For Sun Life Financial Inc.'s Kevin Strain, competing in Asia is like trying to get on the subway at rush hour in Tokyo or Hong Kong, where "pushers" pack people onto the trains. If you don't move with the crowd, you'll be left behind.
The insurance business is growing so rapidly that "if you miss the mark, you become subscale and you're fighting to get back in, and it's going to be almost impossible," Mr. Strain, president of the insurer's business in Asia, said in an interview. "If you sit back in Asia, you're going to get lost."
Sun Life is doing anything but sitting back. The region's population growth, high savings rates and rising middle class have attracted plenty of competition, but the company expanded again this year through a joint venture in Malaysia and a licence to sell insurance in its seventh market in Asia: Vietnam.
The challenge, of course, is not only to grow in Asia, but to do it profitably. That has rarely been more important for Canada's two largest, widely held life insurers, Sun Life and Manulife Financial Corp., which are counting on the region's rapid economic development to offset the slow growth of their North American businesses, where insurance and wealth management markets are already developed.
Sun Life began investing more heavily in Asia in the mid-1990s, launching a partnership in Indonesia and returning to markets it had previously left, including India.
The Asian unit is profitable, earning $129-million in profit last year, up from $92-million in 2010. But the returns are far from spectacular – the division's operating return on equity was just 7 per cent.
Mr. Strain sees his biggest challenge as striking a balance between keeping up with other players in the market, while still charging prices that allow insurance products to be profitable.
"Every company that's successful in the world is trying to break in there. And the strategies aren't that different; it's all about executing well," said Mr. Strain, who took over the division in February, 2012, and is based in Hong Kong. Last year, Sun Life sold more than 2 1/2 times as much individual life insurance in Asia than in Canada.
Since Asia is a diverse region, it can be difficult for Sun Life to know what each market will respond to and where to invest. Should it hire more insurance brokers, or spend money on social media? Which products will sell best?
The company appears to have found the right formula in the Philippines, Mr. Strain said. Sales of individual life insurance doubled in the most recent quarter due, in part, to a bigger agency sales force.
But Sun Life's business in Indonesia is an example of how easy it is to fall behind. Indonesia has an affluent middle class expected to double in seven years to more than 140 million people, according to research by the Boston Consulting Group. But Sun Life was having trouble getting recognized in the country, and sales through its insurance agents were underperforming.
To turn it around, Sun Life is adding thousands of new agents. "We're putting a lot of pressure on those guys," Mr. Strain said.
Protectionist laws in many Asian countries mean that North American insurers often must have local partners. Canadian insurers bring actuarial, corporate governance and risk management expertise to countries such as Vietnam, where the demand for life insurance products is still nascent.
"Our partners know that growth is key. Part of our job is to make sure it's done in the right way from a risk management and profitability standpoint," Mr. Strain said.
The government is working on trade agreements that will make it easier for Canadian companies to operate in Asia. "When you look at countries like China and Indonesia with rapid population growth and a burgeoning middle class, they are looking for sophisticated financial products that are secure," Ed Fast, Canada's Minister of International Trade, said in an telephone interview.
In the meantime, Mr. Strain will be trying to determine which product distribution channels will be winners. He favours selling through agents, "because you own distribution and you can work more closely with the strategy and product lineup."
But selling products through existing bank channels is also incredibly popular across Asia.
"I think to be successful, you have to have multiple distribution points and a focus on capturing business quickly," he said.
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