Insurance idol wary of old ladies with sticks
A GOOD KNOWLEDGE in mathematics helped Edmund Tse secure his first job in Hong Kong's largest life insurance company American International Assurance (AIA) in 1961, although he was not quite sure about calculating risks and setting prices for insurance policies.
Now, he is the chairman & chief executive of AIA and senior vice-chairman and co-chief operating officer of the US-parent American International Group (AIG), which has 180,000 agents worldwide and 21 million life policies. In Hong Kong, AIA has a 20 per cent market share and a team of 8,400 agents.
Mr Tse's contribution to the insurance industry was affirmed yesterday when he became the first Chinese and the 108th top insurance executive to be elected to the Insurance Hall of Fame - an honour given to individuals who have influenced insurance organisations in more than one country. The annual award is voted on by more than 1,000 chief executives.
The Informer spoke to Mr Tse about insurance development in China. He also gave a few good tips on football and why you should be careful when you are in Russia.
Q: Do you think Article 23 and the 500,000-strong march against it will affect foreign investors' confidence?
A: I don't think so. I believe businessmen have to take a long-term view. We are an insurance company and have got more than one million policyholders in Hong Kong, so we would not abandon the city because of short-term incidents or any protest.
Hong Kong is still an attractive place to do business as rents have come down and people here are still very efficient. AIG has just joined the project to rebuild the Furama Hotel as our headquarters.
Q: Did you march on July 1?
A: No, I only watched it on TV.
There were more people than expected. I don't think that will shake foreign investors' confidence. I think all countries have their own security law. People only want the government to give a more careful explanation on the details.
It was also related to the poor economic climate. If the unemployment rate was zero, I don't think so many people would have joined the protest.
Q: Do you think the Cepa agreement signed last week will help the economy bounce back?
A: For the insurance sector, the major benefit will be for salespersons as the agreement allows local agents to sell policies in China for mainland firms after they pass an examination. We are planning to provide training to some of our 8,400 Hong Kong agents to help them take the mainland examinations to allow them to sell policies for our China branches.
Q: In Hong Kong, there are complaints that some agents have mistreated clients. Do you have the same experience in China?
A: You will have complaints on insurance agents everywhere. But AIG has adopted a very tight internal policy on the integrity of our sales team. We only hire well-educated persons who must have a university degree.
A top agent can earn 40,000 (HK$37,496) to 50,000 yuan a month, compared with an average of 1,200 yuan earned by fresh graduates. This has attracted many university graduates, doctors and other professionals to join us.
Q: Did sales go well in the first half?
A: Sars affected sales in April and May, but we see a better figure for June.
In China, we have new business growth of 36 per cent in the past six months, while Hong Kong has more than 10 per cent growth.
Q: What do you think are the major problems in developing the mainland insurance industry?
A: Investment restrictions limit the returns of the insurance companies. China only allows insurers to invest the premium into bank deposits and government bonds. It also bans any overseas investment.
In comparison, Hong Kong allows a lot of freedom so insurers can invest in stocks, debts, mortgage loans. Japan allows insurers to invest 40 per cent of total assets overseas, while Taiwan allows 20 to 25 per cent overseas investment.
Q: How do you feel about getting into the Insurance Hall of Fame?
A: It was a surprise to me. There were always Americans and Europeans who got the awards. Only a few Asians ever got it. I did ask my friends to vote for me but I don't think they could have determined the result. I think I could have been elected because I have spent more time in the US in recent years.
Q: Besides Hong Kong and China, what other markets does AIG want to develop?
A: We would like to expand more in Japan, Vietnam, India and Russia. But the security in Russia is a concern.
When I am in Moscow, I am accompanied by a security guard who used to work for former Soviet president Mikhail Gorbachev. He once pushed off a young lady who was waiting for a lift with us. He told me to be extremely cautious with two types of persons - beautiful young girls and old ladies holding a stick. But we still need to be there as Russia is such a big market. We have an office in Moscow and we are planning to open one in St Petersburg.
Q: What are your hobbies?
A: I like watching soccer. I guessed Germany would get into the final of the World Cup. I also think it was a good deal for Manchester United to let David Beckham go to Real Madrid as they may not get such a good price later on.
I also like playing bridge and I was a representative for Hong Kong and Taiwan in an international bridge competition. But I don't have much time now.