National Mutual builds on strong foundations

THE most significant development last year for National Mutual Asia, the Hong Kong-listed arm of the 127-year-old National Mutual Group, was recording a 20 per cent profit increase for the seventh consequent year.

'This attests to the quality of our service, our financial strength and our capability to plan constructively to meet new market needs,' said Terry Smith, NMA chief executive.

NMA's market muscle is also helped by its links to AXA, the third largest insurance group in the world, with assets under management exceeding US$300 billion. NMA was adopted by the AXA Group to develop life insurance in Asia.

NMA's profits for 1996 rose by 20 per cent to HK$1.01 billion. Revenue from premiums, net of reinsurance, rose by 14 per cent to $4.66 billion, while revenue from core individual life and health policies in Hong Kong and Macau grew by 13 per cent to $3.4 billion.

NMA is a general insurance company offering a wide range of products but its core product is life insurance, accounting for 71.4 per cent, followed by retirement funds (21.1 per cent), group (3.5 per cent) and general (2 per cent).

NMA is also preparing to meet the challenges of the Mandatory Provident Fund. If approved by the Government, the MPF scheme will infuse more than $30 billion a year into the market. 'If a company gets 10 per cent of that, it is $3 billion and that will double the funds under management of many companies.' Mr Smith believed the proposed MPF model was the best in the world. 'It is simple, straightforward and likely to be cost-effective. It will remain cost-effective only if it remains simple and straightforward. It has come 20 years too late but the advantage is that the Hong Kong MPF will avoid a lot of the mistakes of other countries. This is compensation for the delay.' Hong Kong was the hub from which NMA planned its regional strategy, overseeing the company's operation in Macau and Taiwan. Hong Kong was also the focal point of planning for China.