Two of canada’s big Three insurers are tying their future growth to the emergence of the Chinese economy.

Manulife Financial Corp.’s Manulife-Sinochem Life Insurance Co. Ltd. has won approval from Chinese regulators to begin doing business in Sichuan province. That will enable Manulife-Sinochem to operate in more cities than any other foreign insurer in China.

“Manulife, like other international insurers, values China as the largest untapped market in the world,” says Richard MacMillan, the Manulife analyst with the A.M. Best Co., which is based in Oldwick, N.J., and is a specialist in rating insurance companies.

Sun Life Financial Group is also rapidly expanding its base in China. Recently, in concert with its Chinese partner, the joint venture Chinese Everbright Bank opened operations in a fourth major city, says Tom Reid, vice president of public relations and communications for Toronto-based Sun Life Canada.

Until recently, he says, licences for doing business in China were given on a city-by-city basis. Many of China’s cities have several million inhabitants, he adds. Recent policy changes have resulted in the central government issuing licences on a province-by-province basis, which is facilitating faster expansion.

By the end of 2007, he says, Sun Life plans to have operations in 30 cities within five provinces. That will include 110 offices and 20,000 agents.

The growth of disposable income in a growing economy means consumers are looking beyond basic needs to building savings and buying insurance, says Reid.

China’s economy is expected to grow 9%-10% a year for the next few years, he says, and that will translate into growth in premiums.

The Chinese government is also making it possible for workers to invest, says MacMillan. So, as well as the market for life products, both Manulife and Sun Life are looking to get into the pension market. However, regulations allowing foreign insurers to get in on the action have been slow to develop. That business line is only in the development stage at present, says Reid.

Meanwhile, however, Sun Life signed up its first group benefits client in China in 2005, he says: “We’re now actively marketing to new customers.”

The growth potential in China varies significantly from the business environment at home, in which insurance industry consolidation has left the big insurers with little room to grow, says MacMillan.

Therefore, he adds, investors should expect both Manulife and Sun Life to focus their primary growth in Asia going forward. IE