When Hong Kong billionaire Richard Li asked Huynh Thanh Phong in 2013 to build a new kind of insurance platform across Asia, Phong had one request in return: patience.
“Because if you buy an asset and make it shiny and sell that right away, I’m not the right guy. But if you want to build something sustainable for the long term, then I can pull together the team,” Phong told the youngest son of one of Asia’s richest men Li Ka-shing.
Phong, a Vietnamese refugee who was sent as a child to Hong Kong by his mother in 1979 in the wake of the Vietnam war, had been working in insurance since graduating from university. He knew what Li wanted would take years to achieve, even with the hefty dose of capital at his disposal.
That was in 2013. Since then, Phong, 54, has led insurance company FWD’s aggressive expansion across Asia with a goal to attract customers by reducing paperwork and the complexity of insurance policies with new technology.
The group has entered ten countries over the past seven years, including Thailand, Malaysia, Singapore, Indonesia, Japan, Vietnam, the Philippines and Cambodia, and now has 9.8m customers, 6,100 employees, 33,000 agents and $62.6bn in assets. It is one of the fastest growing insurers in Asia and is seeking to raise as much as $3bn in an initial public offering later this year, according to people familiar with the matter.
FWD’s acquisition spree came with its own set of challenges. As the company tried to build a new brand in a traditional business dominated by established multinationals, it inherited entrenched legacies and grappled with cultural differences across Asia’s diverse economies and its thousands of employees.
“We were a brand new group with no history. So how do we convince the customer to trust us and [our] promise that we will pay the claim twenty, thirty or forty years down the road,” he says via Zoom from New York.
Phong says one of his trickiest deals as a leader was the acquisition of the life insurance business of Thailand’s Siam Commercial Bank, the biggest ever insurance takeover in south-east Asia. The negotiation was closely scrutinised given Thailand’s King Maha Vajiralongkorn was the biggest shareholder in SCB.
Thailand, south-east Asia’s second-biggest economy, was a target “from day one”, says Phong. “[SCB was] the prize asset that everybody wanted to go after,” he adds.
Deal talks started in 2016 after FWD became the winning candidate among the runners and riders. Then in 2017 the talks collapsed over valuation disagreements.
At the time, FWD was a midsized group trying to crack the top five. Phong knew that he needed SCB to become a market leader in Thailand. But after the breakdown in negotiations he realised it would be difficult to get back to the table. Rebuilding the relationship would require the same patience he had asked of Li years earlier.
“It’s always easier to start a new conversation than to fix the conversation that is already not working,” he says.
And he intended to do so from a position of greater strength. Phong’s team tried to win over the royal family by demonstrating their commitment in Thailand by launching various community support initiatives, staff volunteering schemes and fundraisers.
FWD also doubled down on its existing partnership with Thailand’s TMB Bank, with which it had a bancassurance contract. The group tried to show SCB how the bank benefited from the partnership, such as by leveraging its digital expertise to help productivity and deliver results for its partner.
The fact that FWD has a shareholder on its board, and does not have to go through layers of decision making, gave the group a further edge over competitors, says Phong.
“I think all of those things finally swayed their mind in terms of getting back to the table and talking to us.”
But the real go-ahead for the deal came when the king invited Phong, among other business leaders, to visit the palace in 2019 to attend the monarch’s birthday celebration. FWD were back at the negotiation table.
The deal was eventually sealed for Bt92.7bn ($3bn) in July 2019, making it the biggest ever insurance takeover in south-east Asia. After the acquisition, FWD has a 36 per cent market share in Thailand in terms of bancassurance as of December 2020 — bigger than the next three groups combined.
“When we announced [the acquisition] everybody thought it was really fast,” Phong says. “But it was a long game.”
Nor did challenges end when acquisitions were completed. The difficulties encountered [in communicating with the workforce] following the takeover of AIG Fuji Life Insurance in 2017 drove home the cultural differences across Asia, especially in Japan, and was a painful lesson for Phong.
On Valentine’s Day 2018, a drastic government tax law change caused the collapse of one of FWD Japan’s main market segments related to corporate tax planning. The team, including Phong himself, decided to adjust the product line and retake the market. However, it was a poor decision and the corporate market never recovered.
“We basically lost a year of effort . . . rather than be nimble and switch to the individual side quickly,” he says with regret. The team was unable to rebalance their market strategy to focus on individual protection instead of business in Japan until 2020.
Phong says the reason for the misjudgement was because he had not anticipated the reluctance of employees in Japan to disagree with him.
Three questions for Huynh Thanh Phong
Who is your leadership hero?
My mother is my leadership hero because I grew up during the years of the Vietnam war. My father was in the army and never home. She supported the whole family, she ran businesses, she took care of all of us . . . I still recall the time that the house got burnt down and she had to rebuild it.
If you were not a chief executive what would you be?
As a kid I always wanted to be a fighter pilot.
What was the first leadership lesson you learnt?
What I learned from the CEO of my previous company, was just be who you are, and be good at what you’re very good at. In order to become a successful leader what one has to do is pull together a team that really complements you . . . The advice and the education I got from this gentleman was to surround yourself with people who are not the same as you, with a very different expertise.
In Hong Kong or Vietnam, his team was “very noisy”. “If the strategy looks like it doesn’t go in the right direction. I will know,” he says. “I underestimated the lack of willingness to step up and say hey, we need to rethink this.”
He learnt to listen more to frontline staff, especially the sales team that dealt with customers day-to-day. The failure has taught Phong to be mindful of cultural differences. “In every country, including Japan, you have to be patient, you have to learn and find the right way to connect to them, and communicate with them, because one size does not fit all.”
He recalls making a speech in the Philippines, where people were so pumped up they were “ready to run out and jump over the fire”. In Japan however, “you would face a sea of very serious-looking men in suits”. Phong says the key is to find the right thing that excites people.
Sometimes, a little perspective helped as well. In the aftermath of the Vietnam war, which ravaged the country and left 70 per cent of the population below the poverty line, Phong’s mother put him and one of his sisters into a boat and told them, “You need to leave the country. You need to leave the family.”
Phong, who later settled in Canada before returning to Hong Kong, says whenever he faced challenges he would look back and think: “This is nothing compared to what my mom went through.”