Ng Seng-leong, managing director and CEO at Singapore-based Asia Life Assurance, is retiring mid-August leaving the company in better shape to face the rapid modernization that has taken the sector by storm, but still with an uncertain future.
He says no successor has been chosen and that the firm is now seeking one. He joined the firm six years ago and found "a good company but with a narrow base of products and distribution". The local company, founded in 1948, at the time relied on a traditional agency sales force that was content to remain a small player in the face of the traditional insurance giants: AIG, Great Eastern Life, NTUC and Prudential of the UK.
Since Ng's arrival, however, the sleepy independent has forged a path into group employee benefits; teamed up with Aberdeen Asset Management to provide unit-linked insurance products; begun accumulating foreign multinational clients; diversified distribution to brokers; and most recently restructured and upgraded the sales team.
Despite these achievements, the firm has more to do if it is to succeed in a business that is under new pressure. The Monetary Authority of Singapore has recently required higher standards among insurance agents, while bancassurance and unit-linked products are now driving growth. Moreover the MAS is soon going to introduce new risk-based capital requirements that will force companies to focus on risk management in its investments and its products, as well as raise provisioning levels.
Amid this change is the ever-present pressure to consolidate, and industry players say Asia Life is a potential target.
So far Asia Life is responding with agility to changing times. The new standards for agents has prompted it to streamline its sales force down to 150 agents, mainly weeding out part-timers. Ng has implemented a new scheme to hire university graduates and train them in a bid to professionalize the force.
Moreover, he says distribution has changed dramatically, with now only 50% from the agency force and 50% from banks and brokers. The firm has bancassurance relationships with both ABN AMRO Bank and Maybank in Singapore and Malaysia. It is also diversifying relationships with independent brokers.
The impact of new capital rules is difficult to assess, as the final regulations have yet to be drawn, says Ng. Currently Asia Life manages its investments in-house and will in future have to pay more attention to matching its assets and liabilities. This probably means a greater need for fixed-income assets, which Asia Life currently has a shortage of, Ng notes.
It also means moving more away from traditional saving-type products that have been the firm's bread and butter, and growing protected and investment-linked products with Aberdeen. Ng predicts as well that annuities will become a hot product, given the ageing population that will seek that kind of income product. The Central Provident Fund now provides annuity payouts but wealthier individuals will seek more, and Ng believes new opportunities will open in this area.
Lastly, Asia Life is looking to develop a niche in health insurance. "With an ageing affluent population that puts a premium on healthcare, private health insurance will play a major role," Ng observes.
Of course, the changes he has helped implement to enable Asia Life to compete in the brave new world of Singapore life insurance doesn't end its position as a potential acquisition. But Ng declined to comment on this, noting that such decisions were never up to him, and won't be up to his successor. It is a question for the handful of families that own most of Asia Life.