Insurers line up to serenade Asia’s rich
They enter private banks’ turf to advise on wealth distribution instead of accumulation
By SIOW LI SEN
(SINGAPORE) Asia’s rich and high net worth clients have long been wooed by private banks. Now insurance companies have also set their sights on them.
Mr Thomson: Wealth preservation and wealth distribution have become two important areas in financial planning for baby boomers
Prudential Assurance and Great Eastern Holdings are poised to launch insurance products aimed at this group. Manulife Singapore set up a dedicated office in Great World City in June to sell products to rich Asian baby boomers.
Swiss Life, Switzerland’s market leader for pension and life insurance products, opened its Singapore office in April - not just its first in Asia, but also outside Europe.
Insurers are vying with each other to catch the eye of rich Asians who want to preserve their wealth and also ensure that it is properly distributed among their children.
Not that private banks need worry. All the insurers say they sell their products through private banks as well as financial advisers, brokers and their own agents specially trained to handle this group of clients.
Insurers say Singapore offers rich pickings as they can cater to expats from the United States and Europe as well as Asian millionaires.
AIA Singapore was the first to set up a specialist unit to cater to high net worth (HNW) clients in 2004.
Colin Hughes, AIA Singapore vice-president and head of brokerage and HNW bancassurance, said his unit is doing very well.
‘The local Singaporean market is now happy that it can buy this type of policy from a Singapore-registered company as opposed to having to buy offshore. Our production expectations from this market have been exceeded,’ said Mr Hughes.
Rich Asians have been looking to offshore insurers for their insurance needs generally called universal life products - not an ideal situation as these would not be tailored to the local market.
‘The market is still dominated by universal life products, mainly provided by non-Singapore domiciled companies and distributed through brokers based on referrals from private banks,’ said Thomas Vonrueti from Swiss Life Singapore branch.
He has found that Asian clients have different needs from those in Europe in that many families have all their assets in their businesses.
Asian entrepreneurs want insurance which, on their death, can pay out to their children without the businesses being liquidated, he said.
He has seen families where a daughter is running the company instead of the sons and the father wants to make sure that the business does not have to be sold once his estate is divided up.
A Swiss Life product called the variable universal life allows a high sum assured of up to US$35 million.
‘Clients generally used this to secure liquidity in case of death,’ said Mr Vonrueti.
He has had a few Asian clients ask for the high sum assured but not in Europe, he said.
To assure a sum of US$35 million would cost a 50-year-old healthy male living in Singapore a single premium of US$8 million, he said.
According to Manulife Singapore president and chief executive Darren Thomson, in the past, the rich here and in the region have been given advice focused primarily on wealth accumulation.
‘However, wealth preservation and wealth distribution have become two important areas in financial planning for baby boomers,’ he said.
Singapore’s population, as well as that in other Asian countries, is ageing dramatically, said Mr Thomson.
Manulife will be launching a variable annuity with effective wealth distribution during retirement for the HNW.
This product comes with a guaranteed bonus in the first 15 years that will increase the initial investment to 175 per cent. The minimum investment is S$250,000.
According to the World & Asia-Pacific Wealth Report 2007, Asia’s HNW wealth is growing at an annual rate of 7 per cent and is expected to reach US$10.6 trillion by 2010. Asia represents 25 per cent of HNW individuals globally, with Singapore capturing 23.3 per cent of this share, ranking next to Hong Kong.
Singapore is expected to have the highest concentration of millionaires by 2017 with HNW wealth hitting US$1.6 trillion. Also, the number of mass affluent residents in Singapore is also on the rise and will reach 600,000 by 2011.
Source : Straits Times - 07 Aug 2008
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