IAG has told an investor briefing it will soon have $720 million invested in five Asian countries, prompting calls from some analysts for a more conservative strategy.

Once the group’s acquisition of Malaysian insurer Kurnia is completed, IAG’s Asian businesses will account for 6% of gross written premium, CEO Mike Wilkins told the briefing in Sydney last week.

This is an increase from 5% three months ago. The target is 10% by 2016.

About $500 million will be invested in established businesses in Thailand (Safety Insurance) and Malaysia (AmG and Kurnia).

A further $220 million is invested in the emerging markets of India (SBI General), China (Bohai Insurance) and Vietnam (AAA Assurance).

The insurer is also investigating joint venture opportunities in Indonesia.

Mr Wilkins says middle class consumption in Asia is expected to increase by nearly 200% to $US12 trillion ($11.8 trillion) by 2020, which presents a significant growth opportunity.

But JP Morgan analyst Siddharth Parameswaran told insuranceNEWS.com.au that Asia is very competitive and it takes time to earn profits in developing markets.

“It could be very good for shareholders in five years time,” he said. “But some shareholders would prefer the capital invested in Australia or given back to shareholders.”

Morningstar analyst Ravi Reddy says that although IAG’s discipline has been “impressive”, he also advocates a more conservative strategy.

“We look for more evidence that it’s working and delivering results to the bottom line before we warm to it,” he told insuranceNEWS.com.au.

He says it is “probably not ideal” that IAG has minority interests in all its Asian businesses except Safety Insurance in Thailand.

“They seem to be working well with their joint venture partners, but having control of your investments means you can access cash flow directly,” he said.

Merrill Lynch released a note saying while it likes the Asian expansion strategy, the plan is not a significant force for earnings.

“Investors have been sceptical with respect to IAG’s Asia business,” the report says. “We are more upbeat, noting the structural issues IAG faces in its core Australian and New Zealand markets, the measured approach it has taken to Asia, the quality of its joint venture partners and the appropriateness and success to date of its capability/IP transfers to the region.”

IAG says it has examined about 80 opportunities in Asia, conducted 26 due diligences and concluded five deals.

CEO Asia Justin Breheny told the briefing that one of the biggest reasons behind problems with this kind of acquisition was different visions for the business.

“We don’t feel we have to invest if we don’t find the right place, if we don’t find the right partner,” he said.

Mr Breheny says IAG places its staff in key management roles within joint ventures, works closely with local managers and helps improve areas such as underwriting and claims management.

In India, the State Bank of India has run trials selling insurance products through the bank’s sales channels.

SBI Chairman Pratip Chaudhuri told the briefing the bank has 160 million customers. “When the long-term value emerges, the results will be mind-boggling,” he said.