Manulife bullish with China Bank joint venture

The recent approval of the Bangko Sentral ng Pilipinas (BSP) allowing the China Banking Corp. (China Bank) to practice cross-selling or bancassurance has made Manulife Life Insurance Co. Inc. (Philippines) bullish about doubling its premium income.

Known as cross-selling in the banking industry, bancassurance allows a sister company of a commercial bank to market its products through the bank’s branch network as well as tap into its client base.

Early this year, Manulife and China Bank formed a joint venture company known as Manulife China Bank Life Assurance Corp. The joint venture firm, majority controlled by Manulife but with at least a five-percent equity stake from China Bank, will undertake bancassurance.

“Bancassurance will contribute at least 10 percent to total premiums this year,” Manulife Philippines president and chief executive officer Carl Gustini said.

Last year, the insurers’ total premium income practically breached the P3-billion ceiling, landing it fourth overall among the 34 industry players.

To compliment its bancassurance, Manulife will introduce two new products including variable or unit linked (VUL), the popular life insurance products laced with investment features.

That is aside the traditional or regular life insurance and the single-pay premiums. Last year, single premiums accounted for a mere P41 million of total premium income although new business amounted to almost P300 million.

But the Canada-based insurer is already looking beyond 2007.

Significant contributions by the bancassurance joint venture will start next year, and likely to double in the next years.

Gustini said that joining the top three insurers is a strategic target for Manulife in the next three years. And that goal is helped by the recent acquisition of China Bank of the Manila Banking Corp. (Manila Bank).

That should increase the prospects of increasing premiums since Manila Bank has a branch network of 65 albeit only 26 are actually operational. China Bank plans to absorb the remaining branches into its network.

Manulife will immediately position 40 financial service advisors (FSAs) in 60 China Bank branches. The long-term target is to field one FSAs for every branch.

And since China Bank plans to open a thrift bank from its acquisition of Manila Bank, Manulife will be able to maximize the new business formation. “That situation will allow us to introduce Manulife to the clientele of the new thrift bank,” officials said.

Aside from bancassurance, Manulife will continue to strengthen its agency force numbering nearly 2,000, aside from other marketing tools such as business process outsourcing and direct marketing.

Manulife has at least 250,000 policies-in-force coming from its organic as well as inorganic activities such as the various mergers and acquisitions it undertook in the past years. These include the merger with John Hancock Life Assurance, and its acquistion of policy portfolios of CMG Life Insurance Co. Inc., Pramerica Life Insurance Co. Inc., and Metlife Insurance Company of the Philippines (Metlife Philippines).

Manulife is a wholly owned domestic subsidiary of Manulife Financial Corp., the world’s sixth largest and North America’s second largest life insurance company by market capitalization. Funds under management by Manulife Financial and its subsidiaries were Canadian $410 billion ($386 billion) end June 2007.