Huynh Thanh Phong

Good afternoon. In our next twenty minutes I have the pleasure to briefly introduce Vietnam, it’s life insurance market and to outline Prudential past success, and future strategy to leverage the strong platform we have built here. While Vietnam is one of the most poorest countries in South East Asia with more than 81 million people, the insurance market is still in its infancy. Total premium in 2003 was only £245 million pounds, representing less than one percent of GDP penetration. These indicators, whilst modest be regional standards, represents a very fast start for the industry. We have to remember that the very first life insurance policy was sold in Vietnam in 1996, barely eight years ago. Foreign insurers were allowed into the country just five years ago in 1999. Prudential was granted the second 100% foreign owned life insurance license in that year and has since held the number one position in terms of new business market share. In the next few slides I will give a quick over view of he macro condition of the country. Politically, Vietnam has a one party system, the Communist Party Of Vietnam, which dominates all aspects of life in this country. At the centre of the party is a fifteen member politburo and a 115 central committee. These bodies are the final decision makers of all important political and economic matters for the country. Looking forward it is clear that untapped potential of the market remains significant in Vietnam. With a high propensity for saving by the general population and a good reputation as a safe product, life insurance will continue to be chosen by the Vietnamese people as one of the major financial vehicles. In the next five years Vietnam life insurance premium is projected by Swissary to grow from a level of less than 1% of GDP today to reach a level of about 3%. This is probably on the low side. Reaching 3% of GDP Vietnam life insurance penetration will be at a similar level with other countries in the region. In terms of market penetration we have been the most successful so far, capturing more than half of the customers in our target segment, but there our still a large number of potential customers that remains untapped by the industry. Significant opportunities still exist for Prudential’s 72% of the population still to be accessed. With a steady growth of GDP and the rising level of wealth our target customer’s segments are becoming larger in the next five years. Even with the tremendous platform we have built, with the right strategies, Prudential is well placed to gain significant market share in the future. Our first strategy focused on our potential customers and our product offerings. Our initial product portfolio was deliberately simple and only a few high priority needs of the customer are covered, named regular saving and children education saving by families with young children. In the past twelve months we started to introduce several new products covering new needs for additional market segments. However significant market opportunities still remain for other segments such as empty nesters and singles, and other needs such as retirement and protection. Our strategy going forward is to further expand our product line into more target segments and to meet more the financial needs of the Vietnamese people. To be successful with this strategy Prudential must be able to motivate the population to take action to save for these long-term financial needs. I would like to pause here for a moment and play a TV commercial on our new retirement saving plan. It is a challenge to motivate a very young population to think about long term financial needs many years from now based upon our understanding of the local culture. This TV commercial you are about to see is based not on Western concepts of exotic locations or off playing golf. Rather it is grounded in a simple local vision of being able to spend time with one’s family.

[TV Commercial]

This is an example of our effort to access more customers by introducing a brand new product category. Within a few months after launch this new product category already accounts for 15% of our sales. The second prong of our strategies is to level our unparalleled distribution network, countrywide. Our distribution network is already the most extensive in Vietnam but we are planning to extend it even further to reach more potential customers in smaller urban centres. Furthermore as we continue to grow the ‘one size fits all’ approach will not be the most efficient model. In the next stage of development we are segmenting our agency force in order to focus our resources. By focusing our management effort on the top segments of our agency force we will be able to increase our productivity and efficiency. Also as the consumers become more sophisticated these agents will need to be better equipped with more advanced knowledge and training to provide relevant financial advice. This model will also allow us to continue to strengthen the training and management of the large agency force. Significant benefits can still be derived by increasing the productivity and efficiency here. Combined with this enhanced distribution network with more product offerings is the best way to leverage our strong existing platform. Based upon the strong platform we have built over the past five years of our national distribution network of a powerful brand, a comprehensive back office infrastructure, and a high calibre team Prudential is in a unique position to drive the next stage of development for the entire capital market of Vietnam. Our core strategies will be to bring new products to meet the ever-changing needs of the Vietnamese people, and to motivate them to save for their long term financial goals. Prudential will continue to play the leading role in creating new products and markets as we have done successfully in the past. Our core distribution strategies will be to leverage on the strength of our agency force. We will focus our resources on the top segment of our agency force to increase the productivity and efficiency. We will strengthen the training and management for the remaining segments. Our existing infrastructure will also be expanded to provide service to our economically important regions of Vietnam and to maintain our excellent level of persistency. Last, but not least we will continue to build on the already strong working relationship wit the regulator and with all levels of government so that Prudential can continue to be the pioneering foreign financial service company in Vietnam. In summary, after five years we have built a market leading business in this country and created a strong platform. We fully took advantage of being the first in many aspects of the business. These strategies put us in a strong position to take advantage of Vietnam’s continuing economic growth and the rising level of growth of the population. By unlocking the potential of our large distribution network and by expanding our product portfolio to meet the needs of major demographic segments, Prudential will be able to capitalise on the significant growth opportunities for Vietnam for the next five years. With the right strategy we will certainly maintain and build upon our current leadership position in Vietnam. Thank you very much. At this moment I would like to invite my very dear colleague from India, Miss Shikha Sharma.

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