Old Mutual International, part of Old Mutual Wealth, is seeing an increasing demand for variable universal life policies from Asian high net worth individuals.
Speaking to Citywire Asia, Mark Christal, Hong Kong CEO, said: 'We’ve been seeing growing demand for insurance vehicles from HNWIs as we approach the largest wealth transfer the region has seen.
‘If you look at the domestic HNW market, there’s a lot of focus on wealth transfer and how you can use an insurance vehicle to ease the process.
'There can be avoidance of probates through this form of succession planning, for example.
‘If you look at banks, there’s been a lot of focus on universal life policies for insurance, however alternative solutions such as variable universal life (VUL) are growing as an area of interest as universal life may not address all clients’ needs,’ said Christal.
'For VUL policies, the focus is on addressing the need for a high level of life cover, but at the same time not compromising on opportunities for investment growth as a VUL solution provides open architecture investment access.
'In addition it enables existing assets to be used to fund the policy premium, therefore unlocking the full potential of a client’s wealth.
'Along with the alternative benefits and different needs a VUL solution can address, interest rate rises will put further scrutiny on premium financing as the primary method for funding universal life policies.'
Old Mutual International has an insurance provider licence in Hong Kong and historically focused on servicing expatriates, especially from the UK, in Hong Kong. It is growing its focus on the international and domestic high-net-worth market.
Old Mutual International has increased its focus on the EAM business in the last two years as well.
'We are keen to talk to EAMs and we will see it continue to grow as a market,' said Christal.
‘We align very well with them because they are very client-centric.’
It is currently an associate member of the Association of Independent Asset Managers in Hong Kong.
'Engagement has been through networking, the association, industry events with a focus on helping develop further understanding in this sector of the opportunity insurance solutions to meet identified customer needs.'
Old Mutual International has had an office in Hong Kong since 1991 (as Skandia International from 2006-2014). It mainly works with independent financial advisers and other financial intermediaries, using private banks for custodial services.
It managed £18.9 billion ($23 billion) in offshore funds as of 31 December 2016. Net inflows for 2016 were flat from a year ago at £0.7 billion.
However, Old Mutual International’s business in Asia took a hit in 2016 due to lower sales.
According to its preliminary 2016 results, economic conditions and changes to regulation adversely affected net flows in the Middle East, Singapore and Hong Kong, while European sales were lower following last year’s UK pension reforms which made international pension transfers less attractive for some UK expatriates.
‘Regulations, customer demand and technology are the three key challenges facing private wealth businesses,’ said Christal.
‘We are seeing a lot more drivers for fee-based models in Asian markets now. We are seeing distribution partners looking at that approach. In Asia, overall it’s quite a product, transaction-led model for now.
'We have to move from that to an ongoing solutions service-based model.’
Old Mutual International is the collective name for the Old Mutual companies that provide financial products and solutions designed for affluent and high net worth investors across the world, including Africa, Asia, Europe, Latin America, the Middle East and the United Kingdom.