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On a business trip to congratulate Vietnam’s team on its outstanding business results last March, Robert Cook, senior executive vice president and general manager Manulife Asia, talks with VIR’s Minh Thien about the company’s remarkable business performance over the past year and reveals the company’s ambitions for future growth.
2011 was a fruitful year for Manulife in Asia, including Vietnam. What was the secret to last year’s success?
The year 2011 saw many successes for Manulife Asia. Our insurance sales increased 13 per cent over 2010, a record of Asia Division as a whole. This included record insurance sales in six out of our 10 territories compared to the prior year. Also, our professional agency grew by 18 per cent compared to 2010, marking a record 50,000 professional agents. Agency growth is one of the key measures we use to gauge success because it indicates future sales growth.
We are very pleased with our strong business results in Vietnam, which is one of the fastest growing life insurers in the market. Last year, Manulife Vietnam achieved robust growth, with insurance sales revenue increasing by 40 per cent over 2010, one of the highest growth rates in our Asia operations. In addition, Manulife Vietnam’s agency force grew an impressive 34 per cent, reaching nearly 12,000 by year-end 2011. All that success was recognised recently when we won the Vietnam Economic Times’ prestigious 2011 Golden Dragon Award as “The Best Life Insurance Service”.
These outstanding results have proved the effectiveness of our strategies and investment and we are confident that we are on the right track in this important growth market.
What strategies have helped Manulife Vietnam achieve this success? How different is Manulife Vietnam’s business model compared to others in Asia?
We are taking a similar approach across the region. In Asia, we have been progressing based on a five-pillar growth strategy model. Firstly, we focus on product diversification – it’s always important to provide customers with a diversified and innovative product portfolio. Our “need-based selling” strategy helps us meet customers’ changing needs at different stages in their lives. Secondly, we keep growing our agency force in both quality and quantity. Thirdly, we expand bancassurance to our bank clients. Fourthly, we diversify our distribution through alternative channels such as general agencies. And last but not least, we’re building our brand to make Manulife recognised as the most professional name for insurance and other financial services.
I believe the success we gained in Vietnam comes from our consistent development strategies. These strategies, however, have certainly been localised to adapt to the characteristics of particular markets. Vietnam is an enticing market with a young population, the majority of which are working hard to make savings to pursue higher education, buy a house or a car, and invest in their businesses. Therefore, we are focused on diversifying our product portfolio towards balancing protection features with more saving elements.
“Phuc Tho Phu The”, our best selling product of the year, movies a good illustration of that. In terms of developing our professional agency force, we have streamlined our recruitment process and invested in agency managers’ skills and practices. That helped us to recruit close to 1,000 new agents per month since early 2011. Also, we pioneered the introduction of micro-insurance to reach untapped rural areas.
Entering 2012, we continue setting tough targets for ourselves. We’ve been profitable in Vietnam every year since 2002, three years after setting up and I expect that to continue. And it’s not just me – the whole company, from our global CEO down, recognises the opportunities there are in Asia at this time.
Can you comment further on life insurance’s potential in the region and Vietnam?
There is huge market potential in ASEAN, including Vietnam. That’s why we identify Asian countries like Vietnam, Thailand, the Philippines, Indonesia, and Malaysia as the future growth engine for the Manulife family. We have had a very good track record of growth over the past 5 years. In 2007, Asia’s share of the corporation’s total insurance sales was less than 20 per cent, today it is over half – a multiple of more than 2.5 times. The number of our professional agents in Asia has also doubled from 25,000 agents in 2006 to over 50,000 today.
There are interesting prospects in Asia. Despite the economic downturn, Asia’s economic outlook remains positive. It is forecast that by 2015, Asia-Pacific will account for 39 per cent of the world’s economy. The life insurance industry has largely recovered from the financial crisis and we anticipate that life insurance industry will continue to grow strongly thanks to the emerging middle class. In the next 10 years, a billion people will enter the middle class, of which Asia will make up around 90 per cent. This will create a massive rising demand for insurance. Moreover, customers are beginning to become more sophisticated financially, with a shift of preferences from relying on savings to investing in protection and wealth management products.
Vietnam, in particular, has a huge market potential due not only to the above opportunities but also the current low penetration rate. Only 5 per cent of the population owns life insurance products. It is significantly underinsured compared to the rest of the region. Besides, the average insurance product per person in Vietnam is now just one, compared to four or five in Hong Kong or Singapore. Therefore, there will be a trend for both insured and uninsured people to own more than one product in the future.
With these prospects, we certainly expect continued growth in Asia and in Vietnam. It is important to grow our businesses in our developing markets, like Singapore and China as well as emerging markets, like Vietnam and Thailand. We are also preparing to enter Cambodia, our first new territory since Vietnam nearly 15 years ago.
Can you elaborate on your expansion plan into Cambodia?
We are proud to be one of a few insurance companies to have a pan-Asia presence. This means we can leverage our experience to benefit all our markets. We have looked into Cambodia’s market carefully, and the parallels between Cambodia at the present and Vietnam a decade ago are remarkable in terms of their macroeconomic situation, stock market, banking system, etc. This creates an opportunity for us to expand in an untapped market by applying our cumulative experience in Vietnam.
Currently, life insurance in Cambodia is at a primitive stage and the government is determined to build up the industry. With our excellent business results in Vietnam, Manulife has been welcomed by Cambodia’s government and we will start operations soon. As an early mover, we are coming to the market not only to make a profit, but also to help the country’s regulators lay a foundation for life insurance by providing training courses and introduce them to regulators in other countries. We believe in the near future, our operations in Mekong delta countries will collaborate to help achieve wider economic growth.
Manulife will celebrate its 125th anniversary globally, including 115 years in Asia. What is the significance of this milestone to Manulife?
Well, it gives us a great chance to emphasize a couple of things that are surprising to many people about Manulife. The first thing is how long we have been in Asia. We’ve been operating in Asia on a continuous basis longer than many other international life insurance companies, some even by many decades. We are proud to have a century-long presence in Asia, serving customers of many generations.
It gives us good experience and good connections in the region and we are going to use those to grow in the future. The second thing is how important Asia is to Manulife worldwide. So many international companies are operating in Asia and it may contribute around 5 to 10 per cent of their total income. But with Manulife, it is “half of the cake” now and we will absolutely keep that going forward.