Financial Services Association, Feb. 27 (Reporter Xia Shuyuan) As the first insurance intermediary in Asia, the news that Pan-China Holding Group (NASDAQ code: FANH, hereinafter referred to as “Pan-China”) has received a US$500 million capital injection from the Singapore Foundation has touched the heart of the market.

Following extensive mergers and acquisitions following the introduction of an open platform strategy at the end of 2022, Pan-China recently announced that it has signed the first implementation agreement with Huade Group on the strategic investment framework agreement disclosed on February 2, 2024. Huade Group will help Pan-China achieve intelligent development through capital injections and achieve international expansion by helping Pan-China set up offices in Singapore, Vietnam, Europe, the United States and Hong Kong.

It is worth noting that while Pan-China welcomes a capital injection of 500 million US dollars, Huade Group founder Bai Zhenhua will become the company's chairman, and Pan-China founders Hu Yinan and Lin Chuangbin will resign as co-chairmen.

Behind the series of capital operations, what kind of chess is Pan-China playing next? Recently, a Financial Services Association reporter interviewed Pan China Chief Strategy Officer Lin Chuangbin to share his thoughts behind Pan-China's digital technology and open platform.

As the main operator helping Pan-China's strategic transformation, promote the company's overseas business expansion, and strengthen capital market operations, Lin Chuangbin had been rooted in the financial industry for 18 years before joining Pan-China. In his view, the golden age of insurance intermediaries in China has just begun. Specialization, professionalization, digitalization, and platformization must be the future development direction of the industry. In particular, life insurance intermediaries should be on par with independent financial consulting firms.

Financial Association: Since 2022, Pan-China has proposed an “open platform strategy” while speeding up the pace of mergers and acquisitions, successively acquiring many intermediaries such as China Ronghuijin through share swaps. Since then, it has also set its sights on Southeast Asia and formed two joint ventures with Asia Insurance. Recently, it has received capital injection from the Singapore Foundation. What is the meaning behind a series of capital operations?

Lin Chuangbin: Pan-China plans to go beyond the local market, hoping to serve insurance customers throughout Asia in the future

As an established insurance intermediary, Pan-China has always been a pioneer in market transformation, especially in the field of capital management.

From early major auto insurance sales, to entering life insurance in 2006 and divesting financial insurance in 2017, completely shifting the focus of the business to life insurance sales, to launching a new open platform strategy in 2022.

Lin Chuangbin said that Pan-China's strategy for the past 26 years has always been planning, responding to the situation, and following the trend. Internationalization is Pan-China's latest strategy after specialization, professionalization, digitalization, platformization, and service.

“After I joined Pan-China, I vigorously promoted the company's overseas expansion. We will use US$500 million from Singaporean investors to break out of the local market through two medical-related acquisitions.” Lin Chuangbin introduced.

According to reports, Huade Group and Pan-China will focus on investing in high-quality assets, including a telemedicine service platform headquartered in Asia, which is the platform with the largest number of remote consultations in the Asia-Pacific region.

In addition, the two sides will also invest in an AI intelligent bionic robot hardware manufacturer. The company was founded in Singapore. The bionic intelligent robots it produces can be used in various fields such as medical research, home care, and elderly care.

Regarding the joint establishment of two joint ventures between Pan-China and Asia Insurance, Lin Chuangbin said that as an emerging global insurance market, the average level of insurtech capabilities and the pace of development have yet to meet its strong development momentum, and insurtech capabilities are scarce in most regions.

In contrast, China, especially in the mainland, is leading the way in digital applications and insurance sales technology, far ahead of other regions.

“I believe digitalization is definitely a global trend. We hope to drive the digital transformation of the entire industry through technology export platform strategy in Hong Kong. “By integrating 26 years of experience in the insurance industry and large-scale IT investment in the past 5 years, we can serve the brokerage market in Hong Kong and other parts of Asia very well. Our strategy is to hope that Pan-China can serve insurance customers throughout Asia in the future.”

Financial Association: What impact will the reduction in interest rates on insurance products and the “integration of reporting and banking” regulations have on insurance intermediaries? What are the considerations behind Pan-China's strategy to launch an open platform in 2022? How do you view the future growth space of China's insurance intermediary market?

Lin Chuangbin: The golden age of insurance intermediaries in China has just begun. Specialization, digitalization, professionalization, and platformization are the future development directions

Since 2023, in order to cope with the pressure on personal insurance on the investment side, the regulatory authorities have focused on implementing two major policies to reduce debt-side costs: one is to reduce the predetermined interest rate for insurance products from 3.5% to 3% to prevent the risk of interest spread loss; the other is to use “integrated reporting” as an entry point to prevent the risk of fee differences by setting an upper limit on channel commission fees.

With the gradual implementation of the “combo punch” described above, the insurance industry has ushered in a new round of deep adjustments. Some industries deduce that the sharp drop in sales commissions will inevitably affect the income of millions of insurance agents, and even the lives and deaths of thousands of insurance intermediaries.

According to Lin Chuangbin, reducing costs and increasing efficiency is a major trend in the insurance industry. After the integration of reporting and banking, insurance intermediaries may contract overall, and market resources will be increasingly concentrated on leading high-quality companies.

“The current downturn in the market should be short-lived. The industry is digesting some of the development problems brought about by large-scale development over the previous 30 years. I have studied overseas insurance institutions, and they can achieve positive growth even in an environment with low interest rates. Developed insurance markets such as the US, Japan, and even Hong Kong, China have experienced a long period of low interest rate environments after experiencing the financial crisis, yet the insurance industry in these markets has maintained a certain growth rate.”

In terms of capital markets, domestic and foreign investors do not have enough confidence now, causing China's asset valuations to seriously deviate from a reasonable range. “I have many years of experience as a financial analyst and fund manager. Currently, I have also experienced the most pessimistic environment in my 18-year career. Only economic development and the continued implementation of healthy capital market development strategies can drive domestic and foreign investors to restore their confidence and return corporate valuations to a reasonable range.” Lin Chuangbin said.

On the demand side, China's insurance industry is a market with potential for development throughout Asia, and even the world. Continued economic growth, high savings rates, and population aging trends will bring huge market opportunities to insurance companies. The golden age of insurance intermediaries in China has only just begun. Specialization, professionalization, digitalization, and platformization will definitely be the future development direction of professional intermediaries.

Financial Association: In recent years, domestic insurance intermediaries have accelerated the upgrade from the traditional “resource-based, channel-type, and extensive” growth model to “professional, technology-based, and management-oriented.” In your opinion, compared to leading insurance intermediaries in mature markets, where is the future for the development of insurance intermediaries in our country?

Lin Chuangbin: Life insurance intermediaries should be on par with independent financial consulting firms, and insurance agents should grow into asset allocation experts for every Chinese household

Lin Chuangbin explained that in some mature overseas developed insurance markets, there are already few insurance brokers or agents that sell single financial (insurance) products, and many companies have turned to independent financial advisors. In his view, this will also be the future development direction of Chinese life insurance companies.

We have seen that following the “Administrative Measures on Insurance Sales Conduct” issued by the General Administration of Financial Supervision in September 2023, clarifying product classification and sales personnel classification, the Insurance Association also issued the “Personal Insurance Agent Sales Capability Qualification Rating Standard (Personal Insurance Direction)” (discussion paper) for some insurance companies.

Lin Chuangbin said, “With the implementation of these policies, I believe that when our marketing team becomes more and more professional, the value we can bring to customers will far exceed the service value currently limited to life insurance sales. Future marketers should gradually develop into asset allocation experts for every Chinese family, provide customers with the most comprehensive financial, health, and pension risk analysis, and propose solutions for customers in areas such as pension and asset inheritance.”

Lin Chuangbin said that in fact, these business models are already very mature in some overseas countries or regions. Take the US intermediary market as an example. Independent intermediaries can sell many products, such as funds, pension funds, insurance, etc. Companies such as Raymond James (Raymond James) and Stifel Financial (Stifel Financial) all have a market capitalization of more than 10 billion US dollars. These companies can provide customers with services in the entire financial industry. Insurance is only one of the financial products recommended to customers.

According to reports, independent intermediaries account for 55% of the US insurance market, 18% in Europe, and 10% in Asia. Lin Chuangbin said that this shows that the slow development of the intermediary market is not a problem unique to China, but rather a phenomenon that exists throughout Asia. The development of the Asian intermediary industry started later than mature markets.

Even in Singapore or Hong Kong, China, independent financial advisors haven't really formed a climate because independent wealth advisors still prefer banks in these markets.

Furthermore, taxes in Hong Kong, China and Singapore are famous for their simplicity and low tax rates, but in Europe and the US, their tax rate policies are relatively complex. Independent financial advisors provide customers with another aspect of value, and they also provide analysis and solutions in terms of taxation.

In the US, Australia, and the UK, many independent financial advisors are highly specialized and professional; they are not affiliated with any financial entity. Australia, for example, is very typical. Many financial advisors initially engaged in insurance sales, but as regulatory policies changed, they provided customers with a wider range of financial products, from insurance to pension funds, to retail funds, annuities, etc.

Also, look at life insurance intermediaries in China. Currently, the level of specialization is still insufficient. However, these intermediaries do not need to learn from American companies such as Marsh (Marsh) and Aon (Aon); they should be on par with independent financial advisory firms.