The Philippine unit of global insurer Sun Life of Canada recorded a “spectacular” performance in 2013, reflecting a robust year for the insurance industry.
In an interview with Inquirer, Sun Life Financial Philippines president Riza Mantaring reported that new business generated by Sun Life and Sun Life Grepalife—as measured by weighted first year premium—grew by 51 percent last year to reach P5.96 billion.
Sun Life Grepa, a local bancassurance partnership between the Canadian insurer and the Yuchengco group, accounted for about a quarter of the business.
About 95 percent of the business last year consisted of variable unit-linked insurance or that tied to the performance of an underlying fund. Only 5 percent of new business came from traditional insurance last year.
Mantaring said this reflects two things—the strong market conditions which led to the strong performance of investment-linked instruments and the record-low interest rates which made traditional products more difficult to sell.
Sun Life also rapidly grew its mutual fund business, with Sun Life Asset Management Co. Inc. ending the year with P41.5 billion in assets under management (AUM), Mantaring said. This marked a 43-percent increase over the previous year.
Including the mutual funds of Sun Life Grepalife, she said the group’s total AUM for mutual funds amounted to P43 billion. Group-wide AUM for unit-linked business ended the year at P55 billion.
“[The year] 2013 was spectacular for Sun Life and for our entire industry,” Mantaring said.
For the whole industry, Mantaring estimated that 50 to 60 percent of the P170 billion total premium generated last year consisted of single premium premium products.
“That’s very difficult to replicate,” Mantaring said.
Clients who buy single premium instruments typically don’t end up buying another one the following year.
At the same time, Mantaring said single premium products behave very much like other collective investment instruments like mutual funds and unit investment trust funds (UITFs).
Mantaring said underlying Philippine fundamentals remained good, supporting an appreciation in asset prices. But over the short term, she said external uncertainties were dampening sentiment.
“But the long-term outlook is pretty good. Even for this year, the outlook is good,” she said.
Once investors focus again on fundamentals, she said Philippine markets should do well. Even for this year, she said the outlook for the local stock barometer was positive, likely rising to 6,500 to 6,800.