Manulife, China Bank see boost from venture
MANUFACTURER’S Life Insurance Co. (Philippines), Inc. (Manulife Philippines) and China Banking Corp. (China Bank) expect a boost in their earnings this year and in the medium term from their bancassurance partnership, top officials of both companies said.
Manulife China Bank Life Assurance Corp. (MCBL) is the bancassurance joint venture between Manulife Philippines and China Bank, which began in 2007. In 2014, Manulife and China Bank renewed their partnership, with the Sy-led bank increasing its stake in the bancassurance company to 40% from 5%, while Manulife remains the majority owner of the joint bancassurance venture.
Ryan Charland, Manulife Philippines President and CEO, said currently “around 25%” of Manulife Philippines’ total sales comes from its existing joint venture bancassurance partnership with China Bank, and the local subsidiary of the Canadian life insurer wants to grow this share even more this year and moving forward.
Manulife Philippines posted P13.92 billion in total premiums in 2015, up from its 2014 haul of P13.36 billion, ranking sixth among life insurance players in the country. MCBL, meanwhile, recorded P4.931 billion in premiums last year from P4.764 billion in 2014, the 11th highest in the industry.
“We hope that it will grow to be a meaningful part of our overall business not just this year but in the year’s to come,” Mr. Charland said during the MCBL event last week, adding that “he would be happy” if the share could expand to 40% with the growth in its financial advisers, although clarifying that Manulife “don’t really have a specific target yet.”
Manulife Philippines has over 8,000 financial advisers.
Mr. Charland had said the life insurer wants to have 50 branches by 2016. As of end-2014, it has 32 branches and is expanding in Visayas and Mindanao.
Meanwhile, China Bank expects its bancassurance joint venture with Manulife to “contribute significantly” to the listed lender’s bottom line in the next three to five years.
Alexander C. Escucha, China Bank senior vice-president and Investor and Corporate Relations Group Head, said that with the recent market volatility, all banks are turning to fee-based income, such as returns from their bancassurance businesses, to maintain the same returns amid less trading gains.
“There’s a lot of potential to grow it. We saw it contributing a low single digit to our fee-based income and we expect that to grow double digits... we see very strong growth in the next three to five years,” Mr. Escucha said.
For 2015, the actual share of fee-based revenues to total revenues was at 19%, Mr. Escucha said.
For 2015, the actual share of fee-based revenues to total revenues was at 19%, Mr. Escucha said.
“Share of bancassurance related revenues ( commissions + share in MCBL income) to total fee based revenues is at 6% — expected to grow to double digits in five years,” he added.
China Bank saw its net income grow by a tenth last year to P5.63 billion from P5.11 billion previ-
ously on the back of the continued expansion of its core business operations.
“When we just had five percent, the main income is on the commission, so its a bit negligible ... but now that its 40%, apart from the commission, we get 40% from the earnings of MCBL,” Mr. Escucha said.
Bancassurance refers to the selling of insurance products within bank branches.
Under Republic Act No. 10607 or the amended Insurance Code, banks are no longer required to have 5% equity in insurance companies to enter a bancassurance deal. —