AUSTRALIA

Superannuation funds Hostplus and Club Super have signed an agreement to begin formal due diligence on a merger, the latest in a set of such consolidations as Australia’s pension system continues to coalesce.

The A$43 billion ($30 billion) Hostplus, which manages retirement savings for hospitality and tourism workers, would likely be the dominant driver of the merger with A$560 million Club Super, which operates funds for members in sporting and recreational clubs.

Australia’s A$2.8 trillion superannuation industry has seen a succession of mergers amid complaints of overly high fees and fund underperformance. A government commissioned review earlier this year said the industry was riven with inefficiencies and called for consolidation. Hostplus is one of the top performers however, with its balanced investment option returning 10.88% annualised in the three years to April 30.

Source: Bloomberg

Pension managers Tasplan and MTAA Super are considering a consolidation that would create a A$22 billion fund, in aother sign of increasing mergers among Australia’s superannuation players. The two companies signed an agreement to explore a merger on June 28. Tasplan manages A$9.5 billion in assets, while MTAA has A$13 billion for workers in the motor trade and alliance industries.

The announcement came after Statewide Super on Friday announced it was walking away from separate plans to merge with Tasplan and WA Local Government Super Plan. That three-way merger had a high risk of failing as it was too complex and may have taken two years to complete, Statewide chief executive Tony D’Alessandro said in an interview.

Source: Bloomberg

Some of Australia’s largest superannuation funds are flouting fee-disclosure rules and deliberately reporting data to show lower administration fees.

The Australian Securities and Investments Commission requires super funds to report their respective administration fees as a gross figure – an amount that does not factor discounts for tax benefits. But some are reporting a net tax figure, presenting their products as less expensive, according to analysis by The Australian Financial Review.

Source: Ignites Asia

Australian insurer Suncorp Group said on Monday (July 1) it would defend a class-action lawsuit against its unit managing superannuation funds, alleging improper charging of fees. The suit is one of at least 11 lawsuits to be filed against major financial firms since a public inquiry uncovered widespread misconduct including alleged overcharging of fees.

Law firm William Roberts Lawyers and Litigation Capital Management filed the suit on behalf of members of Suncorp Super Funds against Suncorp Portfolio Services.

“We have formed the view that, since 1 July 2013, Suncorp Super members have been wrongfully stripped of hard-earned monies used for the payment of commissions and other fees to financial advisers. Those monies should now be repaid,” said a statement issued by the law firm on May 31.

Source: Reuters

CHINA

China has created a new insurer to take over the main operations of Anbang Insurance Group. Dajia Insurance Group, which was established June 25 and has Rmb20.4 billion of registered capital, will provide insurance services as approved by the China Banking and Insurance Regulatory Commission.

China Insurance Security Fund, the industry body that’s currently the controlling shareholder of Anbang, owns 98.2% of Dajia Insurance, while China Petrochemical Corp and Shanghai Automotive Industry Corp hold the rest.

Source: Bloomberg

HONG KONG

FWD has entered into an agreement to acquire MetLife’s Hong Kong business.The transaction is subject to regulatory approvals and terms of the deal were not disclosed.

Separately, FWD has also signed a binding share sale agreement with Thailand’s Siam Commercial Bank to buy its entire stake in SCB Life Assurance. The Thai bank will receive a total deal amount of Bt92.7 billion ($3.03 billion) along with additional payments related to the bancassurance partnership between the two parties. At completion, the transaction will be the largest ever life insurance transaction in Southeast Asia in terms of total value.

Source: FWD (Metlife deal and SCB deal)

INDIA

Singapore’s Temasek and Warburg Pincus are the likely frontrunners to buy a 26% stake in India’s SBI General Insurance, according to unnamed sources. The stake is likely to fetch about Rp32.5 billion ($471.40 million), valuing the business at Rp12,500 crore, they said.

The stake is being sold by Insurance Australia Group as part of a regional revamp. The Australian insurer had mandated Goldman Sachs to find a buyer for its stake, having exited Indonesia, Thailand and Vietnam. 

Source: The Economic Times

JAPAN

Nippon Life Insurance, the largest Japanese life insurer by revenue, has agreed to acquire a 35% stake in Myanmar’s Grand Guardian Life Insurance Company (GGLI) for about ¥23 billion ($21 million).

The acquisition, which is subject to the relevant regulatory approval, is expected to be completed by October this year, with Grand Guardian to be renamed as Grand Guardian Nippon Life Insurance under the terms of the deal. Nippon Life acquired the 35% stake from Grand Guardian Insurance Holding Public Co, which will hold the remaining 65% share.

Source: Insurance Business Asia, Deal Street Asia, Myanmar Times

Tokio Marine Holdings Inc. is seeking acquisition opportunities in Asian emerging markets and elsewhere as it seeks to double profits from those regions, according to the new chief of Japan’s largest property-and-casualty insurer.

“We have group companies in Southeast Asia but they’re small,” Satoru Komiya, who became president on Monday, said in an interview. “If we have a chance to make a further leap in the Philippines, Indonesia and Malaysia, we’d like to expand our business.”

Source: Bloomberg

Sompo Holdings, the parent of property-and-casualty insurer Sompo International Holdings, has announced that it has created a global transactions group to take overall responsibility for all M&A, intercompany transactions and joint ventures.

The group comprises senior professionals who will be responsible for both insurance and non-insurance transactions, such as insurtech and healthcare services companies, in over 30 countries.

Source: Press release 

Tech-driven insurance startup Singapore Life has secured $90 million in investment from Japan’s Sumitomo Life Insurance.

Under the deal, Sumitomo Life gets about 25% of the total issued and outstanding shares in Singapore Life. The move will also support the Japanese insurer’s plans to expand into Singapore and other markets, according to a statement.

Source: Tech in Asia

Maybe this? https://asia.nikkei.com/Business/Markets/Aging-Japan-gives-birth-to-first-50-year-corporate-bond

KOREA

South Korean institutional investors, including the National Pension Service (NPS), lost around W2.50 trillion ($2.16 billion) over the last five years due to their inefficient stock trading practices. They traded stocks without making an effort to reduce transaction costs, while foreign investors earned an additional profit by employing advanced techniques.

The combined market impact cost of domestic institutions, such as the NPS, pension funds, insurers, investment trusts and private equity funds, from 2014 to 2018 came to W2.46 trillion, according to a report released by the Korea Capital Market Institute (KCMI) on June 27. The figure for foreign investors totalled a negative W730 billion over the same period.

Source: BusinessKorea

South Korea’s non-life insurer DB Insurance is set to acquire three units of Century Insurance Company (CIC) operating in Guam, Saipan and Papua New Guinea.

The company announced on Monday that it had signed a contract with CIC’s parent company Tan Holdings to take over an 80% stake in each of the three CIC units on June 26. The acquisition is expected to help DB Insurance expand its presence in the global market. The non-life insurance company has had a branch in Guam since 1984 and will merge the business with CIC.

Source: Maeil Business News Korea

The Financial Services Commission announced on June 27 that the Korean Insurance Capital Standard (K-ICS), a new capital adequacy regulation, will be introduced in 2022 as previously scheduled, but a grace period of 10 to 20 years will be given at the same time.

The K-ICS is to measure the available capital-to-capital requirement ratios of insurance companies by applying market price valuation to their assets and liabilities. The standard is scheduled to be introduced in step with the implementation of IFRS 17 in 2022.

Source: BusinessKorea

The Military Mutual Aid Association (MMAA) has committed $40 million to Oaktree Capital Management’s Asia-focused special situations fund which reportedly targets $2 billion in fundraising.

For its sixth Asia special situations fund, Los Angeles-based Oaktree is aiming to raise $100 million to $200 million from South Korea, according to South Korean news outlet MoneyToday on June 26.

In addition to MMAA, LINA Life Insurance, a South Korean unit of the US insurer Cigna, has committed $30 million to the latest fund, with KB Insurance considering committing an undisclosed amount as a limited partner, the report added.

Source: Korean Investors

Assets of South Korea’s biggest institutional investor National Pension Service (NPS) neared W689.96 trillion ($596 billion) in April, with returns in the first four months of the year averaging 6.8%.

Domestic and foreign stocks led the growth, with return rates of 9.97% and 20.3%, respectively. Domestic bonds logged returns of 1.42%, overseas bonds 6.68% and alternative investments 3.46%.

Source: Korea Herald, Maeil Business News Korea

MALAYSIA

Malaysia’s sovereign fund is adding to its board the founder of an artificial intelligence startup and Chinese tech giant Tencent executive to potentially expand its use of new-age tools. 

Effective June 26, Khazanah Nasional added new board members SenseTime founder Xiao’ou Tang; Lau Seng Yee, Tencent's chairman for group marketing and global branding; and Azian Aziz, head of the advisory division at Malaysia’s attorney general’s chambers.

SenseTime is one of the world’s most valued artificial intelligence unicorns, valued at over $4.5 billion after raising $620 million in Series C+ funding in May 2018. 

Source: DealStreetAsia, Khazanah, SenseTime

Insurance firm Tokio Marine Holdings is looking at acquisitions emerging markets in Asia including Malaysia, according to its president Satoru Komiya.

“If we have a chance to make a further leap in the Philippines, Indonesia and Malaysia, we’d like to expand our business,” Komiya, who became president last Monday, was quoted by Bloomberg as saying.

The Japanese insurer has said it wants to increase the proportion of ex-Japan Asia’s profits to 20% of its overseas businesses, up from about 10% now.

Source: The Edge, Bloomberg

PHILIPPINES

Net earnings of Philippine state pension fund Government Service Insurance System jumped fourfold to PHP38.7 billion ($758.8 million) in the first quarter of 2019 from PHP9.05 billion in the same period last year.

The increase in GSIS’s net income was driven by increases in stock market values, interest income and premium contributions, the fund said. The increase in net income is due to the rise in the market valuation of financial assets, GSIS said. Interest earnings rose due to new loan programmes. Total assets also went up 6% to PHP1.2 trillion.

Source: GSIS, PhilStar  

SINGAPORE

GIC is forming a $1 billion-plus limited liability partnership with data centre operator Equinix, to develop and operate data centres in Europe. 

The initial facilities will target some of the world's largest cloud service providers, a press release from the US company said. Customers have included Alibaba Cloud, Amazon Web Services, Microsoft Azure, Oracle Cloud Infrastructure and Google Cloud. 

Under the terms of the agreement, GIC will own an 80% equity interest in the joint venture and Equinix will own the remaining 20% equity interest. The joint venture is expected to close in the third quarter of 2019, pending regulatory approval and other closing conditions.

Source: Yahoo Finance, Equinix

Sovereign wealth fund GIC and Canada’s Brookfield Infrastructure Partners are buying out US railroad operator Genesee & Wyoming for $8.4 billion.

The two funds will pay $112 a share in cash for Genesee & Wyoming and its portfolio of 120 short-line railroads. It has 16,000 miles of track, mostly in the US but also in the UK, Europe and Australia.

The selling price is at a nearly 40% premium from the firm’s share price in March, when rumours of a deal began, and a 5,400% return since its initial public offering in 1996. The deal is scheduled to close around the end of 2019. 

Source: Barron’s

GIC has sold four of its South Korean logistics centres, making a tidy profit in the process. A fund led by Credit Suisse Asset Management’s real estate investment arm bought the two logistics centres in South Korea for W120 billion ($104 million) with another two bought  by South Korean asset managers specialising in logistics centres – ADF Asset Management and Kendall Square Asset Management.

Along with state-run fund Temasek, GIC had spent more than $1 billion in buying logistics centres near Seoul since the early 2000s for expected annual returns of 8% to 9%.  

Source: Korea Economic Daily

Hong Kong’s Li & Fung put the initial share sale of its logistics unit on the backburner following a $300 million investment from Singapore state-run fund Temasek. The state-owned investment company is taking a 21.7% stake in LF Logistics in a deal which values the company at $1.4 billion with the Hong Kong-based clothing supplier retaining 78.3%.

In a filing to the Hong Kong Stock Exchange, it said the investment would “fund future capital expenditures, repay existing bank facilities and accelerate business growth initiatives”.

Source: Reuters, The LoadStar

Sumitomo Life Insurance has bought an about 25% stake in Singapore Life for $90 million. The fund raise values the Singaporean fintech at $358 million, chief executive Walter de Oude told The Business Times, with the investment helping speed up its "mobile-first ambitions".

Earlier this year, Aberdeen Standard Investments had taken a stake in Singapore Life for $13 million, while US insurer Aflac took a separate equity stake for $20 million.

Source: The Business Times

GLOBAL

Superannuation funds and investors representing $34 trillion in assets – nearly half of the total under management across the globe – called on world leaders to bring in carbon pricing and phase out coal power to limit global heating to 1.5 degrees celsius.

Released ahead of the G20 leaders meeting in Osaka, the statement by 477 institutional investors urges world leaders to accelerate their response to the climate crisis to ensure the goals of the 2015 Paris climate deal can be met. The statement was backed by Australian asset managers and retail and industry super funds including Australian Super, First State Super, Cbus, Colonial First State Global Asset Management, Hesta, BT Financial Group, VicSuper, New Forests and IFM Investors.

The Australian government also reiterated at United Nations’ climate talks in Germany that it would develop a long-term strategy by the end of next year consistent with limiting global heating to 1.5 to 2 degrees, but didn’t commit to increase the target it set in Paris.

Source: The Guardian

INTERNATIONAL (EXCLUDING ASIA)

US public pensions are set to see their funding problems grow, as 230 of them faced a combined shortfall of $1.5 trillion as of end-2018, up from $1.28 trillion the year before, estimates Pew Charitable Trusts, a Philadelphia-based think-tank.

Most state pension plans are not equipped to face the next downturn, even after a decade-long record-breaking rally for US equities.

Kentucky ranks as the weakest US state pension system with a funded position of 33.9% (assets as a percentage of liabilities). Only two – Wisconsin and South Dakota – have fully funded pensions, at 102.6% and 100.1%, respectively.

Source: Financial Times