First, a slew of renminbi-denominated deposits hit Singapore earlier this year, and now renminbi-denominated insurance has arrived.
Aviva and DBS Bank on Thursday officially launched the Dragon Renminbi Plan -- Singapore's first renminbi-denominated insurance plan.
The product, a single premium non-participating endowment plan, will allow investors to take advantage of opportunities on offer in the rapidly developing Chinese market, Aviva and DBS officials said in a briefing.
Available to investors at a minimum single premium of RMB250,000 or about S$50,000, the product has a maturity value of 115.09%, which amounts to an effective yield of 2.85% compounded yearly or a little more than 15% total return over the five-year period.
The plan, underwritten by Aviva, also carries death benefit coverage and a capital guarantee. Upon policy maturity, policyholders have the option to receive payment on any currency made available by the institutions.
"In today's environment, interest rates are extremely low, and simple investors, even sophisticated investors, are looking for alternatives. We believe we are bringing a very good alternative to investors in Singapore," said Jeremy Soo, DBS managing director and head of consumer banking in the country.
Regardless of the currency denominated, Soo said that the product offers the highest return on a guaranteed basis versus the rest of single-premium products offered by other insurance companies.
The product's annual return is also higher than the more than 1% annual return on 12-month renminbi-denominated deposits offered in Singapore, DBS officials said.
The suite of renminbi products that DBS launched earlier this year includes current and fixed-deposit accounts, currency-linked investments as well as bonds, unit trusts and structured notes.
On whether there is expected to be more upside to the renminbi given China's slowing economic growth, Simon Newman, CEO of Aviva Singapore, said the product is not aimed at currency speculators but at investors who are taking a medium- to long-term view and wish to have a proportion of their savings denominated in a currency they can rely on getting a fixed 2.85% return a year.
"I think this is about giving people an opportunity to have a part of their portfolio in one of the what undoubtedly is going to continue to be one of the world's leading currencies," Newman said.
Richard Vargo, DBS managing director for bancassurance, said that renminbi-denominated products have become hugely popular in Hong Kong, where DBS has successfully introduced three renminbi-denominated insurance products, so it made sense to bring such a product to Singapore.
According to Soo, since the bank brought a suite of renminbi-denominated products in Singapore in February, as of august it had garnered about RMB40 billion offshore deposits across Singapore and Hong Kong.
"With that kind of success there has been continued requests and demand for such products," he said.