Links with brokers and banks help insurer post 15pc rise in operating earnings for year Like many of its competitors, AXA Hong Kong has been attempting to diversify its sales model away from an almost pure agency system. The insurance company's transformation has achieved considerable success. Business contributed from channels other than the firm's agency force - including independent brokers, alliances with banks and salaried financial advisers - has increased to 40 per cent last year from a paltry 3 per cent in 1999. Despite the growing importance of non-agent sales, the traditional agency model would still be the firm's major source of business for some time, according to AXA chief executive Mark Wilson. 'It doesn't mean that our agencies have stopped growing,' Mr Wilson said. 'The agencies will continue to be a main part of our business, though we will also grow our new channels at a faster rate. 'We're not trying to replace one with the other, but rather to create a multi-distribution model.' Last year the firm unveiled a plan to spend $150 million over 18 months to strengthen its 2,000-strong agency force. The scheme includes a new training centre at AXA's Wan Chai headquarters and overhauling the incentive pay structure. 'Agents will be paid on a different ratio across a whole range of products,' Mr Wilson said. 'On top of that, we have invested a significant amount of money to get them more sophisticated computer tools so they're more like financial advisers.' The investment had so far brought good results, Mr Wilson said. While the number of agents - a figure that tends to fluctuate with overall market conditions - has grown by more than 100 since the new programme was adopted, average productivity has increased 8 per cent to $31,464 a month. However, the productivity growth lags that of salaried financial advisers, whom Mr Wilson said were behind almost 20 per cent of AXA's overall sales last year. With a team of about 300, AXA's financial advisers recorded, on average, monthly productivity growth of 15 per cent to $64,057 last year. 'These people are very different from what we used to have. They're professional, more educated and they target a slightly different market than our agents,' Mr Wilson said. 'We are asking them to serve a very different segment, which is the affluent end of the mass market.' The rise in sales productivity helped AXA post a 15 per cent increase in operating earnings to $921.9 million last year. Mr Wilson also attributed the growth to the improving Hong Kong economy, as well as changes in staffing structures. He said the firm would continue to focus on growing its Mandatory Provident Fund and wealth management businesses, with the latter's success hinging on its ability to grow the financial adviser team. 'As people are earning 0.01 per cent interest in their bank account, the tradition of keeping a lot of money in term deposits will not continue even if the interest rates rise,' he said. The company recorded a 21 per cent drop in net earnings to $1.74 billion last year, largely due to a big loss in investment income. AXA, like other insurance companies, was heavily exposed to bonds and other fixed-income instruments, which suffered in an environment of rising interest rates.
