MANILA, Philippines – The country’s life insurance industry is taking a beating from the negative impact caused by the country’s gasping pre-need industry. It is likewise not speared from the 0.4 percent growth of the country’s economy in the first three months of 2009 principally influenced by the US-inspired credit crunch.
But the Manufacturers Life Insurance Co. (Phils.) Inc. (Manulife Philippines) remains unperturbed preferring to introduce three new products this year.
Manulife Philippines president and chief executive officer Carl Gustini said that the first quarter of 2009 as well as the whole of 2008 was a challenge.
“Yet, Manulife’s total premiums last year grew by two percent versus an estimated industry average loss of 40 percent,” Gustini said. “But yes, the first quarter of 2009 was almost flat.”
Traditionally, however, the second semester of a given year performs than the first.
To keep pace with its positive momentum, Manulife will introduce innovative life insurance and pre-need products, including a critical illness product, a principal protect product, and a medium-type life insurance product (between a micro-insurance and the regular life insurance product).
It will also increase the number of financial service advisors (FSAs) fielded in the branch network of the China Banking Corp. (China Bank).
Manulife and China Bank formed a joint venture company in late 2007 to market its bancassurance products.
The Manulife Chinabank Life Assurance Corp. (MCB-Life) already fielded 100 FSAs in almost 200 branches of China Bank. In fact, 10 to 15 percent of total premiums contributed to the topline came from bancassurance.
“We expect these to grow by another 20 percent this year,” the Manulife chief executive said.
China Bank executives informed The STAR that they plan to increase the branch network to 300 by 2010. MCBLife in turn is looking to field nearly one FSA for every bank branch.
However, Gustini stressed that the principal driver for growth will be its regular life insurance products that generally results in recurring businesses rather than single-pay products.
Wealth creation with protection as offered by its regular insurance business is still the favored products by the market. Wealth management as reflected by its variable unit-linked (VUL) products spiced with investment options is still the second choice.
Regular insurance business grew by 11 percent last year, and is reportedly the main reason why Manulife Philippines remained in the top five best performers among the country’s life insurance firms.
Manulife Philippines manages 240,000 policies-in-force, and a premium base of $100 million. Its persistency rate of 85 to 87 percent is one of the best in the industry, versus the estimated industry average of 75 to 78 percent.
Gustini said that Manulife Philippines is open to an acquisition although it remains more comfortable with organic growth.
At the start of the 21st century, Manulife started an acquisition run that helped install it among the industry’s top five insurers.
In 2002, it bought the in-force business of MetLife Philippines. And in the following year, it acquired CMG Philippines. Not content, Manulife Philippines swallowed the life insurance business of Zurich Life.
This was followed by the acquisition of the John Hancock Life Insurance Corp. This transaction is part of a global initiative by Canadian-based Manulife Financial Corp., the ultimate parent of Manulife Philippines, to merge with US-based John Hancock Financial Services Inc.
Still unsatisfied, the insurer purchased of Philippine business of Prudential International Insurance Holdings Ltd.
Also toward the end of 2000, Manulife Financial Plans Inc. (MFP) got the regulatory nod to sell pension and education plans. As of the first quarter of 2009, it remains among the leaders in the pre-need industry.
For the year 2008, Manulife Philippines achieved an 11-percent growth in regular premium sales and two-percent increase in total premiums and deposits for combined life and pre-need businesses compared to 2007.