By Pathma Subramaniam / The Edge Malaysia

When Sun Life Financial president and CEO Dean Connor pushed for Asia to be the cornersome of its portfolio, its investors were sceptical, But he proved the naysayers wrong when Sun Life Malaysia made a net income of C$32 million last year. In the first of a three-part series, Connor shares about the company's growth in the Asian markets.

A relatively new player on the local insurance scene, Sun Life Financial is a small company with big ambitions.

The Canada-based insurer made the bold decision to venture into Malaysia three years ago, when foreign insurers were exiting the region to focus on their core business. The move was largely attributed to Sun Life's then newly appointed president and CEO Dean A Connor.

In late 2012, when the insurance industries in Europe and Canada were attempting to rebuild their capital positions following the global financial crisis, Connor decided to explore several opportunities, including growing Sun Life's presence in Asia. He also wanted to shift its emphasis from just life insurance to retirement products, bump up group employee benefits in the US and grow its global asset management business.

Although the insurer has grown exponentially in emerging markets over the years, and relatively ubiquitously in some countries for more than a century, less than 10% of its business came from Asia. Seeing this as opportunity for growth, Connor made a push for the region to be the cornerstone of its portfolio.

"We have been in Asia since 1892. We started in Hong Kong and then went to the Philippines in 1895 ... We have operated continuously in Asia since 1892, yet our Asian business, notwithstanding the amazing history, was too small and needed to be bigger," Connor tells Personal Wealth.

"By declaring Asia as one of our four pillars, we set a tardet for our Asian business to grow revenue to 10% from 8% today, and ultimately to 15% to 20% of Sun Life's overall earnings," he says.

"Investors viewed that as very ambitious ... But to be even more ambitious, we set a goal for each of our four pillars, and the goal for Asia was to earn C$350 million (RM726.8 million) by end-2015.[In 2012,] we earned about X$110 million.

So, in 2012, when the UK's second largest insurer Aviva made plans to exit non-core markets and sell its Malaysian business as part of its extensive overhaul, Sun Life grabbed the opportunity to gain foothold in this market.

It teamed up with Khazanah Nasional Bhd to each buy 49% stakes in both CIMB Aviva Assurance Bhd and CIMB Aviva Takaful Bhd, and secured a 20-year bancassurance agreement. CIMB Group Holdings Bhd retained a 2% stake in both companies, which are now known as Sun Life Malaysia Assurance Bhd and Sun Life Malaysia Takaful Bhd.

Sun Life's progress in Southeast Asia has helped boost Connor's plan to increase the insurer's operating earnings by 10% annually and achieve its lofty target of C$1.85 billion by the end of this year.

"Our investors did not believe in the goals we set. They did not believe we could more than double our earnings in three to four years from Asia alone," he says.

"It starts with a chance in the [working] culture, which is focused on creating a high-performance environment and improving productivity. We also want to focus relentlessly on the customer."

Sun Life Malaysia proved the naysayers wrong last year when it generated a net income of C$32 million - a significant portion of the C$180 million the group earned from the seven Asian countries in which it operates.

"We are on track to achieve our C$250 million target this year ... because when we looked at the business we had on the ground, we were very optimistic we could grow quickly,"Connor says.

Sun Life Malaysia has become the fourth largest player in bancassurance and the eighth largest in conventional insurance and takaful products in Malaysia. There are 16 insurers in the country catering for both conventional and takaful products.

"We are so pleased with Malaysia. In its first two years, Asia has performed beyond our expectations. The team here is exemplifying our big change initiatives," says Connor.

Life insurance premiums in emerging Asia are forecast to grow 10% this year and 10.7% next year, compared with the global average of 2.8% and 3.2% respectively, according to Swiss Re, the world's second largest reinsurer, which is based in Zurich, Switzerland.

With a population of about 600 million, Asean is expected to see stronger overall gross domestic product (GDP) growth than the more mature Asia-Pacific economies, the Asian Development Bank said last year.

While Asean accounts for less than 0.25% of the global insurance market, according to research by Norton Rose, demand for health insurance is expected to rise due to the low penetration rate, ageing population, strain on public resources and rising consumer affluence, particularly in Indonesia, Malaysia and Thailand.

The improved outlook was attributed to insurers' focus on new products, increased niche market penetration, better distribution techniques and cost-cutting exercises. "As these countries move up the curve in terms of GDP per capita, insurance penetration grows as well," says Connor.

In the last decade, the government has unveiled a number of stimulus plans and legislative initiatives to help boost the insurance sector. According to the Life Insurance Association of Malaysia (LIAM), 54% of the Malaysian population were insured as at the end of last year.

"We continue to see a shift in responsibility in terms of funding health and retirement needs - for governments and employers to individuals. This is creating new opportunities for group and voluntary benefits.

"The government has a goal of improving penetration to around 75%. That means a lot of support to spur the industry forward. As that happens, our business will grow with it," says Connor.

Based on Sun Life's experience in the Philippines, the statistics are encouraging, he says. The insurer is currently the market leader in the country, with more than two million customers, despite its population surpassing the 100 million mark. "So you see, there is a big opportunity to grow in the region," Connor adds.

As part of its marketing efforts, Sun Life Malaysia has replicated the Canadian "Money for Life" campaign - a digital programme that allows users to have a glimpse at their future selves in six possible scenarios using face-recognition software and ageing technology.

"It is a real differentiator in terms of understanding how the customer feels about a product and how the distributor sells the product. The campaign is about the experiences around us and creating that confidence in the customer about their financial future.

"The purpose of the campaign is not to push a product, but to help create awareness. It focuses on a life segment and poses different financial needs and how needs change over time, so that people can plan what they want to buy and shape how they think about life and health insurance. It is not so much a product as it is a planning tool," Connor says.

This article first appeared in Personal Wealth, a section of The Edge Malaysia, on April 6 - April 12, 2015.