China Bank, Manulife gain from partnership

The Bancassurance partnership between China Bank and global insurance firm Manulife plans to scale up operations, broaden its market base and offer new products such as those that will meet investors’ demand for higher yield.

Manulife China Bank Life Assurance Corp. (MCBL), which recently hit the five-year milestone, has become a key contributor to the operations of both Manulife and China Bank, top officials said in a briefing.

Bancassurance, which refers to the cross-selling of insurance products using bank branches, accounts for about 30 percent of the business of Manulife and is a key contributor to China Bank’s fee-based earnings. China Bank expects about P250 million in fee revenues from MCBL this year, according to Alex Escucha, head of the bank’s corporate planning and investor relations group.

MCBL president Robert Wyld said that since the bancassurance venture started operating in 19 branches in 2007, 274 branches of China Bank are covered by MCBL’s professionally qualified sales force, whose ranks have likewise grown to more than 200 from 19.

The company’s annual premium equivalent (APE), Wyld said, has likewise enjoyed an average annual growth of 58 percent over the past four years.

APE is a sales measure technique where the sales of a given entity are estimated by taking the value of regular premiums plus 10 percent of any new single premium written for the fiscal year. This is to make the amount of new business gained in a period comparable, specially when sales contain both single premium and regular premium business.

Moving forward, Wyld said: “We will look to broaden our distribution capability through further segmentation of the customer base, development of innovative products to fit those segments and the introduction of different distribution techniques over and above the current in-branch model where we deploy more than 200 fully qualified financial sales associates in the China Bank branches.”

For about 100 years that Manulife has been doing business in the Philippines, Manulife Philippines president Indred Naidoo said it was known to cater to the AB income segment. “We’ve changed that in the last few years and we started to develop products for the CD market, the emerging middle class.”

Asked about how the insurance group was coping with historically low interest rates, Naidoo said the group had diversified some of the assets and product offering to cater to the demand for higher yields. For instance, he said an Asia-Pacific Dollar Bond Fund was introduced to allow clients to invest in the fast-growing Asia Pacific bond market.

He said the group would soon come out with an Asian equity fund to give clients the opportunity to invest in the regional equity markets. He said the fund would include Philippine equities. “This fund should be coming out very soon,” he said.

Wyld said new products would be introduced to supplement MCBL’s current suite of offerings, which included Moneymax, a traditional savings product, and Platinum Invest, a single-pay variable life product.

In the first six months of 2012, Wyld said MCBL’s life premiums and deposits grew 128 percent while total assets under management (AUM) amounted to P5.6 billion, up 92 percent year-on-year. Close to 5,500 cases were issued last year.

For Manulife Philippines, Naidoo said insurance sales were up 9 percent in the first semester while wealth sales increased by 157 percent year-on-year. Total premiums and deposits grew 55 percent and total AUM rose 42 percent year-on-year to P55 billion.

“Manulife continues to enjoy strong demand for its wealth products, partly due to the fact that the peso- and US-dollar denominated funds attached to the product have attractive one-, three- and five-year yields and are considered among the highest performing investments compared to other vehicles in the market,” Naidoo said.