Canadian partner is to provide BIDV Insurance with technical assistance related to underwriting, investment and risk management, as well as information technology and the development of distribution channels.

BIDV Insurance Chairman Pham Quang Tung said, with the investment and support of Fairfax Asia, his company was expected to become one of the leading non-life insurers in Viet Nam, in terms of distribution channels and profitability.

Meanwhile, Chairman and Chief Executive Officer of Fairfax Asia, Ramaswamy Athappan, noted, "Viet Nam is a fast growing insurance market, in which Fairfax sees strong potential for BIDV Insurance's business." The operations of BIDV Insurance affiliates in Laos and Cambodia were also promising, he added.

Tung told the local press in April that the issuance and transfer of the 41 million shares was aimed at raising the firm's charter capital to some VND1 trillion (US$47.62 million).

BIDV Insurance reported a total turnover of VND314 billion ($14.95 million) during the first quarter of this year, up 48.5 per cent over the same period last year. Pre-tax profits reached VND35.44 billion ($1.69 million), reflecting a year-on-year 30 per cent increase.

The Bank for Investment and Development of Viet Nam (BIDV) and Australia's QBE International Insurance Company formed the BIDV-QBE Insurance joint venture in 1999. The bank acquired shares of the Australian partner in the joint venture and changed its name to BIDV Insurance in 2006.

In Asia, Fairfax Asia operates in India, China, Indonesia, Malaysia, Singapore, Thailand and Sri Lanka. It is among the largest non-life insurers in the region, with gross premiums in Asia reaching over $3 billion. — VNS