Episode 22: Where Innovation Meets Legacy In Wealth And Insurance, A Conversation with Edward Moncreiffe, CEO Insurance at HSBC Group

Speaker A: Hi everyone and welcome to Oliver Wayman's Reinventing Insurance podcast. I'm um, your host, Paul Ricard. Welcome to Riveting Insurance Today. I'm pleased to welcome Ed Boncrif who is the group CEO for HSBC Life. Welcome Ed.

Speaker B: Thank you for having me, Paul.

Speaker A: Uh, so Ed, I have to tell you I feel like I'm braving uh, the weather today to be with you. We're in uh, Hong Kong and uh, it's typhoon season. I think we're somewhere between an amber and uh, red storm right now.

Speaker B: It's black rain outside, which is why we look as we do.

Speaker A: Right? Yeah. So hopefully, uh, we're obviously uh, safe here. Uh, we'll see how the rest of the day turns out. Uh, further ado, why don't you tell us a little bit about yourself and uh, your journey in the insurance industry.

Speaker B: Yeah, sure. I um, well first of all, thank you for having me. This um, is my first podcast, so please go easy on me. Um, Yeah, I started 19 years ago. Uh, I started as an insurance broker in a company called HSBC Insurance Brokers in Lloyd's of London. The old HSBC Gibbs business, which HSBC had purchased I think in the late 70s actually before it even bought Midland bank to get a foothold in the London market. I had tried and failed to be a journalist, which was my dream when I, when I was younger.

Speaker A: It must be a dream now for you to be on a podcast.

Speaker B: Well indeed. Who would have thought these things would have existed 19 years ago? Maybe, maybe careers would have panned out very differently. Um, but I realized one, I wasn't very good at writing and two, there wasn't, there really wasn't much money in it for kind of 22 year old junior sports reporters at the Daily Telegraph. So the job I managed to land was uh, was on the graduate scheme of an insurance broker. So I spent my first couple of years in Lloyds of London placing various sort of risks, mainly marine, cargo, energy, aviation and doing kind of the ferrying jobs that junior brokers would do and shuffling to and fro Leadenhall Market for sort of liquid and refreshments. So I did that, uh, and then uh, I was sort of taken by the group, by the HSBC group to head office to go and work in their strategy, uh, and M and A area for a while. Uh, I spent some time in Ireland, uh, running uh, off our reinsurance company, uh, during the crisis, uh, and sort of exiting some of the liabilities and the risks that we'd accumulated there, uh, I spent some time in Brazil running our pensions business in Brazil, uh, which was a fascinating time. Uh, and then I moved to Hong Kong. Um, I left Copacabana beach on New Year's Day with my wife in 20, uh 16 January, uh, and then the next 36 hours later we turned up in Hong Kong. I ran our insurance uh, company in Hong Kong, Life and health company for seven and a half years, um, which had a fabulous time and we created a very strong market leading franchise here. Uh, and then sort of Q1 last year I became the sort of the global CEO for our insurance franchise. So it's been a really um, interesting journey. It's been across multiple uh, jurisdictions and making a kind of prolonged shift from non life ah to life from London, uh, to Hong Kong. I've learned a little bit over the years, um, but I've also been privileged to learn from a lot of very, very smart people around the world. And hopefully uh, maybe one day someone will say the same thing about me. I still got a long way to go.

Speaker A: Congrats on the latest role, uh, opportunity of course. So yeah, I was going to say you got to see one company, one group, but the many different facets of the insurance industry in the process. So tell us just a little bit about your current role and maybe about HSBC Life as well. What's the scope, what does it, what's the day in your life, uh, as the Group CEO for HSBC Live today.

Speaker B: Sure. And uh, I'll steal a memorable TripAdvisor review of the uh, Victoria and Albert Museum Cafe in London.

Speaker A: I thought you were going to say about HSBC Liverpool.

Speaker B: Well yeah, I mean it said this is one of the greatest cafes in the world with a nice museum attached to it. So that's how I see my m. Obviously we're part of uh, one of the world's largest financial organizations. You know, $3 trillion balance sheet across 60 odd markets around the world and a real financial behemoth. And I'm responsible for all of our insurance operations um, which are predominantly in Asia, uh, where we are a leading, you know we are the number one life and health insurer in Hong Kong. Uh, we 100% own our businesses also in Macau, uh, in mainland China, in Singapore, uh, we have a very large joint venture in India and we also have uh, businesses in Bermuda, in Mexico, across Europe, uh, and where we don't underwrite or manufacture, we're obviously a distributor, as a bank, as a licensed intermediary and I have accountability for that. So the HSBC Life Business is, um, it's about $120 billion of assets. It's a big business. If you look at our Q1 results for the group, you can see we're generating a billion dollars of new business csm. So, you know, kind of, you know, deferred ifrs, profits from new business. So it's growing very, very fast and we're a key growth engine, uh, for the group and capitalizing, particularly in this part of the world, in the wealth creation, the wealth transfer, the wealth growth that's happening, uh, in these economies and in these societies.

Speaker A: Well, let's, let's start talking about the macro trends. Right. Would be very keen to, to hear from your standpoint, obviously, maybe focusing on Asia. What are some of the biggest macro trends, uh, you've seen reshaping, uh, the insurance industry landscape from a demand standpoint in the last few years. Obviously a lot has been happening with China. Uh. Right. The rebalance between China and the rest of the region. Would love to get your views on that. And what else has been really top of mind, uh, and the biggest influencers from your standpoint?

Speaker B: Yeah, sure. I think macro trends is the right way to frame this, uh, as an industry. We're not a reactionary, uh, industry. And I think when we, when we behave in that way, we get into trouble.

Speaker A: Right.

Speaker B: We are, we are a long term anticipatory industry and it is the macro trends that drive our agenda. I'm a big believer in, in demographic destiny, frankly, for, particularly for life and health. Um, and if you look, I mean look at the US Market as an example and they're just a massive growth that's coming out of retirement annuities. I mean this is, you did not need a crystal ball. All you needed was a basic grasp of demographics to figure out that the baby boomer generation would be coming to the end of their accumulation phase and going into the accumulation and we see similar, not the same, but similar dynamics in Asia. We're seeing, uh, what's really interesting, um, particularly in places like China, we're seeing the first generation wealth creators, literally the first families, entrepreneurs, business owners, patriarchs, matriarchs to have created significant, significant wealth. Reaching an age where, you know, wealth transfer and legacy has come to the forefront. And, and my, you know, you got to be careful about stereotyping and overgeneralizing. But one thing I've seen very different in the east and the west is, you know, the concept of legacy is, is all encompassing, particularly in certain Asian cultures. It's not just about accumulating my wealth or consuming all of my wealth until it's gone. It really is around transferring wealth. So we're just seeing massive pools of wealth looking to be transferred from first generation to second and sometimes even third generation in Asia. And of course this is an amazing um, tailwind for us as an insurance industry. I mean the fundamental purpose of uh, our contracts are to transfer wealth between an insured, uh, and a beneficiary. And our products and solutions provide lots of different advantages as to why that's ah, why that's a good choice to take. So first I'd say is the aging population in Asia and particularly the aging um, of first generation wealth creators. This is all about this uh, tidal wave of wealth, wealth creation and wealth transfer.

Speaker A: Yeah, yeah.

Speaker B: I think the second thing is more, more recent, which we've seen really sort of the last five to 10 years rather than the past kind of 20 to 30 years is around the internationalization of wealth and the internationalization of financial planning and the role of life insurance within that. We're sat here in Hong Kong. Hong Kong is an international financial center. Our business in Hong Kong last year we wrote insurance contracts on people from 50 different residencies. Our Singapore business, very, very similar. Um, and the ability now for wealth to flow across markets and for estate planning, uh, and legacy planning, planning to be carried out across markets, um, is just really, really interesting. So if we look at the three major flows that are particularly of interest to me and my business, it is that greater China flow which largely but not exclusively comes to Hong Kong. It is that ASEAN flow and again the huge wealth that's been accumulated, um, in Malaysia and Indonesia, in Thailand, uh, that largely but not exclusively goes to um, uh, Singapore. And then you've got the Middle east and the nri, the non resident Indian pop as well, which, which goes to Bermuda and in some parts to Singapore and Hong Kong as well. So it is, it is demographics around aging, around wealth transfer, uh, and around internationalization of wealth.

Speaker A: Totally hear you. And you know, the aging is bringing it back to the scale, both the scale and the growth of that need. You are talking about the internationalization. You know, one thing I'm also curious about is how you see the needs having evolved. Right? You were talking a lot about that first generational wealth. How you would address the needs of the Personas from 10 years ago, 20 years ago versus now. How has that evolved? Is it more complex? Does it require much more tailored, uh, propositions to very different Personas?

Speaker B: Very, very good question and maybe I'd answer It in two ways give a bit of a cop out answer. So the answer is kind of yes and no. I think on the intermediary side, on the advice side. Absolutely right. There is now a very clearly uh, clear differentiation between advisory and distribution. Um, and people have been predicting the decline of tight agencies in Asia for forever and it hasn't happened. And I don't think it's going to happen anytime soon because there are very deep rooted cultural and community factors that will sustain that. Um, but what we've seen is the emergence of this level of Taylorization and obviously one of your businesses who's a good partner of ours, um, Immersive is an example of that.

Speaker A: Right.

Speaker B: And you do need a specific level of um, intellectual capital and ability to manage and advise wealth and asset allocation and everything that goes with that. And I think as part of a bank that also gives us a competitive advantage because people typically do look to us for things like asset allocation. We've been advertising our internationality for 30 years. Uh, this is again an inherent source of strength. On the product side, I don't think, uh, I've seen sort of massive shifts in product. Yes, we've seen the emergence of kind of more index linked products, more exotic linked kind of uh, solutions with various caps and collars and derivatives and everything else. But it's nothing that hasn't really existed in the west for a number of years. And I think as insurers we tend to kind of, you know, apologies to my product colleagues but we tend to sometimes overplay our kind of product innovation. And frankly with insurance, innovation may not always be the best thing. What I'd say there is, the key trend I've seen in the past five, six years is actually a flight to quality, a flight to risk aversion. Um, because this has been an enormously turbulent time, uh, over the past 10 years across the world. But I think particularly in Asia and the way that Covid landed and then some of the trade geopolitical challenges that have manifested over the past eight or 12 years. And what you haven't seen in most parts of Asia, which you did see in the west and particularly in the US was massive public market, um, valuation growth S and P is trending at like 2x of what it was 10 years ago. Look at the Hang Seng Index, it's still down on where it was in 2019. If you look at property prices across uh, greater China, across most of Asia again, um, so many, um, consumers and savers in Asia are wrestling with very different, different dynamics to what people in the west are wrestling, which is where insurance continues to over index as a safe haven, as something which will not lose you money, as something which can offset, you know, negative spreads or negative equity that you're getting elsewhere in your, in your wealth portfolio. So, you know, I have seen products really, um, you know, start to start to take, uh, significantly different sort of asset allocations. I think the way in which insurers, uh, perhaps somewhat similar to the US have started to invoke much larger allocations to private markets, um, in how they manage their balance sheets, their general account products, and how they're then able to offer customers more illiquid, long term, um, better yield. Um, that's a very important trend in Asia. And again, in the absence of having a massive rerating of stock markets or properties, which are the other two alternative wealth accumulation vehicles in Asia, then you got to be pretty bullish that the growth of insurance as a preferred financial product will continue for some time.

Speaker A: Yeah, that makes a lot of sense. You use the word wealth, uh, a lot. And I always, uh, joke around that if you ask five different experts in wealth management the definition of wealth management, they may give you, uh, different answers.

Speaker B: True, very true.

Speaker A: One question for you is I heard you mentioning aging and almost, you know, talking a bit about a loose correlation between aging population and increasingly wealthy pools of populations in need of insurance. If you move beyond that, if I think about more the mass market or mass affluent, if I think about the younger generations, uh, what trends are you seeing there and how do you see the insurance need there?

Speaker B: To my point, around the losing bets against agency and tight distribution, uh, there's a big contrast in my view between the west and the east on this. I think in many parts of the west, insurance has become either a luxury good, that is, you need to have a certain needs to be of a certain wealth to benefit from the fiscal advantages or scale advantages that it brings. Uh, or it's mandatory and it's like a tax, you just got to have to do it. Right. Whether it's a pension or motor insurance or whatever.

Speaker A: Right.

Speaker B: So which is why, you know, the old jokes around, you know, when you're at a dinner party in London, you know, you know, you never want to say, I work in the insurance industry because people see, yeah, you're either a luxury good or a tax. And both of those things maybe have social connotations, but in Asia, again, if I may be so bold, um, it's still a very aspirational and very socially respected and socially essential means of wealth accumulation. I can't think of a single city or country in this part of the world where you don't have a sizable part of the community who work for or with the insurance industry industry. Hong Kong is a great example, right? Hong Kong people have this image of Hong Kong skyscrapers and capital markets and everything else. And then you go, well, actually, um, 3.5% of the population of Hong Kong sell insurance. It's 120,000 licensed intermediaries in this city. And that is not uncommon with other cities, uh, both developed and developing in Asia. So insurance intermediation, uh, in Asia and in urban Asia has become a way in which to serve the wealth accumulation needs of the younger population, the more mass population, uh, on that basis. Insurance is so deep rooted into the society. Um, everyone has a family member or a friend who works in insurance, sells insurance, who is an agent of XYZ or a broker of abc. Um, and it is thus a very, you know, it is a very socially accepted and preferred vehicle and trusted on that basis because it does have human and familial instincts to it. And the second point, what I mentioned earlier is important. Alternative mechanisms for wealth accumulation have failed to preserve wealth. And every market in Asia has been through numerous stock market crashes, it's been through numerous, um, uh, economic volatility, through numerous sort of property booms and busts. Um, so again, insurance is the safe haven. Uh, it is the calm in the store and in high savings cultures like we're in, in Asia that will continue. And frankly, the only thing I think the insurance industry has to fear and the one thing we should be so focused on is making sure we don't trip ourselves up, which is largely going to be conduct, I would think,

Speaker A: um,

Speaker B: maybe solvency and asset liability and matching, uh, and other things. But the biggest risk we face to our own inexorable growth in this part of the world is ourselves.

Speaker A: By the way, speaking of Hong Kong, uh, it's obviously a major global insurance hub, as you were talking about, with a very special, uh, role. Um, there's obviously been a lot of things happening. I would be curious to hear your view on how Hong Kong is evolving, uh, and where do you see things going in the coming years, uh, in the region and globally. When it comes to the insurance industry,

Speaker B: I'm very pro Hong Kong. It's been my home for nearly a decade. My kids are born here. I used to chair the, uh, insurance federation here. Um, Hong Kong's life market, frankly, is a little bit of a. It's A bit of a unicorn. Um, and I say that because I think it's the most penetrated market on Earth. It's the highest density insurance market on Earth, but it's also one of the fastest growing markets on Earth. It's not rocket science. It's because you have tens and tens, arguably hundred plus million of emerging affluent and all the way up to ultra high net worth mainland Chinese. Um, and the Hong Kong life insurance industry I think has developed over time very successfully to go beyond its kind of natural borders. And I don't just mean geographic, I don't mean geographically at all obviously for regulatory and good legal reasons. I mean in terms of its products have become genuine wealth management, uh, products. Uh, and if you'd have looked at the market 30 years ago, this is a market that's selling term life and mortgage assurance and everything else. But if you look at what the market sells now, uh, these are wealth accumulation, wealth decumulation, wealth transfer, you know, long term care. Every single need, um, whether that be for um, for retirement, for education, for legacy, for protection, is now, can be now met pretty adequately and pretty successfully by the life insurance industry in Hong Kong. So you know, if I look at the uh, the greater Bay area, for example, 83 million people, right? It's more than the population of the UK this is, you know, and it's increasing a common market. There's freedom of movement of people, there's freedom of movement of goods and services. So um, the volumes that Hong Kong can still serve as an international financial capital from the greater Bay, from Greater China, from Asia, um, because it's not just China, of course, although China is the lion's share, make this market, uh, I just think very, very attractive now. It can't get complacent. When I used to run the federation, I used to spend a lot of time with, with government and regulators saying Hong Kong has so many natural competitive advantages, right? It has the rule of law and the contract law that's been here for many, many years. That's the basis of any insurance industry. Um, it has the English language and the language of business and it has the geographical proximity being the bridge between China and the world. Um, and all three of those things can, you know, you know, can sort of weaken over time or can be shocked by competitive, competitive market and jurisdictions. But I think as long as Hong Kong sort of continues to place that emphasis on its stability, its political and legal, um, stability and reliance, it is where global capital comes to do business. Uh, as long as it preserves that international business mind as long as it takes advantage of that bridge into and out of China, um, I think Hong Kong's going to be um, very, very successful. Um, it is now very much a life and health market market. Um, property and casualty would be the flip side frankly where you look at Hong Kong. Despite having some of the competitive advantages around massive trading ports, significant sort of freight and cargo volumes, it never managed to uh, evolve its ancillary uh, insurance industry, ultimately PNC Marine and aviation and everything else in a way that it could have done. And now it's very difficult because once an ecosystem is created, you know, whether that be Lloyds of London or Bermuda or Singapore, frankly for this line of business, uh, it's very difficult for other markets to, you know, to, to, to, to try and catch up. So, so I think with Hong Kong it is a lopsided market. Uh, and I, and my personal view, and I'm not going to, it's not going to make me popular with everyone but my personal view is that that will continue to kind of be more and more lopsided over time and it'll be a life investment, health market.

Speaker A: Yeah, very interesting. Shifting gears a little bit and we started to get into this, we uh, were talking about the industry and the ecosystem itself. We'd uh, love for you maybe to elaborate on what we were starting to discuss earlier in terms of how you see the overall insurance ecosystem evolving and in particular how carriers are kind of evolving their value proposition, their distribution strategies, the relationships with distribution partners are evolving. And you were hinting also at the fact that it varies depending also on the part of the market uh you're after. So we'd love to get uh, some of your views on that.

Speaker B: Yeah, um, lots of views I think. Um, yeah, distribution is um, distribution has not evolved in Asia to the extent that perhaps people thought it would have done. And I'm not just talking about kind of tide tied channels, I'm talking about generally and it hasn't been shocked and lots of people have said well digital will take over. It hasn't. I think again culturally and from a complexity perspective, um, this is still an advice, uh, face to face driven industry. It doesn't mean that there isn't room for digital to play. And I'm a big believer in the omnichannel model. And I always say we have an insurance company in your pocket because with our mobile banking apps, I mean now my policyholders, we've got 2 million policyholders in Asia, they can do anything they want on their insurance in their pocket with their Mobile phone. Uh, are they going to uh, apply for universal life policies on their M mobile banking app? Seems unlikely. So digital I think has become much more of a servicing and engagement capability, um, rather than a sales or a distribution, um, capability. We haven't seen um, much integration or value chain kind of integration between distribution and manufacturing. Yeah, some of it for just uh, regulatory reasons, uh, some of it because I think sort of capital has, you know, as in parts of the west, very clearly bifurcated between distribution and manufacturing. Um, you know our view is actually our ability to provide um, a one stop shop. One stop shops, maybe not the right word, but our ability to own the value chain where we can and where we choose to gives us massive um, an unreplicable competitive advantages versus pure play, uh, peers who play in particular segments. And I'll give you a recent example you'd have seen. We launched a new um, uh, indexed universal life product in Hong Kong this week. Um, so great product, cap and collar, uh, S and P, Hang Seng Index, gold indexes, et cetera. But what's really interesting about this is every single part of the value chain is managed by hsbc. Now obviously it's written on HSBC life paper. It's a life insurance product product. The indexes are provided by HSBC Asset Management. The uh, custody is provided by HSBC Security Services. You know, the derivatives are provided by, you know, HSBC Global Markets. Uh, and we're going to distribute it through HSBC Private Bank. Right. So our ability to then own the value chain and price the value chain and between different sectors of the value chain subsidize, you know, rather than compete, um, in my view gives us that opportunity to reflect that either in higher returns on capital for shareholders or better pricing for customers. Um, and that's really, really exciting. And I think that's an example and there'll be more to come of how we can uh, really configure solutions that are genuinely unreplicable. And the big question then becomes who do you pass that on to? You pass that on to shareholders, you pass that on to customers or intermediate.

Speaker A: Yeah, you obviously have the ability to own the value chain where you choose to, as you said. And it seems like there is more and more examples of this coming up. What do you think is the hardest part for some of your competitors to replicate? And I'm thinking if somebody were to actually assemble the right sum of parts, uh, with the right partnerships, what do you think is the hardest part for them, uh, to replicate that you think would Be absolutely unique to your grip.

Speaker B: Good question and I'm going to try and answer it with a terrible metaphor. But just because I've got a six year old son who is obsessed with Lego and my house is just covered in Lego, I'd say anyone can build Lego or child.

Speaker A: What do you say?

Speaker B: Um, if you have all of the pieces and you have all the instructions, you can build it. But if you don't have the instructions and you don't have all the pieces, it's a lot harder.

Speaker A: Right.

Speaker B: So I think the challenge is procuring, procuring the various components of the value chain with a commensurate level of risk appetite. Um, and when every player in the value chain has their own minimum hurdles, then you typically get into a value capture conversation rather than a value creation conversation. And I think that's the hardest and it's not that it can't be done. And there are many, many examples of great partnerships and ourselves I would also, again including one of your sister companies, we've got great partnerships with third parties that will be critical to our future. Um, but not all of them work and you're inherently geared towards supply, demand dynamics and negotiations. Um, so on the one hand even if you do land on that sweet spot, um, where everyone wins, the time to get to market is significantly longer. The opportunity costs are ah, significantly longer. Again if I use Hong Kong as an example, there's a reason why no one else has been able, since the regulations change, no one's been able to release a genuine universal life legacy protection plan, um, at our speed because we have all the pieces of the LEGO box and we have the instruction manual. Um, that doesn't mean we'll always get it right and sometimes we end up building the wrong things. But I think that is, it's time to market and uh, it's the ability um, to work towards a common consistent, whether it's return on capital or IRR or risk weighted return or whatever it is, rather than having to trade off different constituent parts.

Speaker A: Going back to the digital front and I'll have to throw in AI at some point as well. Uh, you said earlier a couple of things you were saying. We haven't seen a massive shock to distribution in the insurance industry in the east. And you also mentioned, uh, which I think makes a lot of sense that when we think about digital it's less about really going hard at digital as a channel on its own, but more looking at the servicing. Um, let's say if I fast forward 5 plus years, how do you see that evolving and uh, we were talking about the Omnichannel for example. Uh, I guess what I'm curious is both how you see the role of digital evolving, but also how would you see the role of an agent or

Speaker B: an rm And I think timely, right? Because I think with the insanely sort of fast developments in AI and large language models over the past couple of years, this is a tipping point. Now I do think things may change and may change pretty quickly on this. We've been using AI for years, right. It's core to our pricing, uh, we're running incredibly complex data driven models and our algorithms every day. On the liability side, um, we haven't so much on distribution. Now we are because we have a lot of kind of co pilot type tools. So how do we make our agents in Singapore, our bankers in Hong Kong or brokers in China, how do we make them more productive? And now there are so many literally off the shelf tools available that we can use to say before you go meet with Paul, uh, uh, whilst you're on the train or in the car or whatever, you can have a more informed meeting with Paul because you're able to scrape huge amounts of details, tell about Paul and about markets and the world to have a better meeting, more uh, productive meeting with a client. So we've kind of looking at AI as a um, co pilot for, for our supply chain, for our distributors, for our intermediaries. And I think what will change, or may change is it'll become a co pilot for buyers and for consumers and for customers. Because if customers now around the world and customers in Asia, Asia, you know, now can just use Google or, or Gemini or ChatGPT or whatever to say to help them choose the, the right hotel when they go on holiday in Thailand, or to help them book the right restaurant that they're looking for in a particular city. And why, why wouldn't they uh, start to use these tools to help them plan for the future? To buy insurance? Yeah, to select their retirement funds, um, you know, to choose a medical insurance partner. Why wouldn't they? You know, we really need to be aware of that. Our customers may change and it may go overnight. It may, as we've seen in other industries, it may go overnight. And, and we need to be ready for that.

Speaker A: You know, I'll share a couple of hypotheses with you that I love your, your take on. Right. My first hypothesis is the people that will manage to consistently stay ahead, as are those who are flexible, nimble enough to actually adapt to These new tools to these new technologies and constantly be curious, um, and adapt to them and bring them into their workflow because it's not a once and done thing. We're moving almost from binary to quantum. This is the kind of shift we're moving to. So that's my first perspective. The other point which is linked but is back to Your point of ChatGPT becoming your insurance advisor is my perception is in the insurance world we're still at the point in time engagement and yes of course there's engaging at the right moments but is there a way and um, we call it whether wealth management or financial wellness to truly be always on providing the right guidance and perspectives. And if you link this to omnichannel linking the I'm kind of always in your pocket pocket but I can also give you access to the right person to engage at the right time and transforming these infrequent pushes to a constant.

Speaker B: Completely agree. I think firstly your first point absolutely right. This is a journey and I think the insurers, the banks, the financial institutions get on that journey now and continue to iterate as users and buyers and renters and occasionally kind of makers of these tools and capabilities, uh, are the ones that will thrive in the future. And the hardest bit from not just in my organization but I think for any large organization the hardest bit starting the journey. Um, and even the super low hanging fruit around kind of workforce efficiency and productivity board papers, meeting minutes, all of this stuff which AI tools now can literally take out hundreds of hours of manpower a month and redirect that manpower onto more productive value active. So we started doing that but it took us too long to do that. Right, but the point is you've got to start small and keep building. So and people who resist this or organizations that resist this, I think it's like King Knut standing in front of the tide trying to push it back. It's not going to end well. To your second point, this is really interesting and that always on advice there are a number of constraints or barriers to us getting there. Some of it is regulatory, some of it is risk appetite which is linked. Right. And people we don't want to be turning hundreds of millions of retail customers into active hedge fund traders, uh, acting on market information and updates and impulses every newspaper headlines every single second. Remember we're in the long term business M but um, we need to engage with customers much more frequently than we have done in the past. Uh, we now do a lot of push. So push noted. We had a huge Amount of tech and data kind of convergence. We had to get that capability on our apps. But push opens up such an amazing opportunity to engage more dynamically, more personalized with your customers in a way that SMS or email or letters could never have done in the past. And on the health side, I'd say we're close to being always on. If I look at the investments we've made in our health business, the way that we're using kind of AI supplementary tools to do kind of diagnostics, the way that we've kind of triaged that through to our uh, virtual consultation capabilities where we work with partners to immediately match our kind of outpatient clients and our group medical clients to doctors and get diagnoses off on the phone instead of going to the doctor, uh, to then immediately, uh, because we're procuring, um, you know, drugs and procuring treatment centrally immediately, then dispatching that, you know, to customers. So within four hours, you know, they've got it at their, at their homes. We've learned from Uber. Yeah, our virtual consultation model, we do about a thousand virtual consultations a week. You know, it's an Uber model, right. I mean all we're doing is we're connecting demand with a, uh, with a pool of, you know, qualified professional supply, uh, on a time match basis rather than queuing, don't go to taxi rank and queue, don't go to a doctor and queue. And then the fulfillment piece post diagnosis is the Amazon model which is if you centralize procurement you get massive economies of scale and you get very, very good price certainty. And you know, in medical business the thing that kills you is cost. I think it's expense creep, um, and margin dilution. So that I think is a great example where our customers now, wherever they are and whatever they're doing and whatever time of the day can consume their medical insurance and sort of services from us always on that's really powerful. We're not there yet on the life insurance side. And again my challenge would be I'm not sure we want to be on the life insurance side because we may end up triggering, I mean our actuaries will be going terrified about dynamic lapse modeling if we're constantly bombarding our message. But I do think you're right in terms of acquisition and new client. It gives us an opportunity to engage with a historically underserved section of society and a potential customer base of tomorrow, uh, in a way that maybe without this we wouldn't have done. And I do think we have crossed the, you know, we've crossed the bridge now in terms of the past 20 years was like we don't like to contact customers, it's risky, customers complain and then regulators get upset and blah, blah, blah, blah. Whereas now actually we can and we do contact our customers as frequently as the technology and the relevance allows us to do.

Speaker A: If you look at the US life insurance market, I feel like every player has uh, picked a strategy of uh, where they play and where they do not play. We've seen players really doubling down on distribution, doubling down on more asset light type products, uh, or doubling down on being more an asset management led player. Uh, and being a product manufacturer in the US feels like a losing game many times. How do you see a similar dynamic potentially playing out uh, in Asia, uh, for insurers?

Speaker B: Yeah, good question. I was in the US recently for the Geneva association, so it was very interesting. First time I've been there in a long time to see the evolution of that market. And to your point, the convergence of um, the asset side with the liability side and the asset side effectively owning the liability side. Ah, my experience when I grew up in the UK is very different. The liability side owned the asset side.

Speaker A: Right.

Speaker B: So it's quite interesting sort of paradigm there. I think in Asia you see some of that. I'd like to think we're kind of at the forefront and we've got many examples of actually where we've used our bank uh, to originate assets, uh, private credit to give us kind of risk weighted uh, yield pickup which then backs liabilities which we can hold. And obviously we're not consolidated from a capital perspective into the bank long dated credit assets, very expensive for banks to hold. If you think about things like infrastructure debt, if you think about things like uh, climate transition financing, et cetera. But these are great assets for us. They're long duration, um, and they're very high quality quality and very strong cash flow predictability. So I think that is happening among some of us saying Asia as one homogenous kind of. But that's in itself hard because yeah, Asia is a large market of very different markets and the dynamics even between Hong Kong and Singapore, even between Hong Kong and China are so different. Uh, and what we would do on the asset side in Hong Kong is very different to what we can or could do in China. So it's very difficult to choose a lane. To your point, choose a lane and be in that lane across Asia is very, very tough. And I think you know, every mark, you know what, what insurers and finance institutions do now in Asia there is a participation question at a market level. Which market do we want to be in, do we not want to be in? Yeah, um, you know, I don't think in the US you say well I'll be in New York but I won't be in uh, Pennsylvania. Right. I mean notwithstanding state regulation you're in the most market. But in Asia I think those are the key decisions that have to get made. And then the lanes that you play may be different market to market. The mix is very different. Some of the intermediary dynamics are very, very different. Um, India in itself is a fascinating market for us. We've got a great business there. But India is a market where if I look at product margins kind of on an EV basis, I mean these are ah, mature market margins in an emerging market. So it faces, we've got to face big strategic questions, um, around which parts of the value chain are uh, you going to play in there? In China of course, when you've got 30 year uh, government bonds yielding 1.8% you think well okay, well we should do distribution in China, but in which then regulations cap distribution and brokerage commissions in China as well. So within what is currently a low yield market, which parts of the value chain can you preserve your returns frankly? Because in the long run this is the world's biggest market and bigger than all other Asian markets combined. So you're really in kind of return preservation mode um, in order to benefit over the medium and over the long term. Certainly a long winded question we haven't seen yet, uh, the Athene Apollo, the global Atlantic model, um, yet really take off from a primary perspective in Asia. I'm not sure it will. I think there are regulatory and nationalistic dynamics that may prevent that because it would be largely US led and I'm not sure it's the right time for that. What we have seen, and again we're a major player in this is Bermuda. We've uh, seen huge amounts of insurers. When it comes as all of these markets move and move into risk based capital regimes, everyone very incentivized to get lower yielding, higher cost in force, portfolios off. And Bermuda has been very effective and we've got our uh, business there. Bermuda has been very effective at acquiring those portfolios and reinsurance risk transfer, whether it's IFRS 17, whether it's RBC, reinsurance is continually a preferred and economically sensible solution to that. That and some of that's underlying is backed by the same private capital. The names that you mentioned earlier. Right. So I think you'll see more of that. I think you'll see more risk, transfer more reinsurance, uh, into private markets indirectly. I don't think we'll see the shift directly at this stage.

Speaker A: Yeah, terrific. Um, well, shifting us to uh, our final chapter. We'd uh, love to, uh, I think we're nicely warmed up, uh, about a lot of these topics. We'd love to get your views on your CEO agenda. I mean looking at your customers and markets, looking even internally. Uh, what's top of m mind for you over the next three to five years?

Speaker B: Uh, our strategy is very simple. It's wealth, health and high net worth. Our wealth business. It's around integrating the highest level possible, our insurance franchise within a integrated insurance and investment wealth advisory capability from hsbc. And we do that very well in some markets. We have improvements to make in other markets. And sometimes insurance is an augmentation to that wealth.

Speaker A: Capability.

Speaker B: Capability because we're able to provide distribution capacity outside of a, uh, kind of bricks and mortar, um, perimeter. It's health because as you know, medical prices constantly outstrip inflation. I think we've got tremendous unreplicable competitive advantages. Because we own payments, we can move cash around the system faster. And I have a large corporate bank, um, that allows us to have kind of persistency gains with major clients. So um, I think those are the two key things. And high net worth. So we are a leading high net worth provider. We have a Guinness world record for the largest individual life insurance policy ever written. Um, and I think most Singapore and Hong Kong businesses are competing right now to see who's going to break that record.

Speaker A: Can you share any specifics?

Speaker B: I can't share anything. Any specifics about the person, of course, uh, otherwise we'll never write another policy again. Whatever. What I can say is the previous world record holder according to Guinness, uh, was issued in California about 10 years ago. And uh, by all, uh, uh, guesses, seems to be a gentleman called Elon Musk. So I'm not sure we could afford to underwrite him anymore, but shows how he was 10 years ago. Actually he was way ahead of his time in looking at insurance as a way to leverage your estate. Um, so high net worth is critical for us. We're very fortunate in our Hong Kong, Singapore, Bermuda businesses to have those capabilities and that internationalization of wealth. You know, 20 years ago there maybe was a view. You needed to plant your flag in every single country to be in every country. Now you don't actually. Now you don't have to build technology platforms and hire people and have uh, capital and everything else in every single market. Uh, because if you're playing in the high end network space, this is onshore to offshore business anyway. So those are the three kind of strategies for us. And I need to do kind of the basics, which is I need to grow, I need to continue to grow double digit. Um, again, if you look at our Q1 results, I mean we're growing our new business CSM 40% plus. Right? So a billion dollars a quarter. And we need to, you know, we need to, we need to continue to grow double digit, uh, we need to reshift our participation, um, because capital is finite, technology allocations are finite, time is finite. And you'll have seen recent news we've made in Europe and France and the uk and that's not because we don't like those businesses, it's just that we need to be more focused around where our highest growth is, where our highest returns are, and again, be relentless in chasing those returns. Um, and then the third thing is future proofing. And I think for me as a CEO, it comes down to leaving a business in a better shape that you inherited it.

Speaker A: It.

Speaker B: And yes, that's around balance sheet stability and market share and earnings and all of this type of stuff. But mostly it comes down to people. So future proofing, uh, our business with leadership capability, with talent, with pipelines and with culture. Because culture, my boss always says culture eats strategy for breakfast, right? Everyone's got the same strategy, but having a culture, a leadership culture where, where people make decisions, hold themselves accountable, make collective, you know, make decisions for the collective, but make them individually. Uh, having that bravery, um, and that efficiency to me is what's always been, is when we've got that right, we've always outperformed. And so, so it's growth, um, you know, it's, it's participation, uh, and allocation decisions and it's around people and culture.

Speaker A: I have an interesting answer. Anecdote about Elon Musk and insurance. When Tesla started, um, Tesla Insurance, in, uh, one of the, um, investor presentations, Elon got a question about, uh, insurance. And he actually said, we love insurance, it's a great business to be in and obviously on the PNC side of things, as you can imagine. And he said, we love actuaries, they do math, they're great, they're doing a lot of very interesting things. And actually at Tesla we're looking to hire revolutionary actuaries. And so interestingly, I actually know the person who was the first Hire, uh, as the revolutionary actuary. And that person, her title is revolutionary. That was override by Elon Musk. She's actually now a senior revolutionary actuary because she.

Speaker B: You don't want to turn up at, uh, our Group Risk Management forum with that title, that's for sure.

Speaker A: But there is an interesting thing in there. You were talking about culture and all these things. In a world where, you know, in insurance, institutional knowledge is important, experience is important, risk management is very important, important. But being able to adapt and be flexible to what's happening is also important. And that idea of revolutionary talent is interesting in my view of having that expertise and definitely not sacrificing it, but also being open to everything else that's happening around you, I think is an interesting balance that I think in our industry we need to keep in mind.

Speaker B: I agree. And I mean, we talked before about, uh, the kind of, the long term risks of relevancy for our industry. Right. Again, that will come down to people.

Speaker A: Right.

Speaker B: And are we building human capital and are we attracting the next generation of human capital into our industry directly or on an adjacent basis? Um, yeah. And, um, you know, when I look to hire people, it's IQ and eq and historically we've always kind of hired people because you have the highest iq, you are the best underwriter for this risk. Right. You are the best investment manager, or you're the best sort of intermediate actually. Now it's much more around EQ and it's much more around being lateral. It's much more around really getting to the bottom of trends and consumer behavior and supply chain behavior and everything else. So we do need to start looking at the people we hire and being more diverse and inclusive, um, in a really macro way.

Speaker A: We're coming up on time. Before we wrap, uh, one final question for you. Based on everything we discussed, any few final words of wisdom for our audience.

Speaker B: And I've never been accused of being wise, so I have also never been accused of just providing a few words. Uh, so that's quite, quite a challenge for me. You know, I think for those listeners, you know, who don't, who are not as close as perhaps we are to Asia right now. I mean, this is such an exciting part of the world. It is, it's too easy to just say this is where growth is because it's so much more complex and multifaceted for this. But I do see, um, Asia really driving the global life and health agenda, um, for some time to come. And Asia needs to step up to the mark globally and better represent itself within this industry, um, but also globally. I think we need to spend more time spotlighting and profiling Asia on that basis.

Speaker A: Ed, thank you so much for your time.

Speaker B: Thank you.

Speaker A: Terrific. Pleasure. Thank you very much for this. Um, that was Ed Moncrief, who's the group CEO for HSBC Life. I'm Paul Ricard. Thanks for listening and catch you next time. For more information about our Reinventing Insurance series, you can find everything on our website@OliverWeimman.com Reinventing Insurance. Thanks for listening and I'll see you next time.