Bancassurance sales have quadrupled but wealth management business has been hit due to volatility
Sun Life Financial's (SLF) insurance business in India saw robust growth last year as volatile markets drove customers towards traditional products but sales of wealth products fell on account of the same reason, shows the company's latest annual report.
Its bancassurance sales more than quadrupled in 2018 after deepening the ties with HDFC Bank, which led to a 45% year-on-year growth in individual life insurance sales on a local currency basis.
Canada-based Sun Life Financial provides insurance, wealth and asset management solutions to individual and corporate clients and has $951 billion in assets under management (AUM).
In Asia, SLF operates across seven markets. In India, it has two major joint ventures with the Aditya Birla Group - Aditya Birla Sun Life Insurance Company and Aditya Birla Sun Life Asset Management Company – with 49% stake in each.
"SLF Asia insurance sales were $898 million in 2018, compared to $811 million in 2017. On a constant currency basis, individual insurance sales increased 13%, mainly driven by growth in the Philippines, India, and Hong Kong... In India... on a local-currency basis, individual life insurance sales were up 45% from 2017, driven by growth in bancassurance through establishment of our relationship with HDFC Bank. Bancassurance sales in India more than quadrupled after further establishing our relationship with HDFC Bank, the largest bank in India's private sector, as we develop scale in this market," SLF 2018 annual report said.
First year premium collections for Aditya Birla Sun Life Insurance in 2018 grew by over 50% year on year, which is over twice the growth rate of its private sector life insurance peers as a whole. This made the company one of the fastest growing in terms of first year premium.
When markets are volatile and returns from traditional products such as fixed deposits are low, retail investors often view insurance products as attractive, believe experts.
However, India market was a laggard for wealth and asset management businesses. Aditya Birla Sun Life Asset Management Company, which runs the fourth largest mutual fund operation in the country, reported lower sales. "SLF Asia wealth sales were $10.1 billion in 2018, compared to $13.1 billion in 2017. Wealth sales were down 20% on a constant currency basis over 2017 as a result of lower mutual funds sales in India due to market volatility and the Philippines due to elevated money market sales in 2017, partially offset by continued strong growth in Hong Kong pension business," the SLF annual report said.
SLF also said that on a local currency basis, gross sales of equity and fixed income funds in India decreased by 27% due to market volatility. Its wealth and asset management businesses in Asia ended 2018 with a total AUM of $48.6 billion, including $24.2 billion from the asset management joint venture in India.
Aditya Birla Sun Life Asset Management Company's total AUM at the end of 2018 was $49.3 billion, of which $24.2 billion is reported in Sun Life Financial AUM based on its proportionate equity interest.
In April 2016, Sun Life Financial had announced the completion of the transaction to increase its ownership in Aditya Birla Sun Life Insurance from 26% to 49%. The life insurance company, the eighth largest in India, provides individual and group insurance, savings and retirement products through the agency, brokerage, and bancassurance channels.
ROBUST PERFORMANCE
- 45% – Year-on-year growth in individual life insurance sales in India on a local currency basis
- 27% – Fall in gross sales of equity and fixed income funds in India
- $10.1 bn – SLF Asia’s wealth sales in the year 2018
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