Sun Life acquires 49% stake in Grepalife

MANILA, Philippines - Sun Life Financial Philippines has acquired a 49-percent equity in Grepalife Financial Inc. and formed Sun Life Grepa Financial Inc.

Sun Life Financial Philippines is the Philippine subsidiary of global player Sun Life of Canada, while Grepalife is the life insurance company of the Yuchengco Group of Companies.

The new company will, among others, focus on bancassurance, or selling life insurance products through the branch network of the Rizal Commercial Banking Corp. (RCBC).

Prior to the acquisition, Grepalife Financial was already practicing bancassurance with RCBC. In 2010, premiums income from bancassurance amounted to P1.4 billion, or a third of the total premium income.

At the end of 2010, Sun Life Financial reported P10.6 billion in total premiums while Grepalife Financial reported premiums at P3.6 billion. In 2009, Sun Life was ranked second in the industry and Grepalife, ninth.

However, the new company will continue to market other life insurance products including traditional and group insurance.

Management control will be “surrendered” to Sun Life Philippines despite the latter controlling only 49 percent of the new company.

The remaining 51 percent is still controlled by GPL Foundation Inc., one of the investment arms of the Yuchengco Group of Companies.

RCBC chief executive officer Lorenzo Tan said that the alliance “combines the best of manufacturing and distribution.”

“Sun Life brings to the new alliance regional and global expertise aside from new products, while the bank offers a nationwide distribution system,” Tan said. RCBC has over 300 branches nationwide, and was ranked fourth largest commercial bank in the country.

Tan added: “We have a partnership with the regional and international distribution and expertise.”

Tan also admitted that the new company is a product of what he called “looking forward.”

And with the full implementation of the ASEAN Free Trade Agreement (AFTA), the country’s financial players will be hard pressed with the entry of the regional players.