Phillip Capital Group is Singapore’s only entity involved in the banking sector and has now ventured into Insurance. In conjunction with the 54th Singapore National Day Special Edition, Khmer Times got an insight into their banking and insurance operations by talking to the CEO of Phillip Bank
Mr. Ong Teong Hoon, Mr. Andrew Ong, and Ms. Violet Chia, CEO’s of the two insurance arm. The following is a Q and A format of the interview.
● Phillip Bank is the only bank in the Phillip Capital Group in Cambodia. Can you please explain how this has come about and what are your expansion plans for the next five years?
We started our first investment in First Home MFI (now known as First Finance MFI PLC) in 2009 with a USD100,000 investment. This is the only asset-enhancing MFI in Cambodia that is into micro-mortgages. In 2012, we invested in an income-generating Kredit MFI as a majority shareholder. In 2014, we bought over HwangDBS Bank and currently, we are in the process of merging Kredit MFI with Phillip Bank to form one of the largest commercial banks, in terms of branch outlets in Cambodia.
As a Group, we see a consistent high economic growth in the Kingdom and the political stability which are enticing from an investor’s point of view, especially when we view Cambodia as a beach-head into the Cambodia, Laos, Myanmar and Vietnam region (CLMV). In Vietnam, we just established an asset management company; and in Cambodia, our General Insurance Cambodia Plc started in 2017, followed by our Phillip Life Assurance Cambodia Plc. We have thus increased our footprints in Cambodia from a modest investment of USD100,000 to more than USD110m today.
As a bank with 2 insurance arms, we will provide a more complete suite of financial products and services that caters to the entire financial needs of Cambodia. By doing so, we will further entrench our position as a strong partner in finance to Cambodians. We will be including the high net worth individuals segment as well as initiating a “China Desk” as part of the bank’s growth strategy.
● How does the Group as a whole tackle issue such as HR in terms of capacity building, minimizing the drain of skilled staff and management personnel and what efforts are taken to retain staff?
There is massive competition for Human Resources in the market and we instituted an internship and graduate trainee programme as a means to bolster our human resources needs. We do have a fairly sizeable budget for training, both local and overseas, as a means of building our staff capacity. We try to meet the needs of the staff with appropriate benefits such as personal, car and housing loan packages; insurance coverage and other medical benefits.
● When would the merger of Phillip Bank and Kredit MFI in which it has a stake merge under the Philip Bank Plc and does it mean that Phillip Bank Plc will exit the microcredit sector?
The reason that we merge is that we see a convergence of banks with MFIs; and by merging, we will be able to serve the full spectrum of our customers, from farmers in the province to businessmen in the cities like Phnom Penh, Battambang, Siem Reap and many other provinces like. We will have 3 divisions in the bank, one that serves Microfinance Sector, Retail Sector, and Corporate Sector.
● The Group is active in CSR activities. Could you elaborate on this and what are the driving forces behind these initiatives? Is there is a fixed budget for this or is it on an ad hoc basis?
For CSR, we focus on the Disabled and Education. Many of the Cambodians are struggling to meet their basic needs and they need help. The Disabled are certainly more marginalized and they certainly need more help. Another area of our CSR focus is Education, where we are strongly behind the E2STEM project which was initiated by a former Minister of State in Education from Singapore and one of our bank’s directors. This programme equips grade 10 students with skills in English, E-Learning, Science, Technology, Engineering and Mathematics and it is a Private Public Partnership with the Ministry of Education, Youth and Sports. The other CSR projects are ad hoc and reactive like harnessing donations for the flood victims in Stung Treng province.
● How has the Group contributed towards the growth of Cambodia’s financial and digital banking and the economy as a whole?
We are very pleased to have helped several Cambodia SMEs grow to fairly sizeable proportion with our constant and regular provision of credit. Our Loan portfolio had grown from USD40m in 2014 to current USD190m, and the provision of credits to businesses has helped contribute to the growth of the Cambodian economy. Being a Singaporean based bank, we do not only connect and provide a conduit for investments from Singapore into Cambodia but also share important information to Singapore investors to help them understand the Cambodia market.
On Insurance, Life nand General
● Has Phillip’s two insurance arms started full business activities and if so how many insurance products are they currently offering in the Cambodian market place?
Phillip Life Assurance Cambodia is already selling its two life insurance products – Krour Sar 123 Endowment and Yearly Renewable Term – and one Critical Illness Rider. Later this year, we are launching more products that will be of great interest to corporates in Cambodia.
Phillip General Insurance Cambodia started doing business in March 2018 and currently offer ten products viz Fire and Additional Perils, Property All Risks, Construction All Risks, Public Liability, Burglary, Personal Accident, Hospitalisation and Surgical insurance and all classes of Motor Vehicle Insurance.
● Would the Group’s banking clients be the first targeted group? If so, which other segments would both arms target?
While not strictly the first, Philllip Bank’s customers have been the most obvious group to approach. We are also gaining traction in B2C, B2B and B2B2C channels, such as non-salaried insurance planners and brokers.
Yes, we started with Phillip Bank’s fire mortgage business and their auto loan division. Whilst the Bank is an important source of business, we also deal with personal and corporate businesses on a direct basis and through intermediaries such as brokers.
● Awareness of insurance products in Cambodia is still relatively low. How does the group circumvent this and achieve profitability in the quickest possible time? What are your expectations for the next five years in both sectors – life and general?
Life insurance as a business model is a long term game. At the same time, the low market penetration to date means we have tremendous opportunities for growth over the next 5-10 years. The key will be greater emphasis on targeted education and investing in our people.
General insurance business is a yearly renewable business. We believe that, by providing good products and excellent customer service, especially in claims, we will retain our customers year after year. Currently, the penetration rate for general insurance is low and we intend to educate members of the public and our intermediary market whenever we can, whether by participating in seminars or exhibitions or giving talks to target groups. We see our business growing from year to year in line with market growth. To date, the year on year growth is at an average of 18%.
● Which age bracket would the life insurance arm target and where would the reinsurance be done?
We currently focus on the same demographics as other life insurance companies. However, we have also identified specific niche groups with significant potential. Our reinsurer is Hanover.
● Would the announcement of compulsory motor vehicle insurance for motor vehicles be a game-changer for the general insurance arm?
Definitely. Currently, the take-up rate for motor insurance is low as there is no compulsion to insure. Awareness of the cover afforded by insurers on a third party basis or comprehensive basis is not fully understood till they meet with an accident where repair costs may exceed their expectations and liability compensation to third parties have to be paid.
● How cumbersome was it to obtain operating and product licenses for both arms? When did it start actual operations?
Phillip Life started operations in May 2018. Notwithstanding that the product approval process in Cambodia can be quite challenging for a startup like us, we also see an overall improvement in understanding life insurance products and our processes, and for this, we do acknowledge the efforts of Insurance Association of Cambodia’s (IAC). Actual operations started in March 2018 with the MEF’s approval of our first two products i.e. fire and motor. Since then we have had ten products approved with more to come.
● Currently, there are quite a number of players in both sectors of the insurance industry. What would be your strategies to create a niche market for Phillip Insurance’s products?
If you compare all the products offered by each life insurance company, there are relatively small differences. While we currently cannot compete with the big players on branding, we can win on a combination of pricing, service and customer retention, plus we have the solid financial backing of the Phillip Capital Group.
We will identify product niches that are traditionally profitable and distinguish ourselves from our competitors with better product benefits that meet the needs of what our clients are looking for.