Sun Life’s newly minted Chinese asset-management joint venture will seek mandates from pension plans as well as other life insurers, and has plans to invest in infrastructure.
But it is not without competition; a fast-growing number of such firms are setting up on the mainland.
Launched in February, the Beijing-based insurance asset-management company (IAMC) manages the assets of Sun Life Everbright and other insurers. It expects to win business from pension and enterprise-annuity clients, says Kevin Strain, Hong Kong-based president of Sun Life Financial Asia. He sees the firm as “part of the growth engine” for Sun Life’s China business.
“For third-party asset management business, other insurance companies are a good place to start,” notes Strain, “as it is an area we are familiar with and they are going to be high on our priority list.”
The JV may also engage in investment advisory services, as Sun Life in Hong Kong offers renminbi interbank bond market investment advisory services. Moreover, IAMCs have access to a broad range of asset classes, including bonds, equities, mutual funds, infrastructure financing debt plans, private equity and real estate.
In fact, Sun Life Everbright is exploring opportunities in the infrastructure space in Asia, an asset class in which insurers have been allowed to invest since 2006.
“We are the largest investor in infrastructure projects in Canada and one of the largest in North America,” says Strain. “We have quite some expertise globally in this area and are looking for such opportunities in Hong Kong, mainland China and the Philippines.”
Sun Life Everbright AM is the 12th insurance asset manager to have obtained approval to operate onshore from the China Insurance Regulatory Commission (CIRC). Everbright Group holds 50% of the JV, Sun Life 24.99%, China North Industries 12.505% and Anshan Iron and Steel 12.505%.
The first IAMC, PICC, was approved in 2003, and there are now 17 such firms. With deregulation gathering pace since last year, more players are expected to gain approval.
Last year, the CIRC resumed granting approval to insurance asset managers after a five-year hiatus. Anbang Life and Sino Life received their AM licences in May and July 2011, respectively.
More recently, Union Life AMC set up in Beijing last month (having obtained approval some time before). Also in July, three other insurance AMCs received licences, including Aviva-Cofco Life, Minsheng Life and Sunshine Insurance.
The regulator last year also relaxed the rules on insurance firms setting up investment arms by reducing the operational track record required from eight to five years. This opened the door for mid-sized insurers to enter the market, which has been long dominated by big domestic players such as PICC and Ping An.