Manulife to enter India insurance market as part of diversification refocus

Signage is seen on Manulife Financial Corp.'s office tower in Toronto, Tuesday, Feb. 11, 2020. Photo by Cole Burston /The Canadian Press

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TORONTO — Manulife Financial Corp. is looking both further afield and closer to home as it charts a refreshed course for the years ahead.

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The insurance giant says it plans to enter the insurance market in India to capitalize on rapid growth in one of the world’s largest economies, while at the same time it plans to invest more in Canada and the United States to sustain its scale.

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“Our strategy clarifies that we do believe it’s important to be in the mega economies of the future,” said chief executive Phil Witherington on an earnings call Thursday.

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Given the company’s established presence in the U.S. and China, it made sense to also push into India, he said.

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“Where we saw a strategic gap was the scale of our presence in India, and that was really the logic for us taking decisive action to enter the India insurance market.”

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The company says it will enter the insurance market through a joint venture with Mahindra & Mahindra Ltd., building on a partnership the two companies struck in 2020 in investment management.

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The two companies have each committed up to US$400 million for the joint venture, including an expected US$140 million each in the first five years, with an aim of becoming a dominant player in the insurance market for rural and semi-urban India while also serving urban customers.

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Manulife has been looking to enter the Indian insurance market for many years, said Witherington, with the time now looking right thanks to more favourable regulations, better digital infrastructure and growing wealth across the country.

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The company’s refreshed strategy also sees it affirm that closer markets are also key.

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“Resetting the strategy is really to make it clear that growth will not only come from Asia and (wealth asset management), the U.S. and Canada will be important contributors to that,” said Witherington.

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The company has narrowed and streamlined its operations in the U.S. over the past decade to shed lower-performing categories, and won’t be going back to higher-risk areas like variable annuities, he said.

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But through a focus on insurance that promotes health and wellness, there is the potential to expand on its business serving high-net-worth clients to also serve affluent ones.

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“We’re very well positioned to be able to deliver on that opportunity, and sustain our scale, earnings and capital generation from what is the largest economy and the largest insurance market in the world.”

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As part of the company’s push into wellness, it has also announced the launch of the Manulife Longevity Institute, a new platform with the stated goal of helping people live longer and more financially secure lives.