Canadian insurance group Manulife is eyeing opportunities on multiple fronts in Asia, including seeking a partner with which to enter the Chinese pensions market and planning to set up a wealth management office in Manila.
The firm, which already has a life insurance business in the Philippines, is working towards getting a licence for an investment trust company next year, when a local chief executive will be appointed.
In China, while Manulife would like to have sole ownership of an onshore entity, it sees value in partnering a local player for distribution, said Michael Huddart, executive vice-president and general manager for Greater China.
“We’d love to have a 100%[-owned operation], but realistically it will be a joint venture in this space,” he noted, adding that the big question was how much it would own of the JV. Certainly the general expectation remains that foreign partners hold the minority stakes.
Manulife already has life insurance and asset management JVs in China – Manulife-Sinochem Life and Manulife Teda, respectively – so pensions is another logical step, especially as the country's Public Pension Fund reforms gather pace.
“We need a partner that would give additional distribution [in China],” noted Huddart. He declined to comment further on the companies it is talking to, but said the partner could be an bank or an insurer. Manulife already distributes insurance and fund products through Agricultural Bank of China and Bank of China.
Meanwhile, Manulife Teda Fund Management runs funds that mainly invest domestically, but it may start offering products with foreign underlyings by making use of the qualified domestic institutional investor (QDII) scheme, said Huddart.
However, with the Hong Kong-China mutual recognition of funds scheme now in place and the mainland market fast opening up, a decision has not been made on this. A Manulife committee is exploring the options for providing offshore funds to mainland investors.
When will more pension licences come?
All licences for pensions businesses had been issued to life insurers until last year, when a special broad approval was given to China Construction Bank. CCB partnered China’s National Council for Social Security Fund late last year to set up a retirement fund management subsidiary, as reported. The JV was the first entity to secure a full licence for pension management in China.
The Chinese authorities have not indicated when they might issue licences for other pensions business, but Huddart was hopeful it would be soon. “There’s been more talk, more debate about pensions in China now than a year ago,” he said. “It’s definitely happening.”
Other foreign financial services firms have already moved to participate in the mainland pensions business. Australia’s AMP Capital in late 2014 bought a 20% stake in China Life Pension, which provides enterprise annuity products to state-owned and private enterprises
And in March, US firm Principal Financial Group signed an agreement with CCB to further strengthen the duo's cooperation on pension and asset management business. This may see them set up joint business platforms for product development and market exploration. The two firms already have a joint venture, CCB Principal Asset Management, formed in 2005.