HONG KONG (Reuters) - New York Life, the largest U.S. mutual life insurance company, may enter wealthy and ageing Japan as part of a strategy to diversify beyond its home market, its Asia chief executive said on Monday.
The policyholder-owned firm also expects operating revenue from its six existing Asian markets to rise 20-25 percent to about $1.6 billion this year from $1.31 billion in 2006, and to continue growing by more than 20 percent a year for the foreseeable future, John Harrison, New York Life’s head of Asia, told Reuters.
But the insurer, which competes in the region with listed firms like American International Group Inc. (AIG.N) and Britain’s Prudential Plc (PRU.L), is wary of trying to expand its network of sales agents as quickly as some global players are now doing in the region, he said.
“We have demonstrated more discipline around our agency structure than a lot of other companies, so when we’ve seen the growth of operations, we’re also seeing the stability of our management team,” he said.
As part of its focus, the insurer decided last year to devote its resources in Asia to its strongest markets: Hong Kong, China, Taiwan, India, Thailand and South Korea.
New York Life closed its Vietnam operation in February while maintaining a representative office. Harrison said some rivals there were growing their agent networks too quickly, undermining the quality of the industry, but added that New York Life might return to the fast-growing country if conditions improve.
New York Life also signed a deal last month to sell its interest in its Philippines operation to the partner.
Harrison said the firm could begin operations at some point in the next few years in Japan, which has the world’s highest percentage of elderly people.
New York Life believes it may be able to build on its U.S. expertise in providing annuities — products which provide regular payments — usually to retirees.
“There’s a lot of interest in Japan from some of the banks to work with insurance companies, particularly on the annuity and wealth management products. And that’s where our initial assessment in there has already started,” he said.
The former senior executive with Canadian insurer Manulife Financial Corp. (MFC.TO) said even if New York Life doesn’t enter Japan, fast-growing Asia will expand as a percentage of its overall operating revenue, which was $12.3 billion in 2006.
Most of that growth will be organic, though the firm is open to looking at acquisitions in the region, he said, as part of its broader strategy to expand.
“Whether you’re a mutual company or a public company, in order to continue to be able to provide the size and the scope that you need to be a strong player, it’s very difficult if you just stay focused on one market,” he said.
“The commitment to the international (arm) is partly to make sure that overall with the excess capital that we have, that we’re really investing it well.”