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Startup Singapore Life targets industry shake-up

The new firm's chief executive, Walter de Oude, sets out his stall to AsianInvestor, with some arguing this could be a good time to challenge more traditional insurers.
Startup Singapore Life targets industry shake-up

The first local life insurance firm to gain a licence in Singapore since 1970 is looking to make an impact in the city-state’s wealth management industry by selling digitally and through financial advisers, and industry observers say it could well do so.

Singapore Life won approval on June 13 from the Monetary Authority of Singapore. It is capitalised with $50 million having completed a funding round in April this year, partnering two large reinsurers – Munich Re and Pacific Life Re – in the process.

The timing is good, said industry observers, since the competitive environment is such that traditional business models are under pressure. One expert told AsianInvestor that if Singapore Life could provide a competitive offering and smooth delivery, it may be entering just as others are considering withdrawing.

Walter de Oude, chief executive of Singapore Life, told AsianInvestor: “The life insurance industry has not kept pace with the innovation seen in other industries. We’ve seen a greater share of banking activity focused on things like universal life products [bancassurance business].

“Singapore Life has been designed to add capacity to that market," he noted, "with a focus on clients who are looking for a boutique alternative to the mainstream life insurance companies.”

   Walter de Oude

The firm will initially focus on selling universal life products through wealth management channels and aims to work with all of the top private banks in Singapore. De Oude said Singapore Life had been approved by one of the big players already, but he declined to name it.

It is the only firm offering both universal life and variable universal life products, said de Oude. Other providers such as TransAmerica or Swiss Life offer one or the other, he added.

Universal life insurance is type of flexible permanent life insurance offering the low-cost protection of term life insurance as well as a savings element, which is invested. Variable universal life products offer both a death benefit and an investment feature.

People are increasingly looking to use wealth protection or insurance products as alternatives to offshore trusts than in the past, said de Oude. “We think that trend is going to continue, because it’s a simpler way than setting up a trust structure in BVI [the British Virgin Islands] or elsewhere.”

Singapore Life will deliver this service by partnering two financial technology firms, Credit China FinTech and IPGL.

A Singapore-based insurance industry expert said the new venture could potentially add a new dimension to the business. He told AsianInvestor: “Most larger insurers are balking at the capital cost of providing the savings and investment product distributors want, so if a competitive offering can be produced, there is certainly demand.

"For all the talk about digital, there is only one other provider who claims to live in this space: FWD [a Hong Kong-based insurer]," he added. "So if Singapore Life gets the right distribution and is able to hook in premium financing, which is the mainstay of this type of product, and build competitive product then they could be successful before they run out of capital."
 
He said there were certainly headwinds, in that the products that are most attractive are capital-intensive and typically low-margin. "Singapore Life will have to work hard to make sales and manage this issue," he said. 
 
And despite the Singapore government’s attempts to promote digital distribution, it is still nascent in terms of market share, he noted, so Singapore Life may need traditional distribution sources to tide it over.

The insurer plans to offer “fund-style investing” later this year, said de Oude, but the firm has not been involved in talks with asset managers as yet. “They will be easily transactable and will be self-executed, advisory-executed or robo, based on client preference.”

Singapore Life has 27 staff, which is sufficient for its first phase of development, said de Oude. In August it will start offering term life insurance and critical illness products both digitally and through financial advisers. By that time, the firm aims to have 35 staff and will be fully functioning for the retail market.

He sees the firm’s chief competitors as HSBC, Manulife and Transamerica.

When it comes to the general account assets, de Oude says Singapore Life will manage its portfolio in a prudent manner, buying long-dated corporate bonds. It will use UBS as its custodian and asset manager.

In addition to de Oude, who was previously Singapore head of HSBC Insurance, Singapore Life's management team includes non-executive chairman Ray Ferguson, formerly group chief banking officer at Arab Banking Corporation in Bahrain and before that Singapore CEO at Standard Chartered.

The insurer's head of product development is Thomas von Rueti, previously CEO of Swiss Life in Singapore, and its chief technology officer is Ian Parker, formerly Singapore chief technology officer at HSBC.

¬ Haymarket Media Limited. All rights reserved.
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