Manulife Indonesia president director and chief executive officer (CEO) Indren S. Naidoo (right) and Manulife Aset Manajemen Indonesia chief economist and investment strategist Katarina Setiawan talk on the sidelines of a press briefing in Jakarta on Wednesday.
Despite the country’s weak economy, life insurer Manulife Indonesia enjoyed a sharp increase in new business premiums during the first semester of the year on the back of surging wealth and insurance sales.
Its total new business premiums soared by 28 percent year-on-year (yoy) to Rp 1.8 trillion (US$135 million) in the first semester, according to Manulife’s unaudited financial results for the first semester of 2016.
During the January and June period, Manulife’s wealth sales rose 27 percent yoy to Rp 1 trillion from
Rp 785 billion, while its insurance sales increased 17 percent yoy to Rp 764 billion from the corresponding period in 2015.
As of June, Manulife’s total premium and deposits amounted to Rp 9.1 trillion, a 12 percent hike from Rp 8.1 trillion recorded in the same month last year. The number of the company’s in-force policies, meanwhile, grew steadily to 2,297,305 from 2,250,210 recorded in June last year.
“We are confident that our business will book positive growth over this year,” Manulife’s newly appointed president director and chief executive officer Indren S. Naidoo told a press briefing on Wednesday.
Indren, who assumed his position in May, said he was optimistic that the company could tap into the growing insurance market in Indonesia, which is the most populous country in Southeast Asia, but has low insurance penetration.
Indonesia’s economy expanded an annual 4.92 percent in the January-March quarter, below analysts’ expectation of 5.05 percent. Growth weakened for the fifth straight year in 2015, to 4.8 percent, amid poor commodity prices and contracting exports.
Financial Services Authority (OJK) data showed that conventional insurance premiums accounted for just 2.37 percent of the country’s gross domestic product (GDP) during the first quarter of the year. Life insurance penetration rates, meanwhile, reached 0.93 percent of the GDP in the January-March period.
“Compared to some other markets in Asia, we are actually quite low. So, the opportunity is there,” said Indren, who previously assumed CEO positions at Manulife units in the Philippines, Thailand, Vietnam and Cambodia prior to his current position.
Indren said Manulife would continue to expand its unit-linked products, which have become the main driver of the company’s business growth.
The contribution of Manulife’s unit-linked products, which combine insurance and investment products such as government bonds and stocks, “was close to 80 percent of our business”, Indren said, explaining that the insurer would continue to promote the instrument as customers still expected double-digit returns on their investment amid the downward trend in banks’ deposit interest rate.
In the first half of the year, Manulife launched unit-linked product Mi Wealth Insurance to further boost its investment-linked insurance products.
He expressed his optimism that the burgeoning middle-income segment in the country, expected to reach 100 million of people by 2020, would be a boon for Manulife’s unit-linked products, which are aimed to higher-end customers.
The CEO said Manulife would continuously educate potential customers on life insurance, as well as its unit-linked instruments by leveraging its 8,000 agents in 25 branches across the country and its bankassurance service, for which the insurer has forged partnerships with three lenders in the country: DBS, Bank Danamon and sharia-based Bank Muamalat.
“We are here not to sell, but to teach [the customers]. At the end of the day, you, as a customer, will make the decision [on whether to buy Manulife’s products],” Indren said.