Navigating the insurance maze

By Zhang Haizhou in Hong Kong (China Daily) Updated: 2014-11-14 14:22

Growth slowdown necessary process for the economy, says AIA president

Stretching along the west bank of the Huangpu River that divides Shanghai into two parts, the Bund is not just the city's top scenic draw, but a symbol of its global reach and international orientation.

Once part of a British concession, the 1.5-km long narrow strip of land used to house foreign banks, financial institutions and trading houses from countries like the United Kingdom, France and the United States. But there is one building that stands out from the others.

Standing on No 17 in the Bund is the AIA tower, a modern construction in Renaissance style built in 1921. Between 1928 and 1947, it housed the offices of the American International Group, founded by Cornelius Vander Starr in Shanghai in 1919, and the parent company of the AIA Group.

Though most people would consider AIA an American company, the Group Chief Executive and President Mark Tucker strongly disagrees.

"The AIA story is very much a China success story. Significantly for AIA, we are effectively a Chinese company," the 56-year-old Tucker told China Daily.

"Our deep-rooted connection with China is a heritage that we have always treasured and this sense of alignment has increased since we became a Hong Kong-headquartered and independently listed company in 2010."

With operations in 17 markets in the Asia-Pacific region and total assets of $159 billion as of May 31 this year, AIA is now the largest independent and listed pan-Asian life-insurance group.

This week, the company's board met for the first time in Shanghai and the Chinese mainland since its listing, highlighting its continued confidence in China's growth. The recent slowdown, Tucker said, is more of a "necessary transition" for China to move toward quality growth.

"It's a necessary transition to move more to qualitative, more to productivity and efficiency, which we believe is absolutely the right thing, and absolutely the right timing," he said.

"We don't think in one or two years, we think in five, 10, 15, or 25 years," Tucker said. "Today, China is an integral part of our past and fundamentally important to our future also."

Recently released figures showed the Chinese economy growing at its slowest pace for more than five years. Growth in the third quarter was 7.3 percent compared with a year earlier, down from 7.5 percent in the previous quarter.

But the Chinese mainland was still one of the best-performing markets among all AIA markets in the first half of 2014. It achieved a record in new business wins of about $120 million, up 58 percent from the same period of 2013, ranking fourth and contributing about 13.79 percent of the group's total volume of new business, a key performance metric that measures value creation. Hong Kong, Thailand and Singapore occupied the top three slots.

"The potential in China is unlimited," said Tucker, as the country's growing middle-class population is set to bring new opportunities for insurance companies.

"As people build their assets, they want to protect them. They want to protect their families and jobs, etc. And life insurance will protect their health," he said.