Invesco has become the latest international fund house to appoint an executive dedicated to Asia's fast-growing insurance sector, in a bid to expand its client base and strengthen its offering in the region.
Jaijit Kumar will start on Monday (November 11) in Hong Kong as Invesco's first head of Asia insurance solutions. He was most recently UK insurer Aviva's Asia chief investment officer.
Aviva could not immediately confirm whether Kumar would be replaced, as AsianInvestor had inquired late on Friday evening Hong Kong time.
He will report to Alexandre Mincier, the US firm's global head of insurance, who said he considered Asia as “the biggest opportunity in insurance [investment services]”. Half of the global insurance asset inflows in the next three years are expected to be from Asian clients, he told AsianInvestor.
Asian insurance assets under management swelled to $7.93 trillion as of end-2017 from $5.55 trillion in 2012, according to research house Broadridge. And the speed at which firms are upping their foreign investments via external managers is rising even faster: overseas outsourced assets stood at $180 billion as of 2017, up from just $20 billion in 2012.
Invesco itself manages some $70 billion of its $1.2 trillion under management on behalf of insurers, around 30% of which is for Asian clients, Mincier said. That proportion has already climbed from around 20% to 25% since he joined in March last year. And he expects it to rise further, in line with the industry's expansion in the region.
Before Kumar joined Invesco, Mincier had looked after Asian clients, spending around a third of his time in the region.
And, like Kumar, he had worked on the insurance side before switching to asset management – as global CIO at HSBC Insurance and head of hedging and global head of investment solutions at Axa.
Similarly, Invesco will be hoping Kumar's long experience in the industry helps it achieve its ambitions. He had been with Aviva since June 2016, before which he was CIO for the China region at French insurer Axa, and held investment and asset-liability management (ALM) roles at New York Life.
“Jaijit understand investments and ALM,” Mincier said. “He was head of ALM before being CIO; he understands the insurance products and how to position assets to match liabilities.”
This should stand him in good stead. For one thing, risk-based capital (RBC) regulations in several major Asian jurisdictions are progressing to the second stage, or RBC2, which is creating new opportunities both in the general account and unit-linked spaces, Mincier said.
RBC rules govern the amount of capital that insurers must hold depending on the assets they have in their portfolios, with riskier investments necessitating larger capital reserves. RBC 2 will generally impose more stringent requirements in this area, with major implications for how insurers allocate.
Yet RBC regulations are not the only current issues for insurance investment. There are also changes looming in the form of new accounting rules – International Financial Reporting Standards 9 and 17 – that are already affecting how insurance firms manage their assets and liabilities.
Such challenges, combined with the prevailing low-yield environment and rising cost pressures, are mean insurers have arguably even greater challenges to contend with than other institutional investors. Hence their acute need for external help to squeeze as much as performance as they can out of their assets.
Accordingly, fund houses have built up insurance coverage and expertise in Asia in the past couple of years. BlackRock and HSBC Global Asset Management both did so last year, while Neuberger Berman in July poached JP Morgan Asset Management's Asia head of insurance strategy.
And more firms are considering putting their own dedicated insurance coverage in place in Asia, recruitment sources tell AsianInvestor.