Sun Life Financial Aims for Growth in China and India
By Thomas | Published November 24, 2010
The Canadian insurer Sun Life Financial reported third-quarter earnings for 2010, with net income totaling C$453 million (US$444 million). This compared with a loss of C$140 million (US$137 million) during the same period last year. Sun Life Financial also highlighted plans for future expansion through its operations in China and India in order to capitalize on the developing markets in these countries.
Sun Life Chief Executive Don Stewart said: “In Asia, the restructuring of Sun Life Everbright is now complete. We continue to see strong sales growth in China and Indonesia..”
Sun Life Financial reported 2010 third-quarter earnings in Asia totaling C$37 million (US$ 36 million), compared to earnings of C$13 million (US$12.7 million) for the same period in 2009. Significant growth was reported from individual life sales in China and Indonesia, which grew by 178 percent and 54 percent respectively.
Canada’s third largest insurer Sun Life Financial plans to expand throughout China by increasing its presence in major cities across the country, taking advantage of the growing demand for protection and saving products. This will be undertaken through Sun Life Financial’s joint venture with China’s Everbright Group, which started trading in 2002; the JV – Sun Life Everbright Insurance Co – went through a restructuring programme earlier this year to strengthen its presence in the rapidly growing financial market in this country.
The revamp of Sun Life Everbright earlier in 2010, meant Toronto-based Sun Life Financial’s holding in the joint venture decreased to 24.99 percent from its original stake of 50 percent, with Sun Life Financial still providing expertise in areas such as risk management and actuarial services. Under the restructuring of the Chinese JV, Sun Life Financial reported a net gain of C$19 million (US$18.6 million) and set its sights on continued sales growth in the future.
Currently Sun Life Everbright operates in 18 Chinese cities employing more than 2,500 advisors providing individual and group plans for accident, pension, life and health protection products. The foreign linked joint venture became the first recognized domestic Chinese company in the summer of 2010 following its restructuring program. Sun Life Financial has highlighted – like many other global insurers – the significance of the Chinese economy and the part it will play in the future growth for insurance companies re-positioning operations to capitalize on emerging demands.
Birla Sun Life is Sun Life Financial’s joint venture with local Indian partners Aditya V. Birla Group and is one of the top 5 privately owned life insurers in India. Although Sun Life Financial’s sales in India were down by 13 percent in the third quarter of 2010, compared with the same period in 2009, this was partly due to the major changes imposed by Indian regulatory authorities. However, Birla Sun Life expects prospects to bounce back in the future in line with the economic growth forecast to occur in this Asian powerhouse. The Indian insurance sector is set to expand propelled by the country’s economic prosperity and increasing demands from the vast population for insurance products. Birla Sun Life provides life, heath, education, retirement, saving and mutual fund products.
Sun Life Financial and its partners in India and China are upping operations in these two Asian powerhouses, which have both emerged from the 2007-2008 financial crises as pivotal markets for insurers and financial institutions; this reflects emerging demands for protection and investment products from the increasingly more affluent populations in China, India and other Asian countries, which are providing multi-national insurers – such as Sun Life Financial – and their local partners a new outlet for income growth. The demand for insurance products in the Asian region offsetting more static demands in traditional markets in North America, Western Europe and Japan, where economies have been slower to recover from the global financial setback in 2007-2008.
Even though competition in the insurance market in China, India and other Asian countries has increased in recent years, Sun Life Financial believes the expanding savings culture in this region of the world will provide new and profitable business outlets.
In Canada, Sun Life Financial’s third-quarter earnings generated a net income of C$262 million (US$257 million) compared with C$219 million (US$ 215 million) for the same period in 2009; while trading in the USA showed an improvement, with profits of C$41 million (US$ 40 million) in third-quarter 2010 compared to a net loss of C$413 million (US$405 million) year-on-year.
The China Insurance Regulatory Commission (CIRC) and the Insurance Regulatory and Development Authority (IRDA) of India are the gatekeepers of the insurance industries in their respective countries. In recent years each insurance market has been subject to changes, which has resulted in an increase in competition between foreign and domestic insurance providers. Reforms and criteria changes have paved the way for global insurers to enter the Chinese and Indian insurance markets – although some obstacles still remain. Sun Life Financial – through their joint ventures with local insurers – are in a strong position within the Chinese and Indian insurance sectors, offering a large product mix to meet the demands of changing needs and competition within these nascent insurance markets.
Insurance Companies Mentioned:
Sun Life Financial
Sun Life Everbright Life Insurance Co. Ltd
Sun Life Everbright Life Insurance was established in April 2002. It’s shareholders include China Everbright Group, Canada’s Sun Life Financial Group, China North Industries Group Corporation and Anshan Iron and Steel Groups, based in Tianjin
Birla Sun Life
Birla Sun Life is a joint venture established in 1999 between Sun Life and Indian based Aditya V. Birla Group. Today, Birla Sun Life Insurance is one of the top 5 privately owned life insurers in India, and Birla Sun Life Mutual Fund is the fifth largest Mutual Fund House in the country.