MANILA, Philippines—Sun Life Financial Philippines expects to report a sharp rise in revenues this year as sales of its insurance and investment products surged, aided by the country’s booming economy.
In an interview, Sun Life president and CEO Riza Mantaring said that preliminary figures point to a growth rate of “over 80 percent” in sales for products and services of the insurer as the end of 2012 draws near.
“The growth in Sun Life’s premium income from the Philippines is up because of both organic growth and the acquisition of Sun Life-Grepa,” she said, referring to the former Grepalife Financial Inc. of the Yuchengco family in which the insurer acquired a 49-percent stake last year.
“We’re above target for both Sun Life and Sun Life-Grepa,” she said.
The growth in the local unit of the Canadian insurance giant is pacing the growth of the Philippine insurance industry which, Mantaring pointed out, is also on the rise.
“The whole industry is showing strong growth,” she said. “The economy is doing extremely well, and this is the third year in a row that the insurance industry is growing by an average of 30 percent.”
The Sun Life chief noted that the growth of the industry is still being driven, for the most part, by heavy demand from the market for variable universal life (VUL) products.
In a VUL plan, premiums and death benefits are flexible and the fund value depends on the performance of the funds chosen by the policyholder.
“The [VUL] market is so strong, and there are two factors driving it,” she said.
The first one, according to Mantaring, is the prevailing low interest rate regime, which is making traditional investment products more difficult to sell because of the declining yields.
“In other markets, they understand the need for [insurance] protection, but here, there’s still the mindset that the savings component has to be there,” she said, in explaining why VUL products are more popular than traditional insurance policies. “We need more financial literacy because insurance is a need by itself.”
The other factor boosting Sun Life’s VUL sales is the strong performance of local equities and bond markets.
Last year, Sun Life Philippines became the largest insurer in the Philippines in terms of premium sales, as it collected P13.9 billion worth of premiums in 2011, 31 percent more than the P10.6 billion yielded in 2010, making this the highest in the company’s 117 years in the Philippines.
Mantaring expressed confidence that the company’s No. 1 position would be maintained in 2012, but said that the final tally would only be available once the complete sales figures for 2012 are presented.
“We’re quite positive and hopeful on the Philippine market,” she said, when asked about the prospects of the local economy going forward. “From an external perspective, [foreign businesses] are also very positive.”