Trends of Multinational Coporation with Ermerging Market

Outside Hong Kong and mainland China, they conduct business in 22 countries and territories in the Rest of Asia Pacific region.

According to HSBC Holdings Annual Report in 2010, HSBC still gain an increase of 41%. Reported profits included an accounting gain of US$ 188m arising from the dilution of HSBC’s shareholding in Ping An Insurance following its issue of share capital to a third party in 2010.

HSBC Insurance, a subsidiary of HSBC Holdings plc, sees no significant impact from a flurry of acquisitions and consolidation moves triggered by the divestiture of American International Group Inc.'s life insurance assets in Asia.

"Competitors always change," said David Fried, group general manager and group head of insurance at HSBC. In the light of changing market scene, HSBC Insurance "continues to do a lot more on what we've been doing," said Fried in an interview.

Prudential plc's pending acquisition of AIG's Asian life assets, AIA Group, is a "very complex transaction" that is being closely reviewed by regulators and market players, he said. HSBC Insurance has not seen any potential merger and acquisition opportunities for itself, Fried added.

HSBC Insurance's strategy is different to that of AIA, which is more of an agency model, said Fried. HSBC is taking on a bancassurance strategy with a focus on cross-selling of insurance products. It sees its growth coming from banking customers.

The Customer Base

Globally, Fried said the company aims to raise the insurance penetration of HSBC's banking clients to 20% from current level of 11%. With 100 million global banking customers, this means one-fifth of HSBC's clients would purchase insurance policies from the bank.

HSBC Insurance is "positive" about its growth plan as there is still a lot of room to grow in Hong Kong and global markets, he said.

In Asia, 5.8% and 10.9% of HSBC's banking customers hold a life and nonlife insurance policy from the bank, respectively. The global penetration level is 6% for life and 28% for nonlife policies, and 8.3% for life and 6.7% for nonlife policies in Hong Kong.

With a total profit of US$2.5 billion in 2009, Fried said insurance is a "substantial business" for HSBC, contributing 18% of the group's profit. The business is aligned with trends in global private banking in meeting diversified product needs of customers.

HSBC Insurance's future growth will come from Asia and other emerging markets, which now account for 49% and 21% of global insurance profit, respectively. The remaining 30% of insurance profit came from markets in the United States and Europe, according to Fried.

The company expects "robust growth" from emerging markets, given their strong economic growth, low insurance

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