JERNEH Asia Bhd, through its partnership with composite insurer Assicurazioni Generali SpA of Italy, is well on track to become a formidable insurance player in the region.
Beginning as a joint venture investment holding company in 1999 called Generali Asia NV, the two partners have successfully drawn up a roadmap that would reinforce their presence in the regional markets, including Hong Kong and China.
Generali Asia, in which Jerneh Asia has a 40% stake, has made inroads into Thailand and the Philippines through joint ventures with local partners offering life and general insurance.
“We are targeting China after this and subsequently a life licence in Malaysia,” Jerneh Insurance Bhd chief executive officer Ralph Liew said in an interview.
In China, Generali Italy has a joint venture with the Chinese Petroleum Co to provide life insurance in Ghuongzhou and having established partnerships in Thailand and the Philippines, Liew said it was only a matter of time before Jerneh Asia would be invited to take up a stake in the Chinese market.
“The same goes for Malaysia, Generali is scouting around to buy a life insurance licence and once that materialised, I believe the two parties will formalise their Malaysian partnership to incorporate life and general licences,” he said.
Jerneh Insurance is a wholly-owned subsidiary of Jerneh Asia, which contributed 80% to revenue last year.
The other 20% is contributed by Jerneh Asia's holdings in subsidiaries providing insurance and reinsurance broking, healthcare and credit leasing.
Liew said at present, 80% of the group revenue is derived from local operations, and 20% from its regional operation.
“We hope to have an equal contribution of 50:50 in the next 10 years. In fact, we expect the figure to start going up four years from now beginning with the Manila operations,” he said.
Life insurance usually takes seven years to break even while general insurance about four years.
After three years in business, the Manila general insurance operations will start to break even next year followed by its life division in another three to five years.
The Thai operations, Generali Insurance (Thailand) Co Ltd and Generali Life Assurance (Thailand) Co Ltd were only acquired last year.
Jerneh Asia is banking on the Philippines 70 million population and is targeting to capture 5% of the total market in the next three to five years.
In Thailand, Jerneh Asia is capitalising on the emergence of “Detroit of Asia” which will spur car ownership in the country.
Generali Asia has also identified Indonesia and Vietnam as its next potential market.
Liew said it was a natural progression that Jerneh Asia moved beyond Malaysia in line with the regional expansion of its major shareholder, the Kuok group, which already had an entrenched position in the region, China including.
“We started as a captive insurer for the Kuok group 32 years ago and now we are again following the same steps,” he said.
Jerneh, named after a little stream that passes through the sugar plantation owned by the Kuok group in Chuping, Perlis, has today moved away from its dependency on the Kuok group business.
“We used to have 80% of our business coming within the group but now the figure only stood at 20%,” he said.
In the early years, Jerneh Insurance provides cover for mostly related companies' business, such as those of PPB group, Pelangi Bhd, Shangri La Hotels and also the vast trading, shipping and plantation activities within the group.
Through the years, Jerneh Insurance has moved to include industrial insurance, commercial, motor and more recently, medical and healthcare “to balance up the portfolio,” according to Liew.
While the numbers may not look so rosy lately, “the industry outlook is neither difficult nor easy”, Jerneh Asia nevertheless provide a good prospect for a solid portfolio investment.
For the financial year ended Dec 31, 2002, Jerneh Asia registered a significant growth of 21% in net profit of RM25.4mil compared with the RM20.9mil in the corresponding period in 2001.
Net earnings per share increased to 24.3 sen from 20.2 sen.
Jerneh Insurance contributed RM22.9mil in net profit, a growth of 30.9% from the RM17.5mil recorded previously.
“Investors cannot expect the share price to move up dramatically, but like all other stocks under the Kuok stable, it will enjoy steady dividends and appreciation in the long term,” he said.
Furthermore, the small free float and tight control by majority shareholders makes the shares more attractive for investors “to buy and lock it” for the next 10 years.
According to Jerneh Asia 2002 annual report, Kuok Brothers own nearly 40% of Jerneh Asia, Tan Sri Basir Ismail and family own 15.89% through BHR Enterprise Sdn Bhd, and Hong Kong shipping magnate Tan Sri Frank Tsao Wen King another 7.71% through Sable Investment Corp. Local businessman Datuk Seri Ismail Farouk Abdullah owns 3.82%.
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