US insurer eyes slot in top 10 life insurers this year

US-based John Hancock Life Insurance Corp. expects to be counted among the country’s top 10 life insurers by the end of the year, and that not-too-ambitious target would be achieved without the benefit of a full-blown bancassurance package.

John Hancock Life plans to achieve the feat with its traditional sales agency as well as through new alternative distribution channels and new products.

This year, the life insurer targets first-year premium income to reach P130 million giving it a gross premium income of P349 million. Last year, it generated new business amounting to P90 million thus reaching P219 million in gross premiums in the same period. That was an annual growth rate of nearly 60 percent.

In 2000, total premium income was recorded at P108.9 million and the year before it was P85 million. All told, sales grew by over 400 percent in the past three years.

Unofficially, the total premium income last year should have cemented their hold on the 14th or 15th spot in the life insurance industry numbering 37. In 2001, it was ranked 18th overall.

However, the departure of several players and the merger of several more resulted in a contraction and eventual changes in the market share scenario.

Meanwhile, the not-too-ambitions plan for the year will get a tremendous boost from a recent alliance it forged with a Citibank affiliate.

Citigroup Financial Services and Insurance Brokerage Philippines Inc. (CFSI) entered into a business partnership with John Hancock Life that allows the latter to underwrite CreditShield. CreditShield is a feature of the Citibank credit card that pays the outstanding balance of the card or the minimum monthly amount due in case of the card member’s death or disability.

"We expect tremendous earnings from this new partnership with Citibank," said Michael G. Plaxton, John Hancock Life president and chief executive officer.

It had also forge a franchise agreement with 32 "signature partners" or 32 of the country’s leading insurance brokers. They sell other financial products but exclusively sell John Hancock life products. Since it was still unchartered waters in terms of real earnings, John Hancock Life did not include the two in its new business targets for 2003.

Another factor which is expected to contribute to its plan to barge into the top 10 players in the life insurance industry, is the marketing alliance it forged with medium-sized commercial bank, East West Bank Corp.

Unable to practice full-blown bancassurance due to the existing regulations directly affecting banks, John Hancock Life nonetheless forged an alliance that would allow them to access the bank’s client base.

"We want to emphasize that we go directly to the bank’s clients and not do any business in the bank premises," Plaxton stressed.

The Bangko Sentral of the Philippines (BSP) ruled that only commercial banks can allow its subsidiaries or affiliates to sell their products within the premises. The Insurance Commission (IC) while encouraging the practice of bancassurance urged insurers to abide by the limitations of the BSP ruling.

However, practice of bancassurance can be practiced indirectly by not selling within the bank’s premises but by tapping directly its client base or the referral system.

Another route for John Hancock Life to register a tremendous growth in its gross premium base, is through acquisition.

The most recent evidence of that is when Manufacturers Life Insurance Phils. (Manulife) acquired the life policies of CMG Life, which pulled out of the Philippine market last year. While Manulife did not improve its standings as fourth best in the industry as 2001, it is expected to cemented its hold it that spot in 2002 and subsequently benefit its forward movement this year.

"We are always open to any opportunity that is good for the customers, and for the company," the John Hancock Life chief executive said yesterday.