Banking & Finance

Jack Ma-backed Yunfeng broadens financial services with MassMutual’s insurance products

  • Hong Kong-listed Yunfeng will expand its financial product offerings with life and health insurance policies from newly acquired MassMutual Asia
  • Yunfeng will use in-house developed fintech to build financial services ecosystem
PUBLISHED : Monday, 03 December, 2018, 8:32am
UPDATED : Monday, 03 December, 2018, 1:00pm

Yunfeng Financial Group, backed by Alibaba Group Holding executive chairman Jack Ma, will use fintech to sell insurance products of recently acquired MassMutual Asia, filling the gap in the Hong Kong-listed financial firm’s portfolio, the chief executive said.

“Yunfeng already has stock broking, wealth management and investment businesses,” said Li Tang in an exclusive interview with the South China Morning Post. “Only insurance was missing. Since it is difficult to build up an insurance business from scratch, we decided on the acquisition,” adding that it will use MassMutual’s 3,000 agents and its own financial platform to offer a wide range of life and pension products in Hong Kong and Macau.

Yunfeng has developed and uses fintech to deliver many of its services in securities trading, wealth management, employees’ shareholding service and investment research.

Yunfeng completed the US$1.7 billion MassMutual Asia acquisition on November 16, more than a year after it was announced in August 2017 – making it the industry’s largest takeover in Hong Kong by a mainland backed company, according to Refinitiv data.

Under the deal, Springfield, Massachusetts-based MassMutual International will become Yunfeng’s second largest shareholder, owning a 24.8 per cent stake. The deal, however, excludes MassMutual Asia’s Japan and mainland business.

The shareholding in Yunfeng by Jade Passion Limited, whose investors include Ma, has fallen to 41.7 per cent as of November 16, from an earlier 55.4 per cent, according to stock exchange filings. Jade Passion bought a 56 per cent stake in the brokerage firm in May 2015, which was formerly known as Reorient Group.

Eddie Ahmed, chairman, president and CEO of MassMutual International, said the deal was a win-win for both companies. He said MassMutual and Yunfeng will collaborate to explore business opportunities.

“We are definitely not planning to exit from Asia. Rather, we want to use our shareholder stake in Yunfeng to expand in Asia,” Ahmed said, who will join the boards of both MassMutual Asia and Yunfeng. “MassMutual previously liked to own 100 per cent of any overseas units to have full control. However, we decided to change the approach to establish partnerships with other firms with specialised knowledge or technology,” Ahmed said.

“We have an eye on expanding in the Greater Bay Area and other Asia markets by adopting fintech,” he said, adding that the partnership is not exclusive and the two firms can also opt to separately develop different projects.

Yunfeng’s Li said her company is also interested in a virtual bank licence in Hong Kong.

“However, we would like to take a wait-and-see approach to see how the first batch of virtual banks develop first,” she said.

Hong Kong’s government is pushing for more fintech adoption in the city. The Hong Kong Monetary Authority last year announced seven measures to boost smart banking, including a plan to issue the first batch of virtual bank licences to some of the 29 applicants by the end of this year.

Since 2014, a string of Chinese firms have acquired many local insurers amid a rush from mainlanders rush to buy policies here, as nearly one in three policies are sold to mainlanders over the past few years. This has boosted local insurers’ business and made them attractive takeover targets.

The trend, however, has cooled down recently. A volatile market and tight capital controls caused the HK$7.1 billion (US$907.49 million) deal of Hong Kong Life to a mainland entity known as First Origin to collapse.

Hong Kong insurance policies regain sparkle among mainland investors as yuan weakens

The Insurance Authority said last Friday that mainlanders spent HK$11.7 billion on buying life and health insurance policies in Hong Kong during the third quarter, up 17 per cent from HK$10.1 billion a year earlier.

Alibaba owns the South China Morning Post.