Insurance giant with a growing presence in China

This Insurance Company is the largest pan-Asia life insurance group, with a presence in 18 markets across the region. We have been long-term shareholders in our Asia Pacific portfolios and see this company as an example of high quality financial companies which should benefit from favourable demographics, rising incomes and urbanisation.

The China market presents a sizeable long-term growth opportunity, and this company has been gradually expanding its footprint by two to three cities each year. In 2019, this company opened new offices in Tianjin & Shijiazhuang – increasing its China presence to five cities across two provinces.

This company differentiates itself from the state-owned insurers in China by focusing on health protection rather than short-term deposit products; and by hiring highly educated agents from outside of the industry. With their strong reputation in China, they are able to recruit high quality agents - 85% of the newly hired agents have bachelor degrees or above and a large number of them have studied overseas.

Thus, this company’s productivity is substantially higher than peers, leading to a much higher Value of New Business (VoNB) rate per agent. The China business is already 40% of group VoNB and 20% of its enterprise value, but they have only 1% market share – which suggest that there is plenty of room to grow.

Geographic mix of value of new business

Geographical Expansion Multiplies The Company’s Opportunity

Source: Bloomberg, Company reports, McKinsey, FSSA Investment Managers, as at 31 December 2020.

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