Manulife favours M&As for expansion

Firm seeks deeper footprint in region

Manulife Financial may adopt a strategy of mergers and acquisitions to expand its insurance business across Southeast Asia, including Thailand, where it sees high growth potential.

Inorganic growth is the company’s key expansion tool as it looks for more business opportunities in the region, said Indren Naidoo, regional chief executive officer of Manulife Financial Asia Ltd.

The Canadian financial group has life assurance arms in Thailand, Vietnam, Cambodia and Myanmar.

Thailand is a big regional market with potential for growth, supported by strong economic fundamentals and a developing insurance market. At the same time, local insurers face the challenge of heated competition, and must find the right business strategies for expansion in the local market, Mr Naidoo said.

Manulife is the first foreign insurer to receive licences from Vietnam and Cambodia, having done business in the two countries since 1999 and 2012, respectively.

It ranks as the industry’s No.3 insurer in terms of total premiums in Vietnam, which has the company’s biggest customer base in the region (1 million clients). Cambodia is the latest market for Manulife.

Mr Naidoo oversees business in Thailand, Vietnam, and Cambodia.

Although the company is keen to expand further in emerging markets, Manulife is careful to select countries with well-developed regulations.

M&As are a key strategy for Manulife Insurance (Thailand), a business unit of Manulife Financial, over the next five years, said president and chief executive Nikkie Hongchumpae.

“We cannot disclose M&A deals in detail, but it’s a strategy to grow [in the region] and strengthen business in the local market,” she said. “The deals are expected to be complete within the next five years in accordance with our mediumterm business plan.”

Under the 2015-20 roadmap, Manulife Insurance aims to improve its market ranking to 17th from 20th.

Last year the company recorded 58% growth in annual premiums, equivalent to 150 million baht, partly due to its small base. It aims for a higher growth rate this year. Partnerships and innovative products are other strategies for expansion.

Manulife has deals with some banks as bancassurance partners for which it will mainly focus on unique products and customer segments. The company plans to offer unit-linked insurance to high net worth customers and has set up an investment-linked team to support product sales.

Sales from agents generate 44% of annual premiums, with the rest coming from non-agent channels such as telemarketing. Over the next five years, the agent channel is expected to decline to 20% as the non-agent channel rises to 80%.