FINANCIAL SERVICES REPORTER
Senior officials from Sun Life Financial are expected to sign a deal today in Jakarta that will create a new company in partnership with the second-largest financial institution in Malaysia.
The move will increase Sun Life's reach in Indonesia, one of the fastest growing insurance markets in Asia and a region that is a key priority for Canada's life insurers.
Asia is expected to make up a much larger proportion of the world's insurance market over the next decade, while North America's piece of the pie is forecast to narrow. Sun Life's deal comes roughly two weeks after rival Manulife Financial Corp. submitted a bid for American International Group Inc.'s crown jewel in Asia, American International Assurance Company Ltd. (AIA).
Despite the growth projections for Asia, Sun Life is believed to be holding on to its potential acquisition funds to make a splash in the United States, where it wants to be a much bigger player.
The company being created today is a new partnership with Bank CIMB Malaysia, part of Bumiputra-Commerce Holdings Berhad, which is listed in Malaysia with a market value of more than $7-billion (U.S.). Sun Life and Bank CIMB will form a new equity-based joint venture in Indonesia to be called CIMB Sun Life.
It will allow Sun Life to distribute its life, accident and health insurance products to Indonesians through CIMB's 600-plus retail bank branches in the country. Sun Life already has about 4,000 agents in Indonesia, and plans to bring that to 5,000 this year. Indonesia's insurance market had total premiums of about $4.7-billion in 2007, a 67-per-cent growth rate, and a large proportion of sales are made through banks.
Sun Life's total individual insurance sales in Indonesia fell 6 per cent in 2008 from 2007.
Manulife has also long had operations in Indonesia. It now has more than 100 sales offices and about 5,000 employees and full-time agents. In 1985, Manulife entered into a joint venture with Dharmala Group and the International Finance Corp. to form P.T. Asuransi Jiwi Dharmala Manulife in Indonesia.