Author: World Finance

Sanjiv Kumar on managed futures | Fort LP | Video

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Fort LP, the US-based investment management firm, will be celebrating its 20th anniversary this month. Over these two decades it has achieved 16 percent returns each year for its investors. Fort’s Principal, Sanjiv Kumar, talks about the key to Fort’s success, the difficulties that the managed futures industry has faced in recent years, and how its new global macro fund provides one solution to the managed futures market’s negative-yielding cash.

World Finance: So, 16 percent return per annum: tell us how this has been achieved.

Sanjiv Kumar: Well, we have maintained our focus and our discipline, and that’s been the main key to our success. Our edge comes from taking advantage of persistent inefficiencies in the market, that arise due to weakness in human behaviour when it comes to investment decision-making. And we spend a lot of effort trying to identify that edge. Then we can work that edge into a systematic computerised rule.

We also try to make sure that this rule can adapt over time. Because things change, and so we built in machine-learning into our rules.

In all our strategies we try to produce returns which are uncorrelated to returns on the stock market.

And finally, we’ve always believed that our managers should be transparent and open, and provide as frequent liquidity as possible to its investors. So, we provide a daily liquidity to our investors now, and for the last two years. And I think many of our investors appreciate that.

“One of the big concerns now for the industry is that the cash returns have gone to close to zero”

World Finance: How has the managed futures market fared over the last five years?

Sanjiv Kumar: I think the last five years have been a very difficult period for the managed futures industry, which had a banner year in 2008. A lot of extra money came into the industry, but since then they haven’t done well. We, on the other hand, have had a good previous five years.

Many people say that this extra money that is coming into the industry has been the cause of the poor performance, and I feel that may be contributing to some of it, but a recent study by a broker New Edge shows that this increased liquidity in managed futures, the futures markets have also grown, and can accommodate the extra money.

Some other people have said that there have not been many trends in the market in the last five years, and that’s probably not true as well, because we had a period where the stock market has almost doubled. Other people say that there has been too much volatility, which is related to interventions by the central bank.

In the past such interventions have actually been very profitable, as was the case with the events related to the break-up of the pound from the European Union.

World Finance: So what needs to be done for the industry to regain profitability?

Sanjiv Kumar: Controlling risk has become more important than generating returns. And I think the industry needs to return back to its roots.

One of the big concerns now for the industry is that the cash returns have gone to close to zero. And the inflation rate – for instance in the US is close to 1.5, 2 percent. So that produces a real negative yield. We in the industry really need to do something about it, of using this cash better, not just investing in treasury bills, we need to find a way to invest it in other instruments, but at the same time we cannot lose sight of our two major attributes, which are that we provide a very liquid portfolio to investors, and we provide returns that are uncorrelated to the stock market.

“We have developed a very novel, unique approach, that uses the cash that has been sitting in our futures accounts earning negative real yields”

World Finance: Now Fort is launching a global macro fund in the coming months, tell us about this.

Sanjiv Kumar: So, we have developed a very novel, unique approach, on value investing, which is systematic. We purchase US and Canadian equities, and hedge out exposure by selling futures against it. And we hold it passively, for a year. And this produces very different kind of returns. So this equity strategy is really going to be able to use the cash that has been sitting in our futures accounts earning negative real yields. It not only solves the problem which is facing the managed futures industry, of having a lot of cash earning negative yields, but it also provides diversification in terms of strategies. And it will, I think, in the long run, reduce the volatility of our returns, while providing similar returns as we have generated in the past.

World Finance: You also have a number of regulation changes to deal with, namely AIFMD in Europe, and Dodd-Frank in the US, so what’s your approach here?

Sanjiv Kumar: In recent years we have improved our backup and disaster recovery processes. We have worked with our legal counsel to improve our documents, so that they’re compliant with these regulations. We are registering with the SEC. In Europe we are launching a UCITS fund, which will make us compliant with AIFMD throughout Europe. And we continue to feel that these steps are necessary, and as the industry grows and matures, so that it can appeal to a wider base of investors – not just high net worth investors.

“We are launching a UCITS fund, which will make us compliant with AIFMD throughout Europe”

World Finance: And finally, the FED recently decided not to taper, so what’s your outlook for the near-term?

Sanjiv Kumar: We will probably continue to see a benign environment for interest rates, as well as for the stock market. The growth is not so weak that the market should get really worried, and interest rates are probably at the higher end of their recent range. So, it’s quite possible interest rates will decline in the coming months.

That’s going to provide a very good opportunity for a lot of the managed futures industry to do well, and we are certainly looking forward to it.

World Finance: Sanjiv, thank you.

Sanjiv Kumar: Thank you Nick for having me.

Abel Lin and Joseph Wang on insurance in Taiwan | Cathay Life Insurance | Video

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Cathay Life has the largest market share of any life insurer in Taiwan. It marked its 50th anniversary in 2012, but has never stopped looking forward. It’s shaping a new organisational culture, in order to maintain long-term, steady growth. Abel Lin and Joseph Wang, Executive Vice Presidents at Cathay Life, discuss the challenges and opportunities facing the company, in the context of the long-term low interest rate environment in Taiwan.

Mr Lin, if we can start with you: let’s look ahead to Cathay Life’s future, what are the challenges and opportunities facing the company?

Abel Lin: For our company culture, we always think risk first, and then reward. I think the first challenge is, how can we resolve the so-called, negative spread issue? As you know, our company has already worked for 50 years in Taiwan, and in the older time when the interest rate is high, we provide a high guarantee on life insurance products. So, actually right now our funding cost is still high as 4.1 percent, and our return general in average is around 3.8 percent to 4.1 percent, so, we still have the negative spread issue.

But, we think within five years we can totally resolve the issue by, we will continue to reduce our cash position to overseas investment, especially the overseas bond market to enhance our yeald. And secondly, we will provide more traditional life insurance company, especially regular paid products, to enhance our mortality and loading gain.And third one, we will continue to increase our risk management ability.

The second challenge is that, how can we satisfy our customer needs to avoid price competition? We want to avoid the price war, we don’t want to join the price competition, so, how can we do that? Is that we need to continue to satisfy our customer needs, so this is a big trend, so we use a large IT system to provide more convenient service to our customers.

And third challenge is, how can we expand our business overseas? As you know, in Taiwan right now, life insurance penetration is over 200 percent. It means that we are a mature market in the world. So, the only way we want to maintain the substantial growth is overseas. So right now we have already a joint venture, 50:50 in China, and fully subsidiary in Vietnam.

Then I want to highlight two opportunities. The first one is that Taiwan right now is facing the so-called ageing society. So, in this ageing society actually provide a great opportunity for pension plan, for health insurance, and also for long-term care products. So, we are facing a big problem in this ageing society.

But, for life insurance company, actually, it’s a good opportunity for we can expend our product to our customer if we can make a right product to our customer. So it’s a potential opportunity.

The second one as I mentioned is a big challenge, is that how can we expend our business overseas? Except China and Vietnam, we think globally in the next 10 years, the capital flow I think will flow to the Asian countries, especially Asian countries. And it has a lot of market potential, because right now the penetration actually is below one percent. So, we can provide our management excellent expertise to these countries, then we can gain more growth potential, growth opportunities, in Asian countries.

World Finance: If I can turn to you Mr Wang, this is an era of low interest rates, so, what’s the impact on Taiwan’s life insurance companies?

Joseph Wang: I think Taiwan’s insurance companies have been suffering from the low interest rate environment for quite a long time. Especially, even before the financial crisis in 2008, Taiwan’s interest rates were extremely low for a long time, so, as Abel said earlier, we have been in a negative interest rate spread situation. So, I think this is because we have very high saving rate, and also legup by investment opportunities. So, how do we respond to this kind of situation?

First, we diversify our investment portfolio to overseas investment. Because we can get higher yields from overseas investment. And also I think, in terms of market size and in terms of liquidity, overseas market can also satisfy our need. Because in local market, for Cathay Life, our asset size has exceeded $110bn. It’s a very big size. So, we have to diversify our investment overseas.

And secondly, we also set up an alternative investment team in 2007, and all so that we can invest in PE or hedge funds, and that can also help us enhance our yield.

And thirdly, we also added a lot of our equity position in high income, high divided equities, and especially we like the companies, they can generate free cash flow, and also pay out to shareholders.

World Finance: So finally, how do you see the relationship between interest rates and product offerings develop in the future?

Abel Lin: I think, because, as Joseph said, we are suffering a quite long-term low interest environment, so, during this low interest environment in Taiwan, actually, our product half is shift to like the interest credit annuity. And the other is growth momentum is quite strong is the unit-linked product in Taiwan. The third one I think, I want to highlight is that, as I mentioned, a big opportunity is we face in the ageing society. So, for health insurance products, actually, is to satisfy our customer need.

Also for health insurance product, actually the interest rate component is not so sensitive to their price. We will more focused on the health insurance product in the future for the rising interest rate environment.

World Finance: Abel Lin, Joseph Wang, thank you very much indeed.

Abel Lin, Joseph Wang: Thank you.

Views from FELABAN 2013 – David Schwartz | Video

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A quick overnight from the 47th annual assembly of FELABAN, the Federation of Latin American Bankers. David Schwartz fills us in on FIBA’s latest works. Follow us on Twitter for more exclusive video coverage – tomorrow we’ll have interviews from KPMG, Scotiabank, BNY Mellon, as well as coverage of Sunday’s session, “The Women’s Market: Are you overlooking the world’s largest emerging economy?”

Chee Keng Koon on Singapore insurance | QBE Insurance | Video

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Over the next seven years, the health insurance market in Singapore is set to quadruple, due to higher levels of disposable income. One of the key players in the region is QBE Insurance Group, and its Singapore CEO, Chee Keng Koon, talks to us about the recent changes in the Singapore insurance sector, the challenges that insurers are facing, and QBE’s plans for expansion in the rest of Asia.

World Finance: Mr Chee, how has the insurance market developed over the last few years?

Chee Keng Koon: Well, Singapore is actually a very interesting market for insurance. As you know Singapore is a financial hub, and we are also the insurance hub in Asia. And if we look back at the statistics in Singapore in terms of revenues, in 2004 the revenues in Singapore were only about SGD 2.2bn written premium size for general, in terms of onshore and offshore.

In the last year, the figures came out to be about SGD 10.4bn, which SGD 3.4bn is onshore, basic domestic business, and the balance is offshore business. So, actually the growth is fantastic. Over the last eight years the growth is about 15 percent on an annual basis.

So, we have a plan in place to ensure that we will not miss out on these opportunities, in terms of the growth in Singapore.

“Over the last eight years the growth is about 15 percent on an annual basis”

World Finance: What opportunities are there for QBE in the Singapore insurance market?

Chee Keng Koon: Looking at the Singapore market, Singapore is going through what we call this ‘infrastructure renewal process,’ which therefore gives rise to opportunities for us. The Singapore government is looking at health insurance. As you know, Asians are becoming more affluent, and as a result people are more focused on health now. Health is a big market, and people in Asia are actually running to Singapore for treatment, and therefore it gives rise to opportunity in internal health, and in terms of commercial and marine.

As you know, Singapore is one of the marine hubs in Asia, so we are the leading players in marine insurance over the last 12 years, and we have been the leaders in this aspect, not just in Singapore, but also in Asia. And our growth is basically focused on these specialty lines: basically it’s marine in Asia, liabilities and casualties, and particularly on professional indemnity, where we are big players for insuring doctors, lawyers, architects, which has great demand going forward.

World Finance: Are there any specific challenges you face in Singapore?

Chee Keng Koon: The challenges as far as the Singapore context is concerned, is always the resource part. The human capital management. I think the influx of the new entrants into the Singapore market give rise to competitions, not just in terms of people trying to take over your business, but very much on the competitor trying to take over your resource. When you lose a good resource, the key personnel? It’s equal to actually losing business.

So, it’s a real challenge for me to retain talent. It’s these talents, and the key personnel, that are the ones that bring us the profits, and brings us the growth. Skill will give us the cost leaderships, besides being the leader. So, what we look at, in order to overcome the challenges, are cultivating the right attitudes of our people, building good, extremely good relationships, and the Asia business depends not just on pricing itself, but on relationships. Long terms relationships, win-win partnerships, collaborations: that’s the way to grow.

“When you lose a good resource, the key personnel? It’s equal to actually losing business”

World Finance: And what are the challenges and opportunities in the rest of the region?

Chee Keng Koon: Asia has been an emerging market, and it was the same as many. So to me there are greenfields in Burma, which is greenfield. But Singapore, Hong Kong, Malaysia and Indonesia are the markets we’re likely to focus on.

World Finance: So what are QBE’s plans for the next few years?

Chee Keng Koon: Our vision is to be in the top three insurance companies in Singapore. And also the top insurance company in Asia. Our plans are to focus on organic growth in Asia, looking at these specialty lines, like the marine insurance, the constructions, the bigger regional spaces, but specifically on the casualty and property markets. And I think we have built the team now, we have built the right capabilities. The key is that we want to build long-term, rewarding relationships with our customers, to achieve our target plans. To deliver the results for our people, for our customers, for our shareholders.

World Finance: Chee Keng Koon, thank you.

Chee Keng Koon: Thank you.

Fernanda Lopes on Mozambique | Fernanda Lopes and Associados | Video

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Mozambique is one of the world’s fastest growing economies, driven by a wealth of natural resources. Fernanda Lopes, Managing Partner of Fernanda Lopes and Associados, talks about the big changes in Mozambique’s legal landscape, the huge potential for investment in infrastructure, agriculture and and tourism, and the legal issues that companies should be aware of entering the country.

World Finance: How has Mozambique’s legal landscape changed over the past two decades?

Fernanda Lopes: It has changed a lot. If you look back at history, it needed, and it had to change. After more than 40 years of war, when finally peace came into the country, and finally it was decided that private investment would be the tool to develop the country. Since 1993 the country prepared for peace, and prepared for economic development.

Of course along that time, all the previous situation had changed completely, not only from an economic perspective, but also from a legal point of view.

“None of us want to go back to war, and the population will force government to comply with the law”

World Finance: So what is the potential for foreign investment in the country?

Fernanda Lopes: There’s an immense potential. If you recall, we came out of war. So, everything has to be rebuilt. If you look at construction, with the new natural resources discoveries, new infrastructure will have to be built. But nothing big has much more potential than that. We have a lot of water calling for dams, calling for energy. We have a very big and fertile territory, calling for agriculture. We have a sea – almost 4,000 km coast, calling for tourism.

World Finance: And what about the challenges?

Fernanda Lopes: Infrastructure was destroyed throughout the war. Now, if you look at the position of Mozambique, you can figure out how important infrastructure can be. All the inland countries depend for their imports and exports on Mozambique.

The second challenge is lack of qualification of the population.

“Foreign investors should be aware that formalities are essential. A case could be thrown out on the basis of lack of formality”

World Finance: The law in Mozambique is constantly evolving. How does this impact on investors?

Fernanda Lopes: I don’t see a concern on foreign investments with the changes of law, because whatever new law will only apply to the future, and if it touches previous investments, there will be a period of time – around six months – for the investor to adjust to the new law.

World Finance: What role will legal firms play in Mozambique’s development?

Fernanda Lopes: We know the local law, and we know what are the concerns of the investors. So, let’s say that we are a perfect vehicle to convey the concerns to government and parliament, either directly or through the organisations, in order for the law to change.

World Finance: You’re becoming increasingly involved in labour matters. What are the issues companies need to be aware of?

Fernanda Lopes: We have a codified legal system, full of formalities. So, I think that foreign investors should be aware that formalities are essential. A case could be thrown out on the basis of lack of formality. That is, the judge might consider that due to lack of formalities, there is an unfair dismissal, not even entering into the merits of the case.

“Infrastructure was destroyed throughout the war. There’s an immense potential for foreign investment”

World Finance: And finally, will the political environment of the country remain sufficiently stable to maintain economic stability and prosperity?

Fernanda Lopes: We’ve gone through a very long period of war, in colonial time, and after independence the internal war. So, none of us – meaning the population of Mozambique – want to go back to war. And besides that, if you look at our recent history, after peace arrived in Mozambique, our president stepped out voluntarily, Joaquim Chissano stepped out voluntarily. And this president will step out also voluntarily. So, in a way we want to comply with the law, and the population will force government to comply with the law. No doubt there will be peace, we don’t want war.

World Finance: Fernanda, thank you.

Fernanda Lopes: You’re welcome.

Scott St John on New Zealand equities | First NZ Capital | Video

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Scott St John has already told us how the New Zealand equity markets were reinvigorated by the Capital Markets Taskforce, established in 2008. We talk to him again to get more detail on First NZ Capital’s view of the New Zealand equity market today, as well as its partnerships with Credit Suisse, and its exploration of the Australian equities space.

World Finance: You have quite a significant market share within New Zealand, so tell us about the mood within the New Zealand equity market?

Scott St John: The mood in New Zealand is good, and in saying that I infer no complacency. But New Zealand is somewhat out of sync with parts of the rest of the world. We don’t have government debt at a very very high level, we have an economy that is recovering, albeit gradually, but genuinely recovering, and has been for a little while now, and is forecast to continue to recover for a number of years.

So, we have a backdrop for corporates that is actually quite positive. And so what we are seeing is, our corporates are moving on to the front foot, to use an English vernacular. And they’re employing, they’re raising capital, and they’re expanding.

“In the New Zealand business we have been strategically aligned to Credit Suisse Australia for well over 20 years”

World Finance: You’re also expanding into Australia. Why Australia, how does that market compare?

Scott St John: The proximity of Australia to New Zealand is helpful. In our own business, be it our wholesale clients or our wealth clients, all of those portfolios have a large proportion of Australian stocks within them, and as a consequence we feel very very familiar with Australia.

Also we have our joint venture partners in Australia: Credit Suisse. In the New Zealand business we have been strategically aligned to Credit Suisse Australia for well over 20 years. And as a consequence of that, there are very very high levels of contact. We have been talking for some time with them about the evolution of their market, the evolution of how global investment banks are changing shape and changing their coverage models, and you know, everyone, I think, is familiar with elements of that. The higher compliance costs, the higher capital costs, and the counter-balancing contraction and headcount. And from our perspective, what we are seeing is opportunity around the periphery of those markets as coverage contracts. We see opportunity to enter that market and fill some of the voids that are being created. Where that might lead you is, what does your experience in New Zealand lend?

And if you break up the Australian market, perhaps you might look at the top 100 stocks over there and say, well look: those companies are possibly globally relevant, but the rest of the market is probably locally relevant. And if you line that locally relevant segment up against New Zealand, they look very very similar. You know, the very very large stocks in the ASX100, generally execution is increasingly via machines, whereas those smaller companies rely on the human hand to execute. That’s where we deploy a lot of effort in New Zealand, and we think we can lend that experience to Australia.

World Finance: You’ve already mentioned Credit Suisse, tell me how important this partnership is, and what do they actually bring to the table?

Scott St John: Effectively our business started doing cross-border transactions and formed a relationship with Credit Suisse, which has been enduring, and it endures essentially because of the trust that sits between the people within the organisation.

The last formal review of the relationship took place in 2002, where we documented a strategic alliance. Now, I don’t believe that strategic alliance document has seen the light of day since then, and that’s testimony to the relationship.

The global CEO of Credit Suisse, Brady Dougan, sat on our board in New Zealand a number of years ago, and relationships like that just foster a very very strong camaraderie between the groups. We are Credit Suisse’s franchise in New Zealand.

“If you line Australia’s locally relevant segment up against New Zealand, they look very very similar”

World Finance: What trends do you see affecting the capital markets in either jurisdiction?

Scott St John: A major trend is going to be influence by how the global banks define their coverage models. And, you know, all of them have reduce their headcount. It’s unambiguous. And that job may in fact not be complete. My sense is that what you will see emerging are very very strong regional franchises that are stepping into the breach of the opportunities that are perhaps not as efficiently covered by the global banks as they reshape. And we intend to be part of that.

World Finance: And finally, what’s next for First NZ Capital?

Scott St John: We’ve got our hands pretty full with Australia, probably for the next couple of years. All going well, if we do a great job there, then maybe other opportunities will follow.

World Finance: Scott, thank you.

Scott St John: Thank you.

Scott St John on New Zealand’s market reforms | First NZ Capital | Video

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The New Zealand equity market went through a “near death experience” in the first half of the decade. So says Scott St John, MD and CEO of First NZ Capital. He explains this view, outlines the action taken by the Capital Markets Taskforce established by the Labour government, and describes the effect it has had on New Zealand’s economy.

World Finance: Scott – a near-death experience? Tell me more.

Scott St John: New Zealand did not have a savings regime. And the consequence of that is that there was no natural cash flows coming into the market, takeovers were relatively meekly met, and the size of the market contracted. And what went with that, was that the financial services sector also contracted.

So you had a situation in New Zealand where we were not doing a very efficient job of putting providers of capital together with users of capital.

“We had a regulator, obviously, but the new regulator was far better resourced, had far deeper reach into the market”

World Finance: What impact did this have on the New Zealand market, and how important are these markets to New Zealand?

Scott St John: The formation of capital and this concept of putting providers of capital and users of capital together is pivotally important to economic growth, and we understood that in New Zealand, but we did a poor job of the, I guess, the oversight of what was happening in that space.

Now, that did turn around, but it took us until about 2007 to do that.

World Finance: So a critical situation like this needs of course immediate action. Who acted, and how?

Scott St John: There were many players agitating in the background, but ultimately it was Lianne Dalziel who was the then Minister of Commerce in the Labour government who was one of the hands in establishing a savings regime called KiwiSaver, in New Zealand. Then, the second big initiative on her part was to establish a capital markets taskforce.

Now, the Capital Markets Taskforce was designed to create a plan for the go forward. I think you would also look at Mark Weldon, who was at the time the recent appointed new CEO of the New Zealand Exchange. Rob Cameron, who led the Capital Markets Taskforce, and did a stunning job. But also people like Adrian Orr, who ran the superfund. Simon Botherway and a couple of others.

“As an industry we started addressing what we termed a birthrate problem. How do we fund smaller, faster growth companies?”

World Finance: Often catalysts for change are multi-dimensional: what else changed?

Scott St John: We had the plan that came out of the Capital Markets Taskforce, and that had a list of circa 40 things that needed to be implemented within the market. But at the core were things like the establishment of a new regulatory body to cover the whole market. We had a regulator, obviously, in New Zealand, but the new regulator that we created was far better resourced, had far deeper reach into the market. Far greater oversight. That delivers confidence to retail investors, and investors generally. We established a clearing house at the NZX. The government initiated its mixed ownership model, which is the privatisation of a number of state-owned electricity generators.

As an industry we started addressing what we termed a birthrate problem. How do we fund smaller, faster growth companies? Now, we don’t have the silver bullet for that yet, but we are actually getting traction, and we are IPOing some of these companies, which is particularly pleasing.

But, all in all, this is essentially a rebuild of the foundation stones of the market. The benefits that we are seeing today are a consequence of that rebuild.

World Finance: And what does this mean for investors?

Scott St John: The key platform has been this client-first mantra that has been promoted by the new regulator. It’s not that it wasn’t there at the core of the market – and particularly with the regulated space in the market, the NZX firms – but around the periphery of the market, which was more loosely regulated previously. There were issues.

So investors, having a sense that they are operating with a level playing field, has been very very important.

World Finance: So what are the current tax implications in New Zealand?

Scott St John: If you’re an offshore investor, and you look at some of the key platforms of government policy, they are relatively investor-friendly. The strong property rights, you’ve got a fiscally responsible government, they’re taking government spending down, they’re taking debt down, and we have low corporate tax. That is a very, very good platform on which to invest.

“Over the last few years… you have a market that looks wildly different”

World Finance: Although New Zealand’s economy is stronger now, it’s still rather small. What would you say to larger funds?

Scott St John: At the core is, can they get set? Is there sufficient liquidity in the market? Now, you can sort of step back from that for a moment and say, you know, do you have strong property rights? Do you have a government that is fiscally responsible? Those sorts of things are absolutely in place. Do you have an economy that’s growing? Absolutely. So you’ve got some nice things by way of backdrop.

But in terms of invest-ability, you know, how do you answer that question? Unambiguously, the breadth and depth of the market has been enhanced over the last half a dozen years. There are a lot more companies in the $2bn+ space, which, you know, one might call the border between small-cap and mid-cap. And in particular, a lot of those companies had large blocks of their stock tied up in single owners.

Over the last few years, that has been broken down by way of secondary placements, so, companies like Sky Television, which had a very low free float, now has an entire free float. Then you add, you know, the likes of Fonterra, the dairy cooperative, Synlait milk, an extremely exciting milk processing company. The government’s initiatives around the mixed ownership model, the privatisation of the electricity companies, and the privatisation of Shell’s New Zealand assets in the form of Z Energy, you have a market that looks wildly different.

World Finance: Scott, thank you.

Scott St John: Thank you.

Patricia Echauz-Chilip and John Echauz on Philippines Insurance | Standard Insurance | Video

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Standard Insurance Company’s successful 2012 was rewarded in December with an upgrade in its investment rating. Patricia Echauz-Chilip and John Echauz – respectively President, and Director and Executive VP – of Standard Insurance, discuss the company’s success, its approach to catastrophe risk management, and the way it’s working with its customers and the community at large to become the Philippines’ most trusted insurance company.

World Finance: So what were the key contributors to this success?

Patricia Echauz-Chilip: We really believe that we’re here to uplift the lives of people. That means our employees, our customers, and you know, all our stakeholders. Everything we do revolves around that philosophy. For instance, in our country, the Philippines, which is an archipelago of 7,100 islands, we’ve built branches across those islands, and that’s translated into the largest market reach, as well as a very localised service.

John Echauz: We are the largest retail insurer back home, and we insure more motor cars than anybody else. You can have an accident in this part of the city, in this part of the country, and within 24 hours we can get the repairs commenced. Everyone taking the time to make things go faster. Customer experience is very very important to us. And secondly, we are the country’s largest buyer of spare parts. That gives us some scale, and we share the savings with the customers.

Even little things like, we built an app? You take a picture of a damaged vehicle, and it’ll tell you exactly how much it’ll cost to repair. Little things like that, that make life better for our customers.

Patricia Echauz-Chilip: We employ about 800 people nationwide, and they’re really trained in being there for you when you need them the most. So when you suffer a fire loss, or a flood loss, you want somebody sympathetic and who’s on your side. And I think that’s translated for us, in terms of being there for our customer, throughout 55 years.

“It’s called the Floody Car Bag. So when there’s a flood, you just drive your car inside, you seal it, it stays dry”

World Finance: So John, the Philippines is particularly vulnerable to typhoons and flooding, so how do you manage this risk?

John Echauz: Even before climate change, we have always been prone to typhoons, because of our proximity to the Pacific Ocean. Every year we get 26 typhoons coming in. Recently over the last five years it’s been worse, because of climate change. Weather patterns are disruptive, unpredictable, very intense. You know really, what a place to run an insurance company!

But having said that, we protect our portfolio two ways. One is, we have our own catastrophe risk monitoring system. Basically we can take any property, and say, Okay, this property here, it’s vulnerable to typhoons, floods, volcanoes, volcanic eruptions, earthquakes. What can we do to mitigate our risk, and help our customer? For motorcar we of course do underwriting, but we also help each driver improve their driving style. We can track their bad habits and correct them.

And then lastly, in 2009 we had massive flooding. We eventually built our own giant ziplock bag for our cars, it’s called the Floody Car Bag. So when there’s a flood, you just drive your car inside, you seal it, it stays dry. It floats actually, at two feet. And that’s been very helpful for us as well. So these are the things we do to mitigate climate change.

World Finance: Patricia, very few people in the Philippines have insurance, despite the region’s vulnerability, so how is Standard Insurance approaching this?

Patricia Echauz-Chilip: You know, insurance penetration in our country is really very low, and we do our best to educate the market about the need for it. But the first asset they’ll usually have will be a mobile phone, and we insure that. And then they’ll move on to buy a motorcycle, and then maybe a motorcar, and then a home. And we try to be with them every step of the way. And as they see the need for insurance for their mobile, they’ll just sort of, ramp up from there.

“We believe in Philippine talent, and we’ll do our share to move the country forward”

World Finance: One of your aspirations is to become the most trusted insurance company, so how do you plan to achieve this?

Patricia Echauz-Chilip: You know our value system at Standard Insurance revolves around hard work, integrity, and professional diligence. Because of that, we do our best to know our business. And we hope that our knowledge and experience translates to a better customer experience. We have branch managers who’ve been around for a very long time, and with 55 years of insurance experience, and, you know, being there locally, that’s translated to, for us, really being part of the fabric of the community. And I think people know we’ll be there for a long time.

World Finance: John, Standard Insurance is also focused on corporate social responsibility, how do you give back to the community?

John Echauz: Well firstly we focus on staying strong as an institution. We employ 800 people, and each of our employees supports directly or indirectly about 20 people. That’s a multiplier effect in a developing nation such as ours. But secondarily we try to develop Philippine talent. We support the Philippine sailing team, and the national cycling team, in their bids for gold at the Southeast Asian Games, as well as the Olympics, that’s number one. Number two, we support two leading violinists, since they were very young. We brought them through school, and now they’re two of the country’s best violinists. We support schools in the middle of nowhere, in the middle of an island chain, mainly because they’re just so poor and have no access to anything. And we support quite a number of elementary and high school kids, just through their education. We believe in Philippine talent, and we’ll do our share to move the country forward.

“When you suffer a fire loss, or a flood loss, you want somebody sympathetic and who’s on your side”

World Finance: And finally Patricia, what does the future hold for the Philippines insurance sector, and Standard Insurance?

Patricia Echauz-Chilip: You know Nick, our country has seen great economic growth. This year we’re growing, our GDP’s growing by seven percent. While the local insurance industry is consolidating, because of higher capitalisation requirements, you know due to the ASEAN free trade agreement coming in 2016, we think it’s healthy for the insurance sector.

For us, motorcar sales in our country has grown 21 percent this year, and we’re just going to grow organically with that. With a rising middle class, and better economic prospects, I think the future for Standard Insurance, and our country, is bright.

World Finance: Patricia, John, thank you.

Patricia Echauz-Chilip: Thank you so much Nick for having us.

Moo Sun on banking in Myanmar | Ayeyarwady Bank

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Myanmar is back on the world stage after years of isolation. In April, the EU lifted the last of its sanctions against the country, and its banking sector is going through rapid changes to catch up with the outside world. Moo Sun, Chief Operating Officer of Ayeyarwady Bank, talks about the reforms and challenges the Myanmar banking sector has experienced this year, Ayeyarwady Bank’s position in the country, and his predictions for the financial industries in the next few years.

World Finance: First, give us an overview of the banking sector in Myanmar, in the period of isolation that you’ve been through?

Moo Sun: At the top would be the central bank of Myanmar. It used to be that the Central Bank was in the department of the Ministry of Finance, but now they have their independence. Below that would be the four state-owned banks, and there are now 21 private banks.

For some 50 years they have been in isolation. The banking then, in fact still very much now, is very cash-based. Very little financial intermediation between depositors and borrowers, for the fact that there’s very little accessibility of service.

“The opportunities are there. With a population of 60 million, a very young and educated workforce”

World Finance: There’s been a period of change in the last few years, and it’s true to say that you’re getting a lot of interest from international investors now?

Moo Sun: Since 2011, there have been a lot of changes, politically and economically. The banking sector itself, we have seen a lot of changes as well. Some of the key reforms would be the unification of the exchange rate. That was an important part of the reforms. With the new foreign investment law there’s now a lot more interest in the country.

The opportunities are there. With a population of 60 million, a very young and educated workforce. And because Myanmar sits in a very strategic geographical location, with abundant resources, there are plenty of opportunities.

World Finance: Tell us about Ayeyarwady Bank; who are your clients, and what services do you provide?

Moo Sun: We started operations in August 2010, so we are a relatively young bank. Just over three years old. Today we have 45 branches, our customer base is about 150,000, and in terms of financials we are over $500m in assets.

Our deposit customers are mostly retail customers, with some 80 percent of our deposits being individuals. On the loans we have a lot more businesses.

In terms of the products and services, for domestic customers we provide all sorts of services from deposits and loans to making remittances, safe deposit boxes, the whole lot, you know, as far as the domestic business is concerned.

In terms of international business, we provide foreign exchange, foreign currency accounts, overseas remittances and letters of credit. That pretty much covers the basic international services that we have.

“One of our key plans is to make our services accessible to the population”

World Finance: And what’s Ayeyarwady Bank’s strategy going forward?

Moo Sun: I think one of the key things would be to make our services accessible to the population. So, one of the key strategic action plans that we have is to grow our branch network. Today we have 45 branches, we hope to have 100 branches within the next two years. We’re aggressively trying to expand on our card services, and we hope to be able to offer debit cards and credit cards. So that is on the domestic side.

On the international side, we feel that now we can be a leader in this market. Because it’s a very new business for private banks. On the corporate side, I think it’s important that we actually include all stakeholders, so in areas of governance particularly. I think this is one area that we need to enhance. So, going forward those are three core areas that we’re looking at.

World Finance: Finally, give us your future outlook for the banking sector in Myanmar over the next five to 10 years.

Moo Sun: Just looking at the figures, comparing 2007 and 2012, the deposit portfolio has grown some eight times. Now, that gives an indication of the trust, you know, in the banking sector domestically. Now, with the foreign investors coming in, once the government’s stabilised, we expect growth to be even more tremendous.

One of the areas that would benefit most would be the banking sector. So for banks with the right strategy, I think they will be able to capture quite a lot of those businesses. So we are very optimistic about the potential for the banking industry.

World Finance: Mr Moo Sun, thank you.

Moo Sun: Thank you for having me.

Jimmy Hu on P&C insurance in Chinese-speaking regions | Cathay Century | Video

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Cathay Century is a non-life subsidiary of Cathay Financial Holdings. The company is growing its market share, and is focused on delivering high quality services across the non-life sector. Jimmy Hu, Senior Vice President of Cathay Century, talks about its insurance offering in Taiwan, the drive to grow outside of the country, and its customer relationship initiatives.

World Finance: Jimmy, how important is it for Cathay Century to grow its market share across Chinese-speaking territories outside Taiwan?

Jimmy Hu: Cathay Century’s market share is second place in Taiwan’s P&C industry. The non-life market in Taiwan has developed over more than 50 years. The written premium has exceeded TWD 100bn since 2002. In the recent 10 years, the whole market written premium grew between TWD 100 and 120bn. With the limited growth of the P&C industry, expanding overseas is necessary to enlarge our company’s business scope.

The P&C market in China is the largest insurance market in Chinese-speaking territory. Its growth rate is up to 25 percent annually in the recent five years. China has become one of the most important markets the international insurance group wanted to station in. Our mainland China subsidiary was set up in Shanghai in 2008. Until now we have eight branches, except for our headquarters, in nine provinces. We hope to become the excellent foreign P&C company in the China market.

World Finance: So what are the key factors in expanding into these territories? The drivers of growth?

Jimmy Hu: It’s the same culture, and this is our natural advantage to expand into Chinese speaking territories, mainly in China. We have excellent operating performance in Taiwan: since the first year we have made profit. We believe we can bring successful business technologies and good corporate cultures to the China market, where insurance is developing in accordance with them.

Motor insurance is approximately 70 percent of the China market. China motor compulsory insurance was opened to foreign insurance companies from this year. It is favourable news to us, because we have enough experience to undertake motor compulsory insurance. We can seize the motor insurance market and increase business growth in the future, and also maintain good quality and a profitable business.

World Finance: Looking ahead, what’s the future for Cathay Century’s policy of internationalisation?

Jimmy Hu: Cathay Century will pass on the policy of reliable operations and balanced performance on both quality and quantity overseas. In addition, the overseas markets are so big that cultural climactic and economic development is very different among them. Even in China, each province has different customs and habits. We shall continue the implementation of localised operations.

Furthermore, as our need of development of internationalisation, we should assess the cultivation of various business professionals and a reserve talent pool. Still, by continue rooting the company and its subsidiaries’ capital structure to mid-future expansion point, demand for funds.

In addition to operating in the Chinese market, we also entered the Vietnam market in 2010. We will continue to take another step towards being the best financial institution serving Chinese-speaking communities in Asia.

World Finance: So in this very competitive market, how important is the customer experience in winning new business?

Jimmy Hu: There are an estimated $4bn premium volume year in Taiwan P&C market. However, there are up to 17 local and foreign insurance companies in Taiwan. In such a competitive market, content and the price of products is not the only concern for customers. Quality of service is definitely the key to keep customers. Risk management plans before business and the claims process after accident occurs are the main services.

Insurers must fully understand the risk that customers may involve and give them professional recommendations. Moreover, they can provide loss-prevention services for customers to reduce their risk opportunities. These approaches will benefit both customers and insurance companies.

When an accident occurs, insurers should timely compensate for damage to customers. An important factor to attract customers to, or renew, is whether one can do the above well.

World Finance: What would you say are the distinctive features of Cathay Century’s interface with your customers?

Jimmy Hu: Cathay Century is known as good quality of customer service. We always provide better customer service than our peers. We received a gold award at the Awards of Excellence this year. We released a campus programme and provide loss prevention services for elemental schools. We not only donated playground equipment and held campus safety seminars, but also taught children correct ways to use insurance by dramatic activities.

Besides, we launched the app My Mobicare in 2012. This is Taiwan’s first live insurance mobile application that integrates positioning, photo shooting, and instant contact to help motor insurance policy holders involved in traffic accidents. This app provides either our customers or the public. It is currently the most popular functional app in Taiwan. Those are the best proof that we emphasise our customer service.

World Finance: So how do you see Cathay Century’s commitment to quality developing in the future?

Jimmy Hu: We set up our service quality improvement team in 2012, so as to implement quality of customer service. We have regular meetings to discuss how to provide customers with better services, in order to smooth claim settlement. We release claims improvement team in loss prevention, we will not only upgrade fire risk assessment technics to factor risk, but also continue to promote a free campus programme. We consider expanding the range of services by extend to personal insurance. In order to approach international development, we will continue learning from the successful service experience of large international insurance groups. We hope to achieve the international standards of service at all levels, and become the most reliable insurance company.

World Finance: Jimmy Hu, thank you very much.

Jimmy Hu: Thank you very much.

Joaquim Silva Pinto on banking | Banif Bank Malta | Video

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Malta avoided the worst of the financial crisis, thanks in large part to rapid government intervention. But banks have also played their role in supporting businesses. Joaquim Silva Pinto, CEO of Banif Bank Malta, discusses the influence that Banif had in keeping the economy turning over, its recent successes, and plans for the future.

Ibrahim M Al Alwan on asset management | KSB Capital Group | Video

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KSB Capital Group is one of the largest asset management businesses in the MENA Region, and provides fund management services in a broad range of asset classes. Ibrahim M Al Alwan, CEO of KSB Capital Group, talks about the asset management sector in Saudi Arabia, how its approach to asset management has adapted to new regulations, and his expectations for the future.

World Finance: So tell us about KSB Capital Group, and what makes you different from the competition?

Ibrahim M Al Alwan: From the beginning, we believe that we have to have a niche market. We have to differentiate ourselves compared with our competitors, and to be a leader in new sectors. And after we made a lot of searches in the market, we saw that real estate investment was not so developed, and not well served by the existing players in the market. So, we focused on this area, and we’re now starting to have new products for real estate. And we create real estate investment funds based on the new regulation from the CMA, the capital markets authority in Saudi. So we launched the first cross-ended real estate fund, and it was really successful at that time. And we got good performance in this fund, and this gave us an advantage over our competitors because we have a niche market, and we have new products in the market. Even our competitors didn’t have. And so this adds value for us, and we believe that we are appealing in this sector.

“We launched the first cross-ended real estate fund, and it was really successful”

World Finance: What can you tell us about how your approach to asset management has developed in recent years?

Ibrahim M Al Alwan: In the beginning, we start with a simple product for real estate investment funds. But after we did some funds, after that, we believed that we have to go to the next stage, of having multi-assets, or multi-projects in one fund. Also, we’re starting to increase the term of the fund itself. We’re starting with short-term, but after that we’re starting to be convinced to have funds with more than two, three, five years, which gives us more flexibility regarding the investment activities.

World Finance: We’ve talked about your asset management approach; what can you then tell us about your corporate governance philosophy?

Ibrahim M Al Alwan: Corporate governance for sure is very important. From the beginning of starting the company, we focused on having to apply the corporate governance in a good manner. And because it really helped us in having the balance between all the stakeholders regarding clients, staff, regulators, and also the public. So, to have all these in balance, by applying the corporate governance, it helps us a lot to get the benefit of these relationships.

“With the new regulations, we see the improvement in the practice in the market”

World Finance: You’ve touched on the new regulations; what impact do you think they will have?

Ibrahim M Al Alwan: With the new regulations, we see the improvement in the practice in the market. We see how the investment banks are starting to focus more on giving a good product, focusing on how to mitigate investors about risks. All these really, we noticed that once the new regulation regarding the corporate governance, and even the investment activities which improved the market. However, at the same time, we have obligations. Investment banks, you know, with the new regulations and with the new corporate governance rules, you have to hire more people to have in the risk management and the corporate governance, as activities. So, all these need to spend and give more time to comply with the new regulations.

World Finance: Now, looking at the asset management sector in Saudi Arabia at large, how has it changed in recent years, do you think?

Ibrahim M Al Alwan: Recent years, we noticed that we’re starting to see products for individuals. In the past, most of the products in the investment management and the investment side, it’s focused on the family business, and the institutions. Right now we noticed that new products, the competition’s coming to the market, so the market’s developed, and we notice a lot of asset under management right now coming from individuals, and even from family offices. They’re starting to be convinced with their local investment banks, to invest with them.

“Right now we are trying to target new markets, we’re targeting also new products, right now especially real estate”

World Finance: And what’s your future outlook, both for the asset management sector in Saudi Arabia, and the strategic vision for KSB?

Ibrahim M Al Alwan: In the beginning we were just focusing on how to improve ourselves, and how we gain the trust from investors and clients. Right now we are trying to target new markets, we’re targeting also new products, right now especially real estate. Saudi Arabia will then have a decent amount of real estate investment trusts, so we are focusing on that. We want to be the main player, or the first to introduce for this product to the market in this one area. And the other area regarding the cores: banking also, we focus on the private equity. A lot of investors, they want to have a partnership, to have activities in the private equity, and have some shares of these companies, and offer it to public or to private investors. I think this is the future for the market in Saudi Arabia.

World Finance: Ibrahim, thank you.

Ibrahim M Al Alwan: You’re welcome.

Jose Tudela on insuring Peru | Rimac Seguros | Video

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Today, more than half of Peruvians consider themselves middle class. This growing demographic is driving the economy forward – and particularly the financial industries. Jose Tudela, International Business Manager for Peruvian insurer Rimac Seguros, talks about how the sector is developing in light of this change, and how Rimac Seguros is developing its products to match customer demand.

Arthur Pinheiro Machado on electronic trading in LatAm | Americas Trading Group | Video

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The Americas Trading Group was founded in 2010 as a technology company, specialising in electronic trading in Brazil. Arthur Pinheiro Machado, COO of Americas Trading Group, discusses how ATG filled a critical gap in the trading market in Latin America, explains what is driving the increase in high-speed trading in the region, and introduces about ATS Brazil, a new exchange in the Brazilian market, formed in partnership with the New York Stock Exchange.

World Finance: So tell us more about ATG.

Arthur Pinheiro Machado: Americas Trading Group is a broker-neutral, high performance liquidity centre, which connects brokers and end-users with the key markets in the Americas, such as the US, Brazil, Colombia, Mexico, Chile and Peru.

ATG offers the buy and sell side, full support in electronic trading solutions to the Latin American market. So, we provide an array of products and services to ensure that the clients will have the best order execution and strategic control.

“ATG offers full support in electronic trading solutions to the Latin American market”

World Finance: So what was the key need in the Brazilian marketplace when you started, and how did you go about servicing that need?

Arthur Pinheiro Machado: At the time, Brazil had an underdeveloped market, and the financial community under-utilised electronic trading solutions. So there was a lack of companies specialising in electronic trading solutions. So, considering the experience that our management team has in the brokerage business – we were partner of one of the largest brokers in Brazil, which was sold in 2008 – plus the fact that we were pioneers in applied electronic trading on the Brazilian market, we decided to create ATG to fill this gap. And today we are the largest electronic trade provider in the region.

World Finance: And have you seen a significant increase in high-speed trading activity in Latin America? And if so, where has it come from?

Arthur Pinheiro Machado: Definitely. And ATG’s helping the buy and sell side to access these markets electronically. High-frequency trading currently accounts for 15 percent of trades in Brazil. The main direct market access accounts for more than 50 percent, and part of these numbers represent automation of the trading process. But there are also new players in the market – in fact, most of them are UK and US investors.

“High-frequency trading currently accounts for 15 percent of trades in Brazil”

World Finance: How do you see electronic trading evolving in Brazil over the next few years?

Arthur Pinheiro Machado: The Brazilian Securities Commission, the CVM, has begun reasonable discussion on new regulation for Brazil. And this is very important, and the most important is much of the industry has been making positive statements favouring opening the market, so we are very very confident, and strongly believe that Brazil represents today a huge opportunity for new venues, providers, and vendors. So, we are very optimistic as well.

World Finance: What then does Brazil need to do to move its financial markets forward?

Arthur Pinheiro Machado: Three basic things. First, introduce real competition at the exchange level. Second, make our market regulation friendlier for new-comers; both local and international. And, be supportive of real competition and innovation in long-term trade solutions and products.

World Finance: Provide us with some detail on your partnership with the New York Stock Exchange.

Arthur Pinheiro Machado: Certainly. In June, we submitted a request for a new stock exchange called ATS Brasil – Americas Trading System Brasil. NYSE holds 20 percent of the new venture, and ATG holds 80 percent. We are prepared to launch the exchange as soon as we have the licence, and we expect that should happen some time next year.

“We have only 360 listed companies. This is nothing, considering the size of our economy”

World Finance: And what were the reasons, the factors, that inspired this venture?

Arthur Pinheiro Machado: The fact that the local market does not truly represent the Brazilian economy. We have a huge opportunity to fix that. Only 10 stocks account for more than 50 percent of all trades in Brazil. On the futures side, five contracts – only five contracts! – account for more than 90 percent of all trades.

We have only 360 listed companies. This is nothing, considering the size of our economy. We are the sixth economy in the world, so there is a huge opportunity, and we are there to take it.

World Finance: What will be the initial focus of the exchange, and how do you see it expanding in the future?

Arthur Pinheiro Machado: At first we concentrated on stocks. We have a strong background in this area, and we know how to create liquidity. So it is the obvious choice. However, futures, derivatives, and even fixed income, are now in our plans down the road.

We’re not afraid to be bold, but we need to take it one step at a time, right? We cannot lose our focus, which is offering a viable solution, a viable option, for investors wanting to efficiently access the Brazilian market.

“If Brazil wants to attract new investors, and have a strong and dynamic market, being connected globally is a must”

World Finance: So is this part of the overall plan to open the Brazilian markets to the rest of the world?

Arthur Pinheiro Machado: We believe that we have to open up the Brazilian market. Brazil – if Brazil wants to attract new investors, and have a strong and dynamic market, being connected globally is a must. And we are the fourth fund in the world, with over $1trn in assets under management, and for Brazilian investors abroad it’s hard. So, it doesn’t make any sense. We have to be cured, we need to be cured of this Peter Pan syndrome and start thinking big.

World Finance: Arthur, thank you.

Arthur Pinheiro Machado: Thank you Nick.

Carlos Hank González on the Gran Museum | Grupo Hermes

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Grupo Hermes was founded in 1977 with the purpose of promoting, developing, and investing in capital infrastructure projects within Mexico. Carlos Hank González, CEO of Grupo Hermes, discusses the Gran Museo del Mundo Maya de Merida: an award-winning, flexible museum space, dedicated to the history and present of the Mayan peoples.

World Finance: Tell us about Grupo Hermes; what kind of projects are you involved with at the moment?

Carlos Hank González: We have different industries that we participate in. For example we’re very focused in the infrastructure business – in not only building, but also the concessions and operating of different businesses.

We also are participating in the automative business; we have also big participation in a steam generation boilers company, which we’re partners with Mitsubishi in Austin. We also have a tourism development project in Cancun, and we participate also in transportation services.

“It was a huge construction. More than 20,000sq m, and we had to do it in under 12 months”

World Finance: Now, the Gran Museum has attracted a lot of positive attention; why do you think this is?

Carlos Hank González: It’s a very interesting project. It’s the first project that has been a PPP project, which is a private and public association project. And it’s very interesting because it’s the first museum in Latin America that has been developed that way. So it took a lot of challenges for sure, but it’s a very exciting thing that we participated in last year and we’re very proud of it.

World Finance: You mentioned the challenges involved; tell us about these and also the other considerations of the project.

Carlos Hank González: Sure. There were many challenges in this project because – as I mentioned – it was the first museum ever built in this type of association. So, first of all we had to convince the government of the benefits that this could have. And it was a big challenge, because this was the first time ever that a project like this has been a concession to a private company, and as you know we still have to manage it for the next 20 years.

But other challenges, for example: the way it was built, it was a huge construction. More than 20,000sq m, and we had to do it in under 12 months. So, there were big challenges, but we’re very proud of what we could achieve.

“The rate that we’re planning to grow, with all the reforms that are going to be passed, we need the infrastructure to go along with that”

World Finance: So how do you envisage the space being used in the long-term?

Carlos Hank González: It’s a very impressive construction, which allows the place to be used in many different ways. Not only as a museum, but for sure as an exhibition centre for the government to show the richness of the state of Yucatan and the city of Medina. We have a big IMAX theatre, which allows us to project a lot of movies, and they have projected a lot of movies, for example, of how the Myans live right now.

And they have also done a lot of big events, where the government has taken a lot of guests, and used it for increasing tourism. And they have a lot of different activities going on at the museum, so we’re very excited about what can be done and achieved in the next years.

World Finance: In the broader context, then, how do you see investment in infrastructure developing in the future?

Carlos Hank González: Very much. President Peña Nieto just announced a big plan to invest around $300bn in Mexico, and we need a lot of infrastructure in Mexico. I think the rate that we’re planning to grow, with all the reforms that are going to be passed, we need the infrastructure to go along with that. So I think these kinds of projects, with the PPP projects in Mexico, is something that will help us and allow us to keep those investment producing and get the growth that we’re looking for in Mexico.

World Finance: Finally, what’s next for Grupo Hermes in terms of projects and the strategic vision?

Carlos Hank González: We’re very excited. We’re very excited because, as I just mentioned, there was a big investment plan announced in Mexico, which is planning to get newer airports, water dams, ports, more highways, and those are all products that we know best, that we have been working on for the last 20 years, and we’re very excited and looking at the new projects to decide which ones we can participate in and be competitive at.

World Finance: Carlos, thank you.

Carlos Hank González: Thank you very much, Nick.