Life insurer head responds to rumours of involvement in RBC Asia deal
Manulife Financial CEO Donald Guloien has welcomed the prospect on relaxed foreign ownership rules in China, following reports that Beijing is considering easing restrictions on life insurers.
Since joining the World Trade Organisation in 2000, China has permitted foreign life insurance providers to own up to 50 per cent in a joint venture with domestic companies.
Addressing the media following his speech at The Canadian Club of Toronto on Monday, Guloien revealed that while local partnership has allowed Manulife’s Chinese business to prosper, the prospect of sole ownership is definitely alluring.
“Our partners have been very helpful for us to understand China, but they are financial partners and naturally could want to exit some day,” he said. “A natural exit would be to sell to the other part of the partnership, and we would love to be able to buy if and when — and only if and when — our partners want to sell.”
Manulife has been operating in China since 1897; the year 1996 represented another milestone as it partnered with Sinochem Finance to create the country’s first Chinese-foreign joint venture life insurance company: Manulife-Sinochem Life Insurance Company.
Last week Bloomberg News reported that the Chinese government is mulling over opening up ownership rules to allow foreign life insurance companies to own more than the existing 50 per cent cap in a joint venture agreement.
This could even extend to allowing full foreign ownership, although this is still some way off according to the Manulife head.
“When it will happen and how it will happen I imagine will be a gradual,” he says. “Many of the foreign participants have said they would love to be able to own more of a company’s operations in China.”
Aside from life insurance, the government of President Xi Jinping is also looking into relaxing ownership rules in other financial sectors including wealth management, investment banking and pension funds.
One company that may not be around to take advantage of such reform is RBC, which last week put its Asian wealth management under review, with a view to a possible sale. When questioned on whether Manulife could be a possible buyer, Guloien distanced the firm from any deal.
“We have been reasonably active buyers, but our name is thrown out a lot,” he said. “Almost every deal that goes down in Asia you see our name, whether we are involved or not. Quite frankly I see most of our activity in Asia to be organic growth.”
Manulife has quite the presence on the continent already, with operations in 12 different countries. As far as expansion plans go, the company’s head says any acquisition will only be considered if it fits with the firm’s regional strategy.
“We had very specific reasons to do the Standard Chartered deal in Hong Kong, which gave us number one market share in the mandatory provident fund (MPF) business there,” he said. “The DBS deal in Singapore, Hong Kong, Indonesia and China was a regional deal. Quite frankly, the notion we are trying to buy a lot of different deals in Asia is a little overstated. Organic growth opportunities are what is really driving our success in Asia.”Related stories:
Speculation rife Manulife is bidding for Thai life insurer
Manulife and Chinese insurance giant reach 20-year milestone
