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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
Monks Investment Trust’s Charles
Plowden names three life insurers
that look well-placed to benefit
from Asia’s growing middle class
Ensuring
peace of
mind
ill health, sudden death, enforced
unemployment and fear of a cash-
strapped old age is rampant, much
to the benefit of the region’s life
insurers. There isn’t an NHS in China;
there’s no universal unemployment
benefit in Thailand; and there isn’t
a state pension in many Asian
countries. The life insurance
industry 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.
T
he extraordinary expansion
of Asia’s middle class is turbo-
charging demand for products
that provide a sense of security and,
as such, the region’s life insurance
giants are well-placed to reap the
rewards. For Asia’s newly prosperous
middle classes, the instinct to protect
themselves and their families against
One of two dominant life
insurance players in the
region is Prudential Cor-
poration Asia. We believe
the market is underesti-
mating this company; in
particular, the open-ended
growth opportunity in Asia
where penetration rates of
FE TRUSTNET
investment and life insur-
ance products are low and
likely to grow faster than
the underlying economies.
Having invested heavily
in the Asian market, Pru-
dential has secured a long-
lasting competitive advan-
tage. Coupled with rising
household incomes and
an ageing population, this
should translate into solid
long-term growth.
The other dominant
player is AIA, the largest
pan-regional insurer in
Asia. Between them, the
two companies have 60
million customers in 20
countries and armies of
highly trained agents sell-
ing their products. AIA’s
agency force creates a bar-
rier to entry: it takes 18
months to train an agent
and three years to train a
manager. Millions of people
work as insurance agents in
China, but it is the profes-
sionalism of AIA’s agents,
their ability to sell complex
protection products and
their higher productivity
that differentiates them
from their competitors.
A recent addition to
Monks’ portfolio is Ping
An (meaning “safe and
well”). Founded in 1988,
the China-only life insurer
had achieved a $225bn
market capitalisation
by its 30th anniversary.
Ping An is China’s lead-
ing private financial ser-
vices group and has the
capability and capacity to
provide a “one-stop inte-
grated financial solution”
to new customers. In addi-
tion, we believe that there
is significant value to be
found in its cutting-edge
technology, which aims
to improve cost efficiency
and customer experience,
all of which we believe
are undervalued by the
market.
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