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Sun Life Everbright Life Insurance Co Ltd signed a comprehensive co-operation agreement with the Agricultural Bank of China (ABC) on Friday to accelerate its business development in the promising Chinese market.
According to the agreement, the two sides will co-operate in a full range of areas including bancassurance, deposit agreements, financing, clearing, bank cards and e-commerce, the companies said.
The two sides also agreed to deepen their bancassurance co-operation by opening new distribution channels such as financial consulting, tele-marketing and online banking.
The agreement will help the insurer improve sales in Beijing, where it opened its first branch in June this year.
Sun Life Everbright, the first Sino-foreign joint venture life insurance company headquartered in North China's Tianjin Municipality, was jointly established in 2002 by Sun Life Financial, one of the largest insurance companies in Canada, and the China Everbright Group, a conglomerate mainly engaged in banking, securities, insurance and investment management.
"Today's agreement signals that Sun Life Everbright has entered a new phase of business operations," Timothy Chen, president and chief executive officer of Sun Life Everbright, told a signing ceremony on Friday.
The Tianjin branch of ABC started to sell the insurer's products early last year, and had sold a total of 150 million yuan (US$18 million) by the end of October. "We handled almost 80 percent of Sun Life Everbright's total sales," said Gao Qiwang, branch president.
"Sun Life Everbright has a complete product mix, and its consultative selling model has been efficient," said Yang Kun, ABC vice-president. "So we have full confidence in our co-operation."
Life insurance companies are facing pressure to raise returns on their products after the central People's Bank of China announced its first interest rate increase in nine years late last month.
Analysts say many fixed return single-premium products, mainly sold at banks in recent years, may suffer decreased sales, or even face retractions as residents pursue the increased deposit rates.
Andrew Cheung, vice-president of Sun Life Everbright, said the impact of the 0.27 percentage point interest rate increase on his firm will not be "too significant," saying it has already been launching new products that are not so sensitive to bank interest rates.
The insurer has recently launched the local market's first bancassurance investment-linked product in Tianjin, out of which company executives expect to see strong sales.
However, Cheung said the interest rate rise also benefits the industry by reminding insurers of the importance of product diversification, and hopefully promoting innovation in the local market.
"Bancassurance needs continuous innovation and must avoid product repetition," he said.
Foreign insurers are enjoying rapid growth in the Chinese market, having grabbed market shares as high as 10 per cent in some key cities such as Guangzhou, South China's Guangdong Province.
Their business growth is poised to accelerate next year, as China is scheduled to lift all business and geographical restrictions on foreign insurers by the end of this year as its World Trade Organization commitments require.
(China Daily November 20, 2004)
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