Sun Life to Form Life Joint Venture With Malaysia’s CIMB in Indonesia

Sun Life Financial Inc. [50913] has reached an agreement with Malaysian banking company CIMB Group to form a life insurance joint venture, CIMB Sun Life, which plans to launch later this year in Indonesia.

As part of the joint venture agreement, CIMB Group's wholly-owned parent CIG will sell a 49% stake in PT Commerce International to Sun Life Financial. The remaining 51% of PTCI will be owned by CIG and CIMB Niaga, a banking subsidiary of CIMB Group. PTCI will then be re-branded CIMB Sun Life. The arrangement is subject to contract and regulatory approval, said Sun Life Financial.

CIMB Sun Life will operate separately from PT Sun Life Financial Indonesia, a wholly-owned subsidiary of Canada's Sun Life Financial. PT Sun Life Financial will continue to focus on lifetime financial security business, said Sun Life Financial.

Sun Life Financial's expansion in Indonesia will bring a new dimension to the Canadian financial group's foothold in the market, Sun Life Financial said. The joint venture is expected to "capture a share of the Indonesian insurance market, which recorded total premiums of US$4.7 billion and growth of 67% in 2007, the fastest growth rate in Asia," the insurer added.

CIMB Sun Life will focus on life insurance products riding on the combined strength of the two partners -- Sun Life in insurance and CIMB with distribution and treasury capabilities.

The new venture will distribute insurance products and services through the Bank CIMB Niaga network, Nadya Siregar, head of marketing and corporate communications at PT Sun Life Financial, told BestWeek Asia/Pacific.

The newly life venture "aims to become the major provider of life, accident and health insurance products to CIMB Niaga customers, offered through its network of over 650 branches and direct channels through Indonesia," said Sun Life.

The joint venture is a "significant milestone" for Sun Life Financial in Indonesia and strengthens the company's "solid base" in the market, said Stephan Rajotte, president of Sun Life Financial Asia. The partnership with CIMB Group will offer the life venture "greater access" to customers in Indonesia where has a "tremendous opportunity in bancassurance market."

"Having successfully merged Bank Niaga and Bank Lippo to form CIMB Niaga, we look forward to delivering more value to CIMB Niaga customers through a bancassurance offering that will result from this partnership," said Dato' Sri Nazir Razak, group chief executive at CIMB Group.

In Indonesia,Sun Life Financial pursues a multichannel distribution strategy with bancassurance, tied agents and direct marketing. It has also formed bancassurance partnerships with Citibank, CitiFinancial, Standard Chartered Bank, BNI, BCA, Bank Mandiri, GE Money, Rabobank and DBS, said Siregar.

The Kuala Lumpur-based CIMB Group is Malaysia's second-largest financial services provider with operations in consumer banking, investment banking, Islamic banking, asset management, insurance products and services. The banking group is owned by publicly-listed Bumiputra-Commerce Holdings Bhd, which has a market capitalization of about US$6 billion.

In Indonesia, Sun Life Financial offers protection and wealth management products including life, education, health insurance and retirement plans.

Established in 1995, Sun Life Financial in Indonesia said it is ranked among the top five in unit-linked insurance by total premiums as of December 2007. The company has 41 sales offices in 30 cities in Indonesia and plans to grow its agents to 5,000 this from 4,000 last year.

With 114,000 customers, the Canadian financial group saw an annual premium income growth rate of 53% from 2003 to 2008 in Indonesia.

Sun Life Assurance Company of Canada currently has a Best's Financial Strength Rating of A+ (Superior).

(By Iris Lai, Hong Kong bureau manager: [email protected])