Sun Life Financial Expands in the Philippines
By Thomas | Published February 22, 2011
Sun Life Financial has announced that it has reached an agreement with GPL Holdings – part of the Southeast Asian multi-industry conglomerate, the Yuchengco Group – in order to acquire a 49 percent stake in its subsidiary Grepalife Financial. The deal will enhance the multi-national Canadian insurer’s presence in the Philippines insurance market.
The deal will see the rebranding of Grepalife as Sun Life Grepa Financial as soon as local regulatory approval has been granted; this is expected to be obtained in the third quarter of 2011. GPL Holdings will maintain the majority share in the venture at 51 percent, with Sun Life being responsible for the operational management of the new company.
The joint venture will strengthen Sun Life’s distribution network in the Philippines through the newly established bancassurance relationship with its local partners. This will be facilitated through Yuchengco’s lending arm, the Rizal Commercial Banking Corporation (RCBC). The agreement will provide Sun Life Grepa Financial with an exclusive distribution platform to distribute insurance and wealth management products to Filipino customers.
RCBC has approximately 2 million customers and over 350 branches currently across the Philippines. The new relationship will provide for synergy between Sun Life and Grepalife operations in the Philippine insurance market and allow both parties to benefit from existing strengths and increase the range of insurance and saving products available through the new Sun Life Grepa Financial venture in an expanding Southeast Asian insurance market.
Speaking on the agreement Sun Life Financial Philippines (SLFP) President & CEO Rizalina Mantaring said: “We’re extremely excited about this deal. Sun Life Philippines has a long history in the country and is already one of the leading players in the insurance industry. This alliance allows us to take advantage of the growing opportunity in the bancassurance sector and positions Sun Life Philippines for even greater growth.”
The Toronto-based insurer’s net income in 2010 totaled US$1.6 billion a significant improvement over the previous year 2009 when total net income reached US$541 million. The increase in net income over the 12 months was down to a strong performance across the range of Sun Life operations. Along with its presence in the Philippine insurance market, Sun Life has a strong foothold in the Canadian, Chinese, Indian, Indonesian, Irish, UK and US insurance markets.
In addition to Southeast Asian neighbors Thailand and Indonesia, the Philippines potentially offers insurers huge increases in written premiums as improvements in wealth levels, within a growing middle class population, takes place. This follows the progress in the growth of returns from business in the Asian powerhouse economies of China and India.
Sun Life currently holds a position in the Philippine insurance market through its Sun Life Financial business – which was established in 1995 – and has become one of the main insurers in the Filipino market. It has established a reputation as one the main protection and savings product providers in the Philippines and will continue to operate as a separate entity from the new insurance venture with Grepalife.
It is estimated that Sun Life’s existing share of the Philippine insurance market is around 17-20 percent, but with the new partnership the Canadian insurer is aiming to increase that to more than 25 percent in the short to medium term.
The parent company of GPL Holdings and Sun Life’s new partners Grepalife – the Yuchengco Group – has over 60 companies within its portfolio making it one the largest conglomerates in Southeast Asia and, with the RCBC banking link, is planned to provide a formidable combination to enhance Sun Life’s bid to penetrate the Philippine’s insurance market.
Sun Life is one of Canada’s largest life insurers and has been building its multi-national operations through joint ventures with local operators, rather than outright acquisitions, to gain a presence in emerging markets currently offering insurers greater scope for improving premium returns.
Insurance Company Mentioned:
Sun Life Financial