Manulife Singapore targets rapidly growing high-net-worth market

New data suggests young beats old in appetite for investments.

The high-net-worth (HNW) market in Singapore has been steadily growing, offering significant opportunities for financial institutions and insurers. According to a Knight Frank report, the population of ultra-HNW individuals experienced a remarkable 6.9% increase in 2022.

“Singapore and Dubai will grow rapidly as wealth hubs; whilst the UK, as well as the EU and US, still attract considerable numbers of globally footloose wealthy residents, it is undeniable that Singapore and Dubai are emerging as critical wealth hubs,” Piers Master, partner at Charles Russel Speechlys said in Knight Frank’s The Wealth Report 2023.

“Singapore is developing a very attractive tax and regulatory framework which will serve to attract not only more Asian but also global, wealthy residents.  In response, we are planning to open an office in Singapore later in the year,” Master added.

The lion city is also deemed as a hot market for cross-border capital investments, which is projected to be one of the most targeted markets in 2023.

“The customer trend is really a key one: we are seeing the growth of younger HNW customers and their investment objective is totally different. One is they are more aggressive in terms of investments. And the older generation HNWI is more conservative because their focus is to keep wealth,” Thomas Lee, Chief Product Officer at Manulife Singapore told Insurance Asia.

Similarly, it is anticipated this year that US investors will take the lead as the most active participants, contributing to approximately half of the total global private cross-border investments in commercial real estate.

Their prime areas of interest are expected to encompass office spaces in the UK, Japan, and Singapore, along with a keen focus on industrial assets in Germany, Japan, and South Korea, explained Antonia Haralambous, an associate at Knight Frank.

“Private investors from Singapore, Germany, the UK and Canada are also expected to be active this year. More specifically, HNWI capital from Brazil, the US, UAE, Germany, Spain and Switzerland is forecast to be prominent in 2023, with offices and retail in the UK a particular focus. Close to 10% of respondents in our HNW Pulse Survey were looking to complete a transaction of $20m or more in 2023. This figure jumps to 20% for investors from the Chinese mainland and 14% for those from both Singapore and Spain,” Haralambous said.

Manulife Singapore sees itself as a leader in this space, offering a range of HNW products designed to cater to the unique needs and preferences of these affluent clients.

“Our growth in the HNW segment has been consistent, and we expect this trend to continue into next year. We’re seeing positive signs across multiple channels — our bancassurance channel, engagement from international brokers, and through our own agency network,” Lee said.

Bolstering HNW coverage

These younger individuals tend to be more aggressive in their investment approach, seeking higher returns, Lee said.

In contrast, the older generation of HNW individuals leans towards a more conservative stance, primarily focused on wealth preservation. In the current high-interest rate environment, there is a growing preference for index Universal Life (UL) products, which offer long-term stability and follow key market indices such as S&P and Hang Seng.

Manulife has experienced significant sales momentum in this segment, aligning its offerings with the evolving needs of HNW clients.

Regarding the future of the HNW market in Singapore, Thomas expressed optimism.

To cater to the unique requirements of HNW individuals, the insurance products offered by Manulife differ significantly from their standard retail counterparts.

Lee outlined key differentiators, starting with the underwriting process.

“The underwriting process is more comprehensive because the case sizes are larger compared to a regular retail product. The underwriting process for HNW products is more rigorous due to the large case sizes, allowing us to accurately assess each customer’s risk profile,” Lee said.

“The second is definitely that the case size is much bigger. Hence, the type of solution that we are providing is also different,” he continued. “For instance, navigating the complexities of insurance applications can be a daunting task, especially for HNWIs (individuals) with multifaceted financial portfolios.”

This service includes pre-submission consultation, coordination for timely medical check-ups, and compliance with existing regulations. It ensures that the unique needs and standards of HNW clients are met efficiently.

Managing niche market risks

The aforementioned meticulous underwriting process plays a critical role in assessing risks associated with sizable policies.

Furthermore, Manulife’s cross-market collaboration between its Bermuda and Hong Kong teams facilitates the exchange of insights and best practices, enhancing risk assessment and management.

“Manulife’s robust capitalisation positions us well to manage the complexities and potential market fluctuations inherent in the HNW business,” Lee added.

This financial stability ensures that the company can continue to provide reliable and innovative insurance solutions to HNW clients while balancing risk and return effectively.