Asia continues to represent a major growth opportunity for global corporates and, as Mike Taylor reports, MetLife is proving no exception as it continues to grow its presence in China, India and elsewhere.
While there has been plenty of discussion about US relations with China and the geo-political balance in Asia, this has not distracted major corporates such as US-based insurer, MetLife, from continuing to prosecute what has become a long-run strategy in Asia.
MetLife has had a solid presence in Asia for decades with solid businesses in both Japan and Korea and, over the past 10 years, has sought to grow its business footprint into China and India, but as MetLife Investment Department managing director and chief investment officer, Asia, Charles Scully, makes clear the company’s Asia outlook is far from static.
Indeed, it is a measure of MetLife’s focus that it has only recently opened up a significant Joint Venture presence in Vietnam and is one of only a few major companies to have a representative office in Myanmar.
Putting MetLife’s broader approach to the region into perspective, Scully told Super Review that growing the international business represented an important element of MetLife’s strategy and that, within that, Asia played an important role “because of the long-term growth in the region, the sheer magnitude of the population, and the demographics of that population.
“It represents a great opportunity to provide better services and products,” he said.
Scully said MetLife was operating in nine markets throughout the region, some well-established, some of them brand new start-up operations
“But if we had to summarise the strategies, one is to maximise the earnings from the businesses which have significant scale - Japan and Korea - then build a long-term growth platform in China and India, because those two markets have the circumstances that could result in very, very significant growth,” he said.
However Scully said that allied to this objective was ensuring a solid earnings contribution from designated markets such as Australia and Hong Kong while expanding into some of the high growth, high margin markets of south-east Asia but in a disciplined way.
“Basically, we’re always searching for opportunities and value,” he said.
China, too big to ignore
Discussing MetLife’s approach to China, Scully said the potential was undeniable.
“When we think about China, it has a tremendous population that is under-served in insurance and has the potential to generate significant growth and we’ve focused a lot of attention on China,” he said. “We’re looking to build a portfolio that builds value and return.”
“If you look at us relative to the joint venture companies we’re number two or three. Things have gone pretty well for us in China and we’re pretty optimistic about how things can go from here.”
However Scully made clear that there were a number of dimensions to the company’s approach, not least investment.
“To the extent that something is important to the overall business, it’s important to investment [MetLife’s investment division] because our primary role here is providing good value investment to support business growth,” he said.
“Fundamental to how we approach investment is the liabilities we’re writing. That’s what we’re doing throughout the organisation and that’s how we’re doing it in Asia. We’ve had an investment office here in Asia since 1997 and we have those capabilities in the region to support the growth we’re talking about.”
Scully said that while China was central to the company’s effort, that focus was not based just on the inherent growth opportunities but because of the global importance of China, generally.
China and India - different challenges
MetLife recognises China and India as two enormous growth opportunities, but Scully believes it needs to be recognised that they present very different challenges .
“[They represent] two very different systems but both have tremendous underlying growth potential,” he said. “Between the two countries there’s a population of 2.5 billion and it’s hard to look at either market and determine which is better.”
“Both countries represent good opportunities but have different systems and both have a need for reform to unleash their growth potential,” Scully said.
However he said MetLife believed that reform as already well underway.
“We think the changes in China are very much in the right direction to keep the growth going and move away from the property, infrastructure debt- fuelled growth they’ve had so far,” Scully said. “But the reforms are there, I think, for them to move forward.”
He said the challenges with respect to India were different, not least the bureaucracy and other self-imposed hurdles that had served to prevent growth.
“They [China and India] both represent really good opportunities, both have obstacles, but in both circumstances we’re seeing the changes necessary to see them getting to a better place,” Scully said.
Acknowledge that joint venture partnerships are an important part of growth plays in China and elsewhere in Asia, Scully said MetLife’s underlying priority was always to go in with a disciplined approach that built long-term value.
“That takes our experience and well-established presence but we want to then leverage that global capability to local benefit,” he said. “You need to be aware of local capital market realities, local regulations, and those things that are very, very local and having joint venture partners is very important because it provides that local knowledge and experience.”
“We have been very, very lucky in our key markets in the JV partners we’ve had,” Scully said.