Asset owner news roundup, Aug 21
AUSTRALIA
Insurance Australia Group (IAG) announced its annual results on August 15, reporting an 18.3% insurance margin, or profit from invested premium income, in the financial year ended June 30. The Australian insurer increased its insurance margin from 15.5% in the 2017 financial year, although overall profit, including gross written premiums income, was down 6%, partly due to tax from discontinued operations. IAG expects its insurance margin to range from 16-18% in FY 2019.
Source: IAG
Australia’s Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry wrapped up its superannuation-focused fifth round of public hearings on August 17.
Over the course of the two-week hearing, the commission heard testimony from select superannuation funds and regulatory representatives detailing how some funds applied administration fees for unexplained services, ran misleading marketing campaigns to drive customers to funds with higher commissions, charged dead people for advice services, and generally failed to act in the best interests of their customers, Australian media reported. The counsel assisting the commission will submit their findings by August 24.
Round six of the commission will take place from September 10 to September 21, and will focus on the insurance industry.
Source: Australian Financial Review
CHINA
Anbang Insurance has put a $5.5 billion luxury hotel portfolio up for sale, as part of a sale of offshore real estate to shore up its balance sheet, amid a sell-off by Chinese insurers of US commercial property.
Chinese insurance firms have become net sellers of US commercial real estate, reversing a years-long buying spree, amid pressure from Beijing on debt-laden domestic companies with foreign investments.
Anbang’s properties, bought from US private markets investor Blackstone in 2016, include Manhattan’s Essex House Hotel.
Anbang has signed more than $30 billion of deals in recent years. But in February the Chinese government said it would take control of the insurer for at least a year, accusing management of illegal activity that it said put the firm at risk.
KOREA
The National Pension Service (NPS) is set to hold a public hearing on August 24, where it intends to unveil several reform packages that will help form a comprehensive pension management plan, scheduled for release by the end of September.
The planned reforms are rumoured to extend the subscription period from the current age of 60 to 65, with subscribers only receiving their pensions from the age of 68, in an effort to reduce the rate of drawdown. The latest study by the NPS suggested that its funds will become exhausted by 2057, under the existing system. But the rumoured changes are causing public dissent and political criticism. Even president Moon Jae-in claimed he finds it hard to understand the reform plan of the Ministry of Health and Welfare, which oversees the NPS.
Sources: Korea Times, Korea Herald
The Pension Fund and Regulatory Development Authority (PFRDA) has set up a standing committee to deal with cybersecurity challenges to protect the interest of subscribers.
“As a regulator of the pension sector and to safeguard the interest of pension subscribers, it is essential to keep an eye on the technological changes and cybersecurity challenges,” the regulator said in a statement announcing its decision to set up the panel.
The committee on ‘information systems and technology and cybersecurity’ will advise on information systems and cybersecurity issues, the need to develop an efficient management information system and regulatory platform, as well as highlight the key opportunities and challenges of financial and regulatory technologies, among other matters.
Source: PFRDA
INDONESIA
China’s largest insurer, China Life Insurance, has started operations in Indonesia, becoming the first Chinese insurer in the country. The company, a subsidiary of China Life Insurance Group, has long considered Indonesia a target of its expansion, media reports noted.
According to Indonesia insurance statistics published by the Financial Services Authority (OJK), the Indonesian life insurance industry achieved double-digit growth in 2017, noted a May 2018 report by Milliman, an actuarial services provider.
In 2017, the industry recorded net premium income of IDR232.06 trillion ($15.9 billion), a 44% growth year-on-year over 2016. Total assets grew 30% year-on-year to IDR 512.95 trillion ($35.17 billion), it noted.
Source: Jakarta Post
JAPAN
The $100 billion SoftBank Vision Fund, part of Japanese conglomerate SoftBank, is investing in and setting up a partnership with China’s ZhongAn Online P&C Insurance.
The deal aims to boost ZhongAn’s technology solutions businesses outside China. The firm, backed by mainland insurer Ping An and internet firms Alibaba and Tencent, says it is the country’s first internet-based insurer. It listed last September in a Hong Kong IPO that raised $1.5 billion.
ZhongAn International, a subsidiary of ZhongAn Online, will establish a new operating entity to partner SoftBank in exploring international opportunities. SoftBank Vision Fund will participate as a strategic investor.
Source: ZhongAn, TechCrunch
MALAYSIA
Etiqa Takaful is eyeing an expansion into more Asean (Association of Southeast Asian Nations" markets with the goal of becoming a major regional insurance player.
The Malaysia-based insurance group also operates in Singapore, the Philippines and Indonesia. It offers general insurance in Indonesia, life insurance in Singapore and both life and general insurance in the Philippines.
Etiqa is the entity created out of the merger of Maybank Ageas (formerly known as Mayban Ageas), Maybank's insurance and takaful arm consisting of Mayban General Assurance, Mayban Life Assurance and Mayban Takaful, which combined with Malaysia National Insurance, Malaysia's largest national insurer and its subsidiary, Takaful Nasional. Takaful is a type of Islamic insurance.
Source: The Star
Foreign insurance companies will have more time to comply with a central bank directive on reducing their share in local entities. Many foreign insurers have wholly-owned subsidiaries so the directive left them scrambling to slash their stakes by as much as 30%.
Bank Negara Malaysia governor Datuk Nor Shamsiah Mohd Yunus said the deadline would now be decided on a bilateral basis, depending on the kind of action being taken by a foreign insurer to meet the directive.
Previous media reports said foreign insurers were struggling to sell down their stakes by the previously announced deadline of the end of June this year.
Source: Malaysian Reserve
PHILIPPINES
The Government Service Insurance System (GSIS) is inviting interested parties to bid for the block sale of all of GSIS’s shares in the Philippines National Construction Corporation.
The number of shares available is 47,490, 383 and the minimum bid has been set at Php50,00,000 ($936,525). A pre-bid conference will be held on September 21 and the submission of bids is expected on October 26.
Source: GSIS
TAIWAN
Taiwan’s Public Service Pension Fund (PSPF) has granted $1 billion of funding to seven foreign asset managers for its two most recent global mandates, its monthly report for June shows.
Schroders, JP Morgan Asset Management and AllianceBernstein LP, which were selected to oversee the fund’s $600 million global multi-asset mandate. Each received $200 million.
The pension fund also awarded $100 million each to Amundi Asset Management, Deutsche Asset Management, TCW Group and American Century Investments. The four were chosen in January to manage its $800 million global total return fixed income mandate. PSPF did not indicate when the remaining $400 million will be handed out.
Source: PSPF, Asia Asset Management
INTERNATIONAL (EX-ASIA PACIFIC)
The Canada Pension Plan Investment Board (CPPIB) plans to more than double the proportion of assets it allocates to China in the next seven years. This is part of a move to tap fast-growing emerging markets for greater returns.
It plans to allocate up to 20% of its assets to China by 2025, up from the 7.6% of its portfolio it now has invested in the world’s second-biggest economy. Overall, it plans to allocate up to 30% of assets to emerging markets over the same period, compared to 15% currently.
Source: Financial Times
Abu Dhabi Investment Authority (Adia) has put a 14-storey office building in Seoul up for sale, with a price tag of W550 billion to W600 billion ($487 million to $531 million), slightly more than it originally paid in early 2015.
Adia is planning the sale at a time when one of the building’s major tenants, Shin & Kim, a large local law firm, looks to move out in early 2019. Korea Investment Corporation, the $134.1 billion sovereign wealth fund of South Korea, also has its headquarters in the building. Adia’s decision to sell is also believed to have been influenced by the possibility the Bank of Korea will raise interest rates later this year.
Adia bought the building from BNP Asset Management for W25 million per 3.3 square metres and will seek to sell it for W27 million to W28 million for the same unit of measurement.
Source: Korean Investors
Other asset owner news reported in AsianInvestor:
China to drive infrastructure via local bonds
NZ Super aims for agri assets to bolster returns
Nest deputy CIO: building a DC fund