| KUALA LUMPUR
KUALA LUMPUR May 26 Sun Life Financial
, Canada's third biggest insurer, is boosting investment
in Indonesia and Malaysia at a time when growth in earnings from
some core Asian markets has slowed.
"This is not the time to slow down in Indonesia - companies
that don't make the investment are going to find themselves
quite far behind," Kevin Strain, president of Sun Life Financial
Asia, told Reuters.
Sun Life manages assets of $590 billion globally and aims
for its income contribution from Asia to reach 12 percent by
2015 against 10 percent now.
Earnings in China declined last year as Sun Life focused on
retaining profitability, said Strain, while numbers in India -
its biggest market in Asia - also fell after regulatory changes
"From a growth percentage, Indonesia and Malaysia will grow
faster than India, but India is a big and sophisticated
business. We should see some of that growth coming back."
A big part of the expansion in southeast Asia will be
growing the company's takaful (Islamic insurance) business,
which contributes half of sales in Malaysia and 16 percent in
The company is spending $40 million to double its number of
agents in Indonesia, as it prepares a distribution strategy to
navigate the country's largely underserved insurance market.
About 1.8 percent of Indonesians are insured, compared to
Malaysia's 4.8 percent.
"We have a real opportunity to become a much bigger player,"
A new rule in Indonesia requiring companies' takaful arms to
be made standalone units is expected to consolidate the industry
into a number of large players.
Strain said Sun Life could achieve its southeast Asian
growth targets for coming years organically, although the
company's capital position was strong enough to conduct mergers
or acquisitions. The parent company had a cash position of $5.9
billion at the end of March.
Last year, Sun Life partnered with Khazanah Nasional
to buy an insurance unit in Malaysia for $594 million
from Britain's second biggest insurer Aviva Plc and CIMB Group
Holdings Bhd. CIMB is also a local partner for Sun
Life's operations in Indonesia.
The company can take up to five years to break even in a new
market, Strain said, considering the initial cost of acquiring a
new business and developing a sales network with enough scale.
Sun Life hopes to leverage on the networks of CIMB and
Khazanah to expand further in Asia, with Thailand and Singapore
"We are always looking at strategic alternatives and the
right cultural fit. It's an area we see as potential, a hole in
our ASEAN (Association of Southeast Asian Nations) strategy we
would like to fill," said Strain.
"In this region, which is growing so quickly and is so
competitive, good partnerships can make a big difference."
Sun Life is also considering whether to enter the takaful
market in India, though poor acceptance of sharia-compliant
products there is discouraging at this stage.
"We can build a strong sharia business in Indonesia and
Malaysia - if it does take hold, we'll have knowledge we can
take into India."
(Editing by Andrew Torchia)