Sun Life buys into Grepalife

Posted on February 18, 2011

SUN LIFE Financial Philippines has acquired 49% of GREPALIFE Financial, Inc. of the Yuchengco Group of Companies, gaining an entry into the highly lucrative bancassurance business.

Sun Life announced yesterday that it had entered into an agreement with Grepalife’s holding company, GPL Holdings, Inc. Sun Life did not say, however, how much it paid for the acquisition.

Grepalife, the life insurance arm of the Yuchengco Group, will be restructured into a new joint venture entity called Sun Life Grepa Financial, Inc.

The insurer was the bancassurance partner of the Rizal Commercial Banking Corp. (RCBC), also a member of the Yuchengco Group.

Bancassurance is the sale of insurance products within bank premises.

Sun Life will have management control of the new company, but the Yuchengco Group will maintain a 51% ownership of Sun Life Grepa Financial through GPL Holdings.

Under the deal, Sun Life Grepa Financial will become the newbancassurance partner of RCBC, selling both Sun Life’s and the former Grepalife’s products in RCBC’s branches.

“Sun Life is already one of the leading players in the insurance industry.

This alliance allows us to take advantage of the growing opportunity in the bancassurance sector and positions Sun Life for even greater growth,” Sun Life President and Chief Executive Officer Rizalina C. Mantaring said in a statement.

Sun Life was the country’s second biggest life insurer in terms of premiums in 2009. RCBC, the country’s seventh largest bank in terms of assets, has an estimated customer base of two million and over 350 branches nationwide.

“The joint venture deal will not only benefit both parties but will also bring greater choice of insurance products to Filipinos,” Ms. Mantaring said.

Grepalife President Victor P. Quisumbing says RCBC customers can expect a more diverse product line from Sun Life Grepa Financial.

“Sun Life has always been known for its upmarket insurance products and services, while Grepalife targets the middle market,” Mr. Quisumbing told BusinessWorld at the sidelines of the Sun Life press conference yesterday.

“Together, Sun Life Grepa Financial can target the A, B, C and D socio-economic classes, with specific ages, genders, paying capacities and risk appetites.”

Sun Life has long been looking for a bancassurance partner to complete its services, Sun Life Chief Operating Officer Naresh Krishnan told BusinessWorld also at the sidelines of the Sun Life press conference yesterday.

“We want to diversify our distribution channels and our products so we can reach more markets,” Mr. Krishnan said. “With RCB’s extensive network, our bancassurance partnership with them is ready-made.”

In a separate interview with BusinessWorld, Ms. Mantaring highlighted the importance of bancassurance as a distribution channel for insurers.

“Bancassurance has been growing rapidly. About 40% to 50% of all sales in the industry have come from bank partnerships,” she said.

Insurers and banks have been forming bancassurance partnerships in the previous years. Manulife Financial and Chinabank Corp. partnered in 2007 for the Manulife China Bank Life Assurance Corp. Philippine American Life and General Insurance Company (Philamlife) acquired a 51% stake in the Ayala Life Assurance Inc. in 2009, forming the BPI-Philam Life Assurance Corp.

“The insurance business has grown in leap and bounds because of bancassurance. Bancassurance gives insurers access to a focused market, where deals are done in trust and confidence,” Mr. Quisumbing said.

Sun Life Grepa Financial will be “very, very competitive,” Mr. Quisumbing said.

“I am very bullish about our growth. I am predicting about 30% to 50% compounded growth between Sun Life and Sun Life Grepa Financial,” he said. “2011 will be our learning year, but 2012 and onwards, I am very optimistic about our growth prospects.”