UK insurer Aviva completed the acquisition of Friends Life on 10 April 2015, creating a new global group with 34 million customers and significant operations in the wealth management centres of Singapore, Hong Kong and Dubai.
While Friends Life’s London headquarters is earmarked to be closed, in the offshore markets the long-established Friends Provident International (FPI) brand looks set to live on.
In an exclusive interview with International Adviser, Chris Wei, chief executive of Aviva’s global life insurance operations and chairman of Asia predicts how he sees the company evolving after the mega-merger.
Aviva’s asset management arm had £246bn in assets under management at the end of last year, and now has the opportunity to add up to approximately £70bn of Friends Life’s UK assets under administration.
What is the future for FPI?
What I can say definitively is that we are keeping the FPI brand.
All the feedback was that Friends Provident International has had a very stable presence in the advisory industry for quite a long time, and that stability is very much appreciated.
So for us to unilaterally come in and replace it with an Aviva brand would not work.
The other thing we have to be mindful of is that FPI has a bit of niche acceptance within the high networth space. That is really critical.
This is not about egos or arrogance, it is about running the business as well as we can, maximising commercial value for our shareholders, and giving our customers and advisers the confidence they want.
We don’t see any major immediate impacts of running the brands in parallel.
FPI’s sweet spot is really around globally mobile professionals and wealthy individuals, who are more sophisticated in their needs and definitely of a higher wealth level.
And they require unique savings and protection solutions in multiple currencies and jurisdictions.
It is an attractive market sector if you look at the wealth flows occurring in the region.
There is a lot of mainland Chinese wealth flowing into Hong Kong, a lot of south-east Asian wealth flowing into Singapore and Indian wealth flowing into Dubai.
If you overlay that with the domestic affluent sector that is already there, and you draw a line right through it, you get to the Isle of Man, with an offshore booking centre.
That would be very difficult to establish today from scratch.
We are getting an existing proven infrastructure with experienced individuals who can help us transact and deliver the trustworthy and safe solutions our customers would expect.
In that regard, it is absolutely complementary.
That is not where Aviva has played in the past.
How do you see things panning out in Asia, specifically?
Aviva has been positive about Asia.
We are willing to invest appropriately but also significantly for that growth.
FPI is a really great platform to service the growing wealth flows in Asia, particularly in the high net-worth and upper affluent spaces.
The first thing to do is focus on the branches we are in, and there is ample opportunity to be successful there.
It is about deepening our existing markets of Singapore, Hong Kong and Dubai.
That is where the majority of the activity is happening and where all of the private banks have booking centres.
It is all very nicely aligned and once we have we have that humming along, we will then consider other geographies.
As a start, we need to re-engage with the IFA partners.
Keep in mind the advisory industry in Asia is going through quite a lot of change. Singapore is just on the heels of the FAIR review and implementation, which is going to mean a lot of compliance regulations.
It will be harder for IFAs to succeed but, in the long run, it will be good for the customer.
In Hong Kong, we have had a number of new guidance notes that have come out of the Office of the Commissioner of Insurance, which has put a temporary halt on the sale of investment-linked products.
This is all quite impactful and, in the short term, it is a negative for our financial advisory partners, so I am looking forward to re-engaging with them.
We are talking about getting the Aviva and FPI teams together and then re-introducing a broader suit of capability when you combine those operations.
Aviva brings some synergies from the technology side.
Take the new anti-money laundering and counterterrorist financing requirements.
We have already implemented new state-of-the-art systems.
FPI can take that and drop it in relatively easily so all those synergies will come through.
