AIA sets up central investment hub, builds team
Asian insurer AIA is busy building out a new regional investment hub in Singapore, including transferring professionals from its headquarters in Hong Kong.
The new firm, AIA Investment Management Private (AIAIM), started operations in January, after receiving its asset management licence from the Monetary Authority of Singapore on December 13.
It is the insurer's first group-wide investment operation, which will manage its portfolio of around $140 billion for the 12 local businesses across Asia.
Cheong Poh Kin, former chief investment officer of AIA Singapore, has been named chief executive of AIAIM, while group CIO Mark Konyn is now chairman.
Cheong's successor has not yet been announced. One potential candidate is Ong Kwee-Peng, head of fixed income at AIA Singapore, seen as Cheong's former number two, sources told AsianInvestor.
Meanwhile, portfolio manager Franklin Au relocated from Hong Kong to Singapore in January to become head of fixed income (offshore) at AIAIM, according to his LinkedIn page. He is not the only individual to have transferred from Hong Kong, according to sources.
One might expect that having a new investment hub will mean AIA will manage more of its portfolio in-house. However, one consultant questioned this assumption, suggesting the group would still be inclined to use external fund houses for many investments.
As for whether AIAIM will look to manage third-party money, the consultant suggested that this was unlikely, at least initially. The firm's core aim is seen to be to more efficiently manage the insurance group's money.
An AIA spokesman declined to comment on the changes in staff roles, or on whether it would manage more of its portfolio in-house or planned to manage external funds.
Efficiency benefits
Centralising investments is beneficial for any pan-regional insurer from an efficiency and cost perspective, said a source familiar with the insurance business. “The cost of compliance of maintaining investment and trading platforms across several markets will be a lot lower if you incorporate those efficiencies into one hub,” he noted.
Moreover, the insurance sector will be making ever more use of derivatives, he said, and it makes sense to have derivatives trading and reporting capabilities in a central location rather than spread across local offices.
Indeed, other multinational insurance firms headquartered in Europe or the US are understood to be moving these centres to Asia instead of running them out of New York or London.
The decision to locate AIAIM in Singapore was down to several factors, including the regulatory framework, availability of professional staff and the city's connectivity to the rest of the region, said AIA in a statement. “AIA has a large and long-standing business presence in Singapore,” it added.
AsianInvestor's upcoming February/March issue will feature an article on how Asian insurers are responding to the current market environment.
*****
AsianInvestor's annual Insurance Investment Forum will take place next week on March 1 at the Mandarin Oriental in Hong Kong and its annual Asian Investment Summit on May 9-11 in Tokyo. Please click on the links above for more details.