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the region’s life insurers. “There
isn’t an NHS in China. There’s
no universal unemployment
benefit in Thailand. There isn’t
a state pension in many of these
countries,” Monks manager Charles
Plowden says.
“The life insurance industry
in Asia provides a useful social
function promoting private savings
and security in markets that don’t
have social security systems or the
tradition of a welfare state.”
Asia, he says, is enjoying
a “seemingly unstoppable”
improvement in levels of health,
education and wealth. This has
already taken hundreds of millions
out of poverty or bare subsistence,
towards levels of income where
they can begin to save for longer
lives in retirement. With a middle
class income comes discretionary
spending.
Around 1.2 billion more people
across Asia are expected to join
the middle class before 2025, six
times more than in the rest of the
world. Plowden’s confidence that
these relatively prosperous Asians
will continue to buy increasingly
sophisticated life insurance
products is based on the human
instinct to secure what we have.
Insurance, he says, is an essential
FE TRUSTNET
[ BAILLIE GIFFORD ]
14 / 15
“The life insurance industry
in Asia provides a useful
social function promoting
private savings and security
in markets that don’t have
social security systems or the
tradition of a welfare state”
rung on the “ladder of needs” from
subsistence to luxury.
Convinced that these numbers
mean that the pull of high-quality
demand for policies of increasing
sophistication, and therefore
profitability, will continue for
decades, Plowden is almost as
confident about who will be
supplying that demand. Some
of these companies now feature
amongst Monks’ highest-conviction
holdings.
There are two dominant players
in the region. One is the deep-
rooted and fast-growing Prudential
Corporation Asia (soon to be listed
separately from the Pru’s venerable
UK and European operation). The
other is AIA, founded in Shanghai in
1919, the largest pan-regional insurer
in Asia. Both are top 10 holdings
in the Monks portfolio. Between
them the two Hong Kong-
headquartered companies
have 60 million customers
in 20 countries and armies
of highly-trained agents to sell their
products.
A more recent addition to Monks’
portfolio is Ping An (meaning ‘safe and
well’). Founded as recently as 1988, the
China-only life insurer had achieved
a $225 billion market capitalisation
by the time of its 30th anniversary.
Monks also has a smaller holding in
ICICI-Pru, a joint venture between one
of India’s largest private banks and
Prudential. Although the numbers
of new entrants to India’s middle
class surpass even China’s, Plowden
sees Indian life insurance as “further
behind the growth curve”, making it a
longer-term opportunity.
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