Culture concern as mainland comes into focus
New York Life International is in talks to acquire several Hong Kong life-insurance companies, according to chairman and chief executive Gary Benanav.
The US insurance giant's move comes as it is gearing up to expand in the mainland market following the country's expected entry into the World Trade Organisation this year.
Mr Benanav said two of the possible sellers could fit easily with New York Life's management culture. Both were in the small to medium-sized bracket.
'We are happy to spend money to acquire other life insurance companies to expand our business, but we would only pay a fair and reasonable price,' he said.
He said many acquisitions failed due to different cultures, which prevented the two companies from integrating.
New York Life was therefore looking at companies with a similar business strategy, he said. This meant long-term plans in Asia and a focus on the quality of insurance agents.
Mr Benanav said New York Life would apply this year to set up a headquarters, probably in Beijing, to manage its representative offices in the mainland.
New York Life has four mainland representative offices - in Beijing, Shanghai, Guangzhou and Chengdu.
It had applied to establish a fifth in Chongqing, in line with the government's plan to develop the western provinces this year, he said.
Mr Benanav hoped New York Life would receive a licence in the mainland soon after the country enters the WTO this year.
New York Life has also applied for a licence to operate in India, which is also to open up its insurance market to the Western companies.
Founded in 1845 in New York, the company's major market is in America, with few operations in Asia before the 1980s.
New York Life came to Asia in 1988 but decided to expand rapidly in the region only in 1998, a year after the regional financial turmoil began.
Mr Benanav said there was less room for the company to grow in the United States than in Asia.
'In the US, many people have already got more than one insurance policy,' he said. 'In Hong Kong and many other Asian countries, the life-insurance market is still underdeveloped and has a lot of room to grow.' The company believes Asia will be the fastest-growing insurance market in the world in the next 20 years. The growing wealth of middle classes in the region would increase the demand for life insurance products, Mr Benanav said.
'We do not worry about the Asian financial turmoil as it is only a temporary incident,' he said. 'We plan to invest in the region for more than 10 years. We are not expecting to see returns in the next quarter or next month.' INSURANCE