ST: Building Singlife with Aviva into the next big financial services platform

Former DBS veteran Pearlyn Phau has to find the right culture for a firm that mixes the incumbent with the challenger

Since the Asian financial crisis, when Singapore pushed its banks to consolidate, the Republic has been familiar with seeing lenders look for merger partners. More recently, parts of the ANZ consumer franchise in several markets, including Singapore, were bought by local giant DBS Group Holdings.

Consolidation in the insurance industry, though, has been rare. So, when home-grown insurtech start-up SingLife announced it was taking a 75 per cent stake in the local operations of British giant Aviva, there was more than ordinary excitement over the $3.2 billion deal, the largest in the insurance space on the island.

Making this union work - even as she looks for new ideas to sell insurance in a crowded market, and preserve margins - falls on the shoulders of Pearlyn Phau. Ms Phau took the reins in August, lured away from DBS by former Standard Chartered veteran Ray Ferguson, who chairs the board of the company now called Singlife with Aviva.

Ms Phau used to be DBS' group head of consumer products, marketing and ecosystem partnerships, and comes with a background in wealth management and digital banking - a hint of the directions in which her new company's directors possibly expect her to take her new charge.

"At this stage of my career, I felt that if I did not strike out, I may never again get the opportunity to build a business," says Ms Phau, who is 53. "Of course, it is a bit scary, but the comforting bit is that this is a small industry and all the players are familiar. What Singlife with Aviva was looking for was not technical expertise in insurance but someone to transform the organisation."

Technology-based SingLife, sired by former HSBC insurance figure Walter de Oude in 2014, is said to be already handling assets of $14 billion, which is impressive. Aviva, larger and storied, on the other hand, is the grande dame. In its British home, it reigns as the largest general insurer and its pedigree includes a merger two decades ago between Norwich Union and the insurer CGU. In Singapore, it provides group insurance to Defence Ministry (Mindef) and Ministry of Home Affairs staff.

In the local context, this country club-meets-millennial lounge union was rather like the audacious challenger buying out the established incumbent. Still, Ms Phau says the two are not that dissimilar.

"There's always this perception that one entity is traditional and the other is cutting edge, but it also is true that it is the mandate they were operating under that shaped the way they operated," says Ms Phau. "Now that we are Singapore-incorporated and headquartered, the pleasant thing is that people (in the firm) think and pivot differently. They are prepared to try different things."

Mergers and acquisitions have at best an uneven record of success. What seems so convincing on paper for their intrinsic merits often fails on issues around corporate culture, technology and unseen factors.

Ms Phau acknowledges that the big piece of work in mergers is adjusting the corporate culture. At DBS, she saw some of that first-hand after it bought ANZ's wealth management and retail banking business in Singapore, Hong Kong, mainland China, Taiwan and Indonesia.

"For me, this is the big piece of work we have to do in 2022," says Ms Phau. "We aren't looking to have either an Aviva culture or a Singlife culture. If you look at the people who have joined us, they aren't all from the insurance industry. We are bringing in people who can fill the gaps in customer journey experience, designers, e-commerce experts… so I have institutional competencies plus outsiders who challenge the norm."

As for herself, while she has been boning up on technical issues specific to insurance such as capital, solvency and underwriting, her confidence has been boosted by the large customer base and the broad suite of products that the merged company offers. While it is too early for 2021 numbers to be available, the firm had about 1.5 million customers and gross written premiums of $3.8 billion in 2020.

Thanks to the composite licence it enjoys, Singlife with Aviva can "manufacture" general and life insurance products, offerings catering to high-net-worth individuals, health Shields and even Singlife debit cards. The Singlife account and app, for instance, help customers to save, spend, earn and be insured at the same time.

And of course, there is the Navigator investment platform and the unit trust-targeting dollarDEX that came from Aviva, as well as a large number of financial advisers. That opens a range of possibilities. "We don't box ourselves as an insurance company but a financial services company," she says. "We are in a very good place and all set to go."

Insurance companies - certainly not one with the ambitions this one carries - cannot be built in a day. It does not help that many people have a deliberate blind spot when it comes to insurance, seeing it as a grudge purchase you would rather do without if you could.

And when customers do buy policies, they often find the experience - from how they are offered insurance to how it is served - intensely fragmented. Surely, says Ms Phau, there must be better ways to do things.

"Insurance is a long-term relationship, yet the interactions with customers oftentimes are very transactional," she says. "We are working very hard on a person-based approach. You may not be ready to commit to everything, but it is important that you know what you should be worried about at a particular point in time."

One big piece Singlife with Aviva is working on is healthcare, including long-term care. The company is doing a strategic review of how it wants to play in the health space beyond being a Shield provider, one that also includes caregivers.

It also wants to introduce "intelligence" into the healthcare journey using artificial intelligence (AI) and machine learning (ML). With more data, insurers should be able to do what Ms Phau calls pre-emptive premium pricing.

"If I reject claims, make it difficult for people to claim, I will lose customers in the long term," she says. "The overriding value proposition is journeying with the customer - so it is a little bit of a slower burn, but we are here for the long haul."

Being Singapore-incorporated, she says, makes her even more aware of the responsibility to do right by customers. "Trust is important in the financial services industry. Combining and calibrating (the company's interests and that of the customer) is what we have to drive towards."

Singlife with Aviva has the advantage of scale and some of it comes from large clients. The Mindef contract, which connects it to thousands of Singaporeans, is into its sixth year and Singlife will be bidding to retain the privilege when its current contract expires.

With a 15-year-old son who is approaching call-up for national service, she says, Mindef is never far from her mind.

"We have been engaging with them," she says. "They are very progressive (in their thinking) and will be looking for a progressive partner. It is a very coveted contract for us, and our competitors, so we do expect an interesting pitch."

While losing the contract would not hurt the bottom line excessively, retaining it has meaning beyond profit. Singlife with Aviva is confident it has a comprehensive suite of solutions that should be attractive. Besides, a fair chunk of Mindef people are millennials and Singlife's digital capabilities surely must appeal to them.

While her immediate sights are on improving the customer journey and finding the right culture for the firm, she is also looking beyond Singapore. Currently, Singlife operates in the Philippines and Ms Phau says she is looking to deepen involvement in that country. The firm also is open to opportunities elsewhere, selectively.

"I am not interested in planting flags," she says. "We want to be in markets where we can transform the business. If it is an agent-led business (that is on offer) it may not appeal to us. In terms of prioritisation, we feel we know the South-east Asian markets best."

At some point, perhaps two or three years into the future, the company also might look at a share sale.

Forecasts for 2022 suggest the global insurance industry is set for a good year and Ms Phau would be happy to participate in that recovery. Question is, can she do that without raising premiums.

"At this point of time, when we look at the pricing, I don't plan to do that, but I cannot guarantee it will not happen."

The former banker is settling into her job amid a period of great churn in the industry. Covid-19 upended engagement models - especially in sourcing for leads - in a happy way. On the other hand, when it comes to running the business, getting forward returns at a time when equity valuations are sky high and bond yields and interest rates low, is increasingly a challenge.

Changing demographics also need watching; in the past, insurance companies were boosted by young people putting away a bit for the future. Today, society is ageing. A lot of insurers are finding endowment products barely profitable and are moving to being wealth managers - an area of strength for Aviva.

Not being an investment bank, Singlife with Aviva has to act with broader obligations in mind as it seeks to generate returns, says Ms Phau. And that will affect investment decisions.

Still, while long-term bonds will continue to be the mainstay to meet obligations on participating funds, there are also opportunities to diversify risk and expand asset classes - pivoting slightly from property and real estate into some non-traded assets such as private equity, for instance.

With her own background in wealth management and consumer banking, it would not be surprising if the new CEO should give attention to taking business from the established players in those fields. Indeed, she says she has "aspirational hopes" for Navigator, the portal that came with Aviva.

DBS veteran Akhil Doegar, an expert on digital banking, joined as CEO of Navigator Investment Services, which owns both Navigator and dollarDEX, on Dec 3.

"Navigator has both direct-to-advisers and direct-to-customers. We want to be not just an insurer, but a holistic financial services provider," she says. "There's a lot in common between retirement planning, wealth creation and accumulation. We don't necessarily want to compete with the private banks, but we do see product gaps that high-net-worth people are looking for and we want to offer that on an open platform."

Singlife with Aviva now also has a chief investment officer in place, one who also doubles as chairperson for the Navigator business. The game plan is to extend beyond offering mutual funds and, possibly, towards exchange-traded funds and foreign exchange.

"Akhil is very keen on crypto and stuff," she says. "Licence-wise, I am able to offer it, but in good time. Nothing is ruled out."

One thing in her resume that caught my eye was her overseas experience - thanks to the four years she spent in Hong Kong with DBS after DBS CEO Piyush Gupta offered her the opportunity to run the consumer and private bank in that vibrant territory. When she showed up there in 2012, it was a tough time and Hong Kong was a tough market. It helped that she spoke Cantonese.

Although her husband, who works in the Asia-Pacific office of a technology company, went with her to Hong Kong, the difficult part of the move was personal - how to break the news to her parents and in-laws that the grandson they doted over would move, too?

"For a long time, I had to say that it was my husband who was being transferred there - to avoid being lynched by my in-laws," she says, with a laugh.

FAST FACTS

The CEO

Ms Pearlyn Phau is group CEO of Singlife with Aviva. She has held the job since August last year.

Before that, she spent 18 years with DBS Group Holdings, starting as head of DBS iBanking and moving on to be regional head of DBS Treasures, deputy group head of consumer banking and wealth management and head of consumer banking and wealth management, Hong Kong, before rising to be group head of consumer products, marketing and ecosystem partnerships.

She began her career with Citibank and is 53 years old.

She went to Crescent Girls’ School and Raffles Junior College and has a Bachelor of Arts in Economics and Statistics from the National University of Singapore.

Ms Phau is married to a software industry professional and they have a son, aged 15. She golfs in her spare time.

The Company

Singlife with Aviva is Singapore’s sixth-largest insurance company. It has a composite licence and offers life, health and general insurance products. It was formed by the merger of the Singapore operations of British insurance giant Aviva with home-grown SingLife, founded in 2014 by Mr Walter de Oude. The $3.2 billion merger is Singapore’s largest in the insurance space to date. Registered as Singapore Life since Jan 1, the firm has about 1.5 million customers and gross written premiums of $3.8 billion for 2020.

Its principal products are savings and protection, including term, critical illness and disability products in the life insurance space. It is one of the three insurers approved by the Ministry of Health to provide supplements to complement the national long-term care insurance, as well as one of seven insurers allowed to provide CPF MediSave-approved medical insurance plans.

The Singlife Account – with the Singlife Debit Card – allows customers to save, spend, earn and be insured through the Singlife app.

The company’s key shareholders are TPG with 36 per cent equity; Aviva plc, 26 per cent; and Sumitomo Life Insurance Company, 21 per cent. Aflac Ventures LLC, Aberdeen Asset Management PLC, IPGL and minorities hold the remainder.

It plans to go public eventually.