Manulife Financial Corp. has done business in Asia for more than a century, but never in India. Now the insurer sees the country becoming a big part of its operations in the region.
“We think that India can be an important part — and quite a significant part — of our business there” in the next 10 to 20 years, Manulife Chief Executive Officer Roy Gori, 50, said in an interview at the insurer’s Toronto headquarters.
Manulife last week announced a joint venture with India’s Mahindra & Mahindra Financial Services Ltd., a firm with more than 6 million customers and assets under management in excess of US$8.5 billion. India was one of the few countries in the region the insurer had yet to enter.
Manulife’s initial investment is small: Canada’s largest life insurer agreed to invest US$35 million in two Mahindra Finance units, according to a June 21 filing with India’s stock exchange. Still, Gori sees the combination of Mahindra’s local market brand with Manulife’s global capability and knowledge as a key step.
“This is just almost perfect chemistry to create a value proposition in the market that will allow us to win and ultimately create value for consumers and ultimately for our shareholders as well,” Gori said.
While Manulife hasn’t disclosed any key targets for the joint venture, Gori said India is going to figure “quite significantly” in Manulife’s plans for Asia that could extend into other products and services. “The first phase for us is all about asset management and we want to make sure that we can execute against the opportunity that we’re excited about. Beyond that, we’ll clearly be open to looking at other opportunities.”
Manulife has been in Asia since 1897, when the insurer sold its first policy in the region, in Shanghai. It now has a presence in more than a dozen Asian markets, with more than 11,000 employees and 80,000-plus contracted agents offering insurance, wealth-management products and asset-management services. Manulife’s assets under management in Asia totalled $192.9 billion (US$147 billion) as of March 31.
Manulife has used joint ventures before to expand in Asia, starting in Indonesia in 1985 with a partnership involving Dharmala Group and International Finance Corp. Manulife was part of China’s first joint-venture life-insurance company, Manulife-Sinochem, in 1996, four years after becoming the first Canadian life insurer to open an office in China. Manulife started a partnership in Japan in 1999, the same year it entered Vietnam, and it has continued its expansion to other Asian nations, including Cambodia and Myanmar.
It has not previously been in India though.
“We’ve been assessing the India opportunity for a long period of time, and quite frankly we’ve been in discussions with Mahindra for more than a year,” Gori said. “It’s a very strong consumer brand.”
India’s population — which now totals about 1.4 billion, and is forecast to surpass China’s in the next decade — is fuelling “tremendous” growth in the asset-management industry, Gori said. The industry has posted a compound annual growth rate of 15 per cent in the past 10 years.
“It’s clear that there is further growth and upside in terms of the industry and its evolution,” Gori said.