Insurer plans to extend coverage
Skandia-BSAM has been one of China's fastest growing insurers in recent years, fueled by the bullish stock market.
The Sino-Swedish joint venture specializing in long-term wealth management has seen over 200-fold growth in the past three years. By the end of November, Skandia-BSAM's premium income hit 1.79 billion yuan, jumping from 464 million yuan in the same period of 2006.
China Daily reporter Hu Yuanyuan spoke to Jim Sutcliffe, CEO of the Old Mutual Group's life assurance businesses, and Dean Richards, CEO of Skandia-BSAM, about the JV's development after Old Mutual acquired Skandia in 2006.
Q: Old Mutual has two core businesses: insurance and asset management. Skandia-BSAM sells insurance in China. Will you also set up a company specializing in asset management in China? And would you start from scratch or is acquisition an option?
A: Yes, we do plan to establish an asset management company. However, it is still at an early stage, and we haven't begun the search for a Chinese partner yet. But one thing's for sure - we would like to set up a brand new firm with our Chinese partner rather than taking over an existing one.
Q: Old Mutual acquired Skandia in 2006. Is Skandia's operation in China a major reason for the purchase? And will your strategy in China differ from that of the European and US markets?
A: Skandia's operations in Europe and China are a major reason for the acquisition, which could help to supplement our business coverage worldwide. But before the acquisition, we had decided to enter the Chinese market. Skandia's operation in China sped up our expansion here.
Unit-linked insurance is our striking characteristic, but that never means we only offer this kind of product. Our core business is to satisfy consumers' needs, and offering different types of products are just the means. So we will continue expanding our product lines.
Q: Skandia-BSAM's premium income jumped from 68 million yuan at the end of 2005 to 1.79 billion yuan by November last year, making it one of the fastest growing insurers in China. Do you think such rapid expansion is sustainable?
A: Skandia-BSAM is one of the most successful operations we've ever had, but it is not in a class by itself. We have an asset management company in the United States, whose assets jumped from $5 billion to $60 billion within three years.
Such rapid growth is mainly down to the right business environment and the management mode we operate. Therefore, I believe the growth is sustainable.
Actually, I hope that our market in China could exceed that of the United States one day.
Q: China's bullish stock market has seen a lot of insurers launch unit-linked products last year. Will the heightened competition hurt your business? And, as unit-linked insurance is related to the capital market, will your business see a big drop when the market becomes bearish?
A: The strengthened competition, for me, is not bad news, as it will promote the development of the whole industry. But I don't think we will easily lose customers because of the red-hot competition.
On one hand, as the only insurer specializing in unit-linked insurance, we've had three years of successful operation that's made us the bellwether in this industry. On the other hand, when striving to make our products more innovative and attractive, we are also working on new marketing channels.
In early June last year, we inked cooperation deals with two banks in Shanghai and we're also in contact with another two foreign banks. Our cooperation with foreign banks will not be confined to over-the-counter sales, but we will also jointly develop tailored products for high-end clients.
Despite the ups and downs in China's stock market, I am quite optimistic about China's capital market in the long run. Our customers can also choose to change their accounts from risky to conservative when the market drops. In fact, due to improved wealth management philosophy, our unit-linked business will maintain average annual growth of 10 percent.
(China Daily 01/08/2008 page15)
