deal with china life forget axa

Australia's second biggest superannuation manager AMP Ltd plans to partner China's largest insurer to expand into asset and pension management in the fast growing Asian nation.

AMP said in a statement on Sunday that it had signed a memorandum of understanding for strategic cooperation with China Life Insurance Company, which is also the world's largest listed life insurer.

"AMP's agreement with China Life offers significant potential for AMP to grow its business in partnership with China Life in the world's fastest growing economy," chief executive Craig Dunn said in the statement.

"AMP brings to the table a proud history that has seen us evolve to become a leader in the Australian superannuation and pension markets and we are focused on building our growing footprint in Asia through AMP Capital's funds management business.

"With China Life's significant scale and leading market position, the partnership is the ideal balance of our mutual strengths and capabilities."

AMP, which on Monday announced a proposal to take over AXA Asia Pacific Holdings together with French parent AXA SA, is looking for avenues to grow its business in Australia and overseas.

The Sydney-based company wants to put itself in a strong position ahead of potential regulatory changes and competition from Australia's big four banks, which are aggressively expanding in the wealth management sector.

National Australia Bank Ltd recently overtook AMP to become the biggest retail superannuation provider through its takeover of Aviva Australia.

While the potential deal with China Life offers huge opportunities - China's private pensions market is expected to grow to $1 trillion by 2030 - there are also uncertainties, with AMP saying that returns will depend on the future Chinese regulatory environment.

AMP said the Chinese pension market was undergoing a period of major structural change as the authorities make available more investment options to pension funds.

"We will work closely with China Life to explore opportunities where we can draw on our areas of strength for mutual benefit," Mr Dunn said.

China was facing a significant demographic shift, with the number of citizens aged 60 or over to grow to more than 430 million, or 31 per cent of the population, by 2050.

"This trend has significant implications for the aged care sector and other areas of social infrastructure, areas in which AMP also has investment expertise," Mr Dunn said.

AMP has had a presence in China since 1997 and was the first Australian company to receive a qualified foreign institutional investor licence to trade in China A class shares. China Life Asset Management Company was appointed AMP's local Chinese investment adviser for that licence in 2006.

AMP also has operations in Japan, India, Singapore, the UK and New Zealand.

Shares in AMP closed at $6.30 on Friday.