Sun Life unit sees 30% growth this year

THE LOCAL unit of global insurer Sun Life of Canada expects to grow new insurance business by at least 30 percent this year, seen in line with expected industry growth amid a favorable macroeconomic backdrop.

In an interview, Sun Life Financial Philippines (SLFP) president Riza Mantaring said growth in business in the second quarter was even higher than the first quarter’s, suggesting a strong first semester. “It’s so far the strongest growth we’ve had in the last five years in terms of new business,” she said.

Excluding business volume from Sun Life Grepa Financial, the bancassurance venture with the Yuchengco group, Mantaring noted that compounded annual growth rate from 2010 to 2013 stood at 36.5 percent but business eased to 16 percent in 2014.

SLFP reported a 39-percent growth in new business—as measured by weighted first-year premium—in the first quarter. “This year, it’s the strongest we’ve experienced so far,” she said.

For the local insurance industry, she said most of the players were targeting more than 30-percent growth in new business this 2015. “I think that’s a sign of optimism. I think it’s achievable. It seems to be the consensus forecast,” she said.

Asked about the outlook for the second semester, Mantaring said in absolute terms, the second half of the year was always better than the first, although not necessarily when it came to year-on-year growth rates. At the same time, she said SLFP’s second-half performance last year was very strong, which would thus be hard to match.

Mantaring said the market for protection products was likewise broadening in the Philippines. While insurance products were previously deemed more acceptable to economic classes A and B, she said there was an increasing base of upper C and average C income-earners that could provide a good market.

In terms of business mix, 95 percent of SLFP’s protection business consisted of variable unit-linked (VUL) insurance while only 5 percent were traditional plans. For VUL projects, 80 percent consisted of regular premium products.

VUL, a hybrid between a mutual fund and life insurance, becomes variable as investment returns depend on the market performance of the fund where the premium is invested.

On the mutual fund side of the business, Mantaring said this was turning out to be better than last year, when the whole industry contracted. Mutual fund arm Sun Life Asset Management Co. Inc. now has P46.5 billion in assets under management (AUM), which could breach the P50-billion mark this year.

As to which funds are attractive to the market, Mantaring said the Philippine Stock Exchange index-tracking fund was selling very well alongside the equity funds, which she noted was a sign that Filipinos’ risk appetite was rising.

“Previously we’ve noticed a larger proportion going to fixed income or balanced fund. Now more funds are going to more aggressive funds,” Mantaring said.

Aside from increasing risk appetite, Mantaring noted that Filipino investors seemed to be becoming better at timing their new placements and redemption.

“When the market is up, they lock gains,” Mantaring said, noting that the first quarter was thus slow in terms of gross sales. But starting the second quarter when the stock market pulled back from record highs in April, she said net sales turned positive.

“This is actually a sign that Filipinos are learning,” she said. Doris Dumlao-Abadilla