Manulife-Sinochem Looks to Financial 'Department Store' Model in China

Manulife-Sinochem Life Insurance Co. [78474], the first Chinese-foreign life joint venture between Canada's Manulife (International) Ltd. [78477] and China Foreign Economy and Trade Trust Co., is looking to explore new business in fund management and annuities together with steady domestic market expansion in China in the coming five years.

James Lin, president of Manulife-Sinochem, said in a statement that in the Chinese insurance sector, companies will gradually develop as an integrated financial conglomerate, or what he calls "an integrated financial department store," which identifies insurance as its core business and expands to incorporate banking, securities, fund management and trust operations under the same insurance group.

In view of the increasing aging problem in urban areas in China, Lin expects that domestic demand for annuity planning and medical insurance products will increase in the coming years.

According to Lin, the insurer's premiums maintained "very steady" growth, within a range of 20% to 30% since its establishment in 1996. Premium rose 28% in 2008, even with the global financial crisis.

In the coming three to five years, Lin said Manulife-Sinochem will try to explore market opportunities in fund management and annuity planning, but in the short term the company will focus more on domestic market developments in order to further increase its product and service presence beyond its existing presence in 36 Chinese cities.

Lin said the insurer will continuously optimize its agency channel by providing professional training, as he believes skillful agents are "the key" to the long-term development of Munilife-Sinochem.

He also noted that "good brand reputation and service quality" of an insurance company are consumers' main concerns when they are selecting an appropriate insurance service provider.

Lin said his company will focus on its "very steady and healthy" operational model to further develop its businesses "step by step with both quality and quantity enhancements."

In September, Shanghai-based Manulife-Sinochem won approval from the China Insurance Regulatory Commission to set up a new branch in northern China's Tianjin municipality.

In August, Manulife-Sinochem recorded total original cumulative premium income of 985 million yuan, up 16.4% from 846 million yuan in July, according to the CIRC.