Manulife eyes smaller insurers

By Ishun P. Ahmad

Manulife Insurance Bhd, which has been on an organic growth path in the last five years, is now looking at buying smaller insurers as one of the ways to expand its market share and business.

“There will be consolidation and Manulife will be one of the consolidators,” said Manulife Insurance’s chief executive officer Kevin McWhinney.

He told The Malaysian Reserve in a recent exclusive interview that the insurance firm, whose listed parent is Manulife Holdings Bhd, is on the look out for an opportunity like buying into insurance companies that works well for its shareholders and be good for policy holders.

When asked if Manulife is open to buying insurance companies, McWhinney replied if the right opportunity presents itself, Manulife has the resources, capital, and the knowhow to integrate companies.

A case in point was when Manulife purchased John Hancock back in 2005.

“With the introduction of risk-based capital, there are players in the market today that have a decision to make whether if they would want to inject more capital into their companies or continue with their insurance business, if that is not their core business they will exit the market and concentrate on their core business. And so definitely those opportunities will present themselves, especially in the next couple of years,” said McWhinney.

According to McWhinney, Manulife has major initiatives to double its 2,000 strong agency force in the next three years with a record increase of 500 agents added in the last 15 months.

Apart from increasing its agency numbers, he said Manulife is looking to have more full time agents, that will have a multiplying effect on productivity and professionalism.

“Feeling the pickup in the market confidence and people interest to join Manulife, we are training people to be more full time professional advisors,” said McWhinney.

Furthermore, Manulife is also looking at growing its distribution by strengthening its agency force through increasing professionalism and productivity. “Last year 2009, Manulife experienced a 25% increase year-on-year, 1Q 2010 over 1Q 2009, on the agency side, which is already doubled the amount of production with overall sales up by 30%,” said McWhinney.

As of 3Q 2009, he said Manulife was at number 12 in terms of market share, and anticipates to move up two notches to 10th place in 2010.

The insurance firm is looking to step up more regional support centres and is actively looking at Kuching for its growing and young population, Penang Island for its mass affluent market, and Kota Kinabalu to increase its presence in East Malaysia.

“The investment is in the hiring of people, agents, and managers in the regional centres,” said McWhinney in regards to the cost of setting up the support centres.

Manulife has currently six of these centres that are also equipped with training facilities each located in Bukit Mertajam, Ipoh, PJ, KL, Johor, and Sibu.

McWhinney said Manulife will continue to focus on three segments that matter most to Malaysians, namely products relating to retirement plan, medical emergencies, and children's education plan. Furthermore, he said Manulife would also look into underserved markets like the Bumiputera market that has a very high potential due to its extremely low penetration rate as well as the underserved markets in the rural areas.

McWhinney commented that the industry has to deal with the high turnover of agents mainly due to the fact that the bulk are part timers and are more likely to be discouraged and less motivated. Malaysia has about 75,000 licensed agents, high in proportion to the country’s 27 million population.

McWhinney said the main challenge is to ensure insurance careers are a fulltime job and not seen as part time, adding that Manulife is tackling this issue head on, and believes in producing caring and professional advisors rather that “you get somebody paddle you a product“.

“Industrywide, we see agents that come and try out the business for a short period of time and because they don’t give it their full commitment, they may get discourage quickly and just return to their fulltime job and don’t pursue it,” he said.

[The Malaysian Reserve, 12 May 2010, page 1]