Sun Life Financial Inc. has inked a new deal in Asia that it likens to sowing the first seeds of future mighty oaks.
The company (through a subsidiary) signed an agreement with Vietnamese insurer PVI Holdings on Thursday to form a new life insurance firm called PVI Sun Life Insurance Company Ltd., or PVI Sun Life, for short.
“There are very few people who have bought life insurance yet in Vietnam,” said chief executive officer Dean Connor in a call from Hanoi, Vietnam, where the deal was signed. “But as these people move into the middle class they’re going need what our industry has to offer.”
Through the deal, PVI will own 51 per cent of the new company and Sun Life will control the other 49 per cent. This alliance is part of Sun Life’s strategy of joint ventures with established Asian businesses, rather than outright takeovers. “Showing up in a country with a strong partner slingshots your growth potential because you have instant brand recognition. Doors will open for you in terms of getting things done,” said Mr. Connor.
The company aims to become a market leader in the sector. PVI already has a good reputation in its home country and, according to Sun Life, controls 21.3 per cent of non-life insurance market share. That would make it the leading non-life insurer in Vietnam.
Sun Life’s presence in the Asian market dates back to 1892 when it entered Hong Kong. Still, it’s only in recent years that expansion into this region has become one of the company’s four strategy pillars. Asia represents the majority of growth opportunities for the industry, according to Mr. Connor.
Of the 90 million people living in Vietnam, Sun Life has estimated that only five per cent of the population has life insurance now. Mr. Connor points to reports by Goldman Sachs and the OECD that indicate Vietnam’s economic growth will be striking in the coming years. “The demographics are quite compelling,” he said.
Manulife Financial Corp. has also been experimenting with life insurance policies in Vietnam by offering monthly premiums for as little as $1 paid by text message, a tool called “microinsurance.”
Sun Life thinks the move sets them up for future geographical expansion in the Asian-market, as well as growth in the pension business.