Source: The Canadian Press

Sun Life Financial Inc. (TSX:SLF) is expecting significant growth opportunities in China and India where insurance coverage is generally low and middle classes are rapidly expanding.

“Growth in these two countries is predicted to continue to outstrip developed economies with explosive expansion of the middle classes,” chief executive Donald Stewart told investors on Tuesday.

Prospects are “excellent” in China and India where insurance penetration is currently low, partly driven by the strong “savings cultures” in those countries, Stewart said at an investors’ day in Toronto.

Stewart said Sun Life is the first foreign joint venture to become recognized as a domestic Chinese company.

“We believe this transformation can significantly accelerate our growth in a country that is now the world’s second-largest economy,” he said. “We’ve moved up to be No. 6 among foreign companies.”

Sun Life has operations in 18 Chinese cities and plans further expansion, he told investors.

He said most of Sun Life’s sales were for individual insurance products but added there has been some growth in its group insurance businesses.

In India, Sun Life has more than 13,000 employees, has 650 branches and is ranked sixth among foreign insurers, Stewart said. Sun Life says its the only Canadian insurer with a presence in India.

Sun Life is Canada’s third-largest insurance company, and as of Sept. 30 had $455 billion in assets under management. It also has customers in 60 countries and also has operations in the United States, Indonesia and Bermuda.

He said the company’s operations in India “broke even” in the second fiscal quarter and turned a profit in the third quarter based on local accounting. He added that its operations there have revamped its products to adapt to local regulatory changes.

Stewart also said the retirement of baby boomers and a shift in responsibilities from governments and employers to individuals when it comes to planning for their retirement.

He noted that every day for the next 20 years that more than 10,000 people a day will turn 65 in the United States and a little over 10% of that number will turn 65 in Canada.

During the global economic slowdown, Sun Life didn’t cut shareholder dividends or require any kind of government bailout, Stewart said.

“Our approach seeks to balance the interests of our customers and our shareholders. We’re shifting our product mix and design to respond to the environment,” he said.

“We will focus on growing businesses and product lines with lower capital requirements and more flexibility around pricing and guarantees.”

IE