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SCMP Reporter

SOUTH Africa's Old Mutual International has joined the line-up of insurers marketing boutique investment products to expatriate investors in Hong Kong.

  The 150-year-old company obtained an insurance licence from Hong Kong's Insurance Commission in December last year and is busy laying foundations in Hong Kong's insurance market.

  With a product range that has high minimum investment levels and lengthy commitment periods, the company is targeting expatriate clients towards the upper end of the salary scale.

  Old Mutual Hong Kong's chief executive Michael Rudge said high-net-worth Hong Kong Chinese investors would also be an important target market.

  Old Mutual's investments will be marketed through a direct sales force via its selling arms Finexco International and Collingwood Investments.

  The insurer owns Finexco outright and recently acquired a 50.1 per cent stake in the Collingwood group.

  Following the acquisition, Old Mutual will also be able to sell its policies through Collingwood offices in Asia and the Middle East.

  Drawing on its own range of funds - two managed funds and 13 funds which give investors the choice to concentrate activity in a particular asset class or geographical area - Old Mutual is offering two lump-sum investment products and one regular savings plan.

  The lump-sum products - the Maxima plan and the Alpha plan - are long-term investment vehicles.

  Maxima is a managed investment plan which can be denominated in either US dollars or in sterling.

  It offers exposure to a range of financial markets through a maximum of five funds which can be used to tailor the level of investment risk.

  The minimum initial investment is US$20,000 (about HK$154,800). The minimum for subsequent contributions has been set at $7,500.

  Life cover is optional for Maxima but is not available in the Alpha plan which is a single-premium, unit-linked policy with a minimum investment of $25,000. Both Maxima and Alpha limit investors to five funds.

  The Omega plan, the company's regular savings scheme, is a unit-linked life assurance policy that has a minimum contribution of five years, making it less flexible than regular savings plans offered by unit trust companies.

  Investors must contribute a minimum of $300 per month or $3,000 per year. The minimum amount that can be switched between funds is $1,000.

    Investors who want to make a one-off, lump-sum investment in the savings plan will need to deposit a minimum of $20,000.

  In broad terms, the Omega plan has been earmarked by Old Mutual as a savings vehicle for education, mortgage, retirement and capital growth.

  Mr Rudge said the policies attempted to cater for overseas taxation systems, with the exception of the United States.

  Despite the emphasis on long-term products, Mr Rudge said Old Mutual did not expect its policyholders to suffer from a high surrender rate.

  'Clients won't be over-committed financially if the financial adviser does his job properly,' he said.

  'We like to think that our surrender rates reflect good selling practice,' he said.

  Mr Rudge said the company's commission structure was on a par with fees charged by other insurance companies in the territory.

  The company will be competing with insurers such as Clerical Medical Insurance, Royal Life and Royal Scandia, which also focus on the expatriate market.

  Old Mutual was established in South Africa in 1845 and has US$35 billion of client assets under management and a client base of more than three million.

  In addition to South Africa, the company is well established in Britain and has branches in Guernsey, Dublin and Boston.

  Old Mutual chairman Mike Levett said the company planned to put down roots in the territory.



Old Mutual moves in on rich expats