Dean Connor, the recently installed chief executive of Canada’s Sun Life Financial SLF, is gearing up for an aggressive expansion in Asia and says his shareholders would back a rights issue to fund the right acquisition.
Connor, who took over the top job at the insurance group just six months ago and recently signed a deal for a new joint venture in Vietnam, has openly spoken of the good potential fit between his business and parts of ING’s Asian operations that are currently being sold. His group has also been linked with a bid for the small Malaysian operation of the UK’s Aviva.
Sun Life has been considered by many industry bankers and analysts as more likely a seller of businesses in Asia than a buyer.
In terms of sales it is far behind many other international groups across the region, and has just a few reasonably well established units in countries such as the Philippines, India and Indonesia – all of which are still relatively small.
“We never had any intention of pulling out of Asia,” Connor told the Financial Times. “But when we looked at strategy last December we decided we could make Asia the fourth commercial pillar of the business.”
Part of the reason for speculation that Sun Life could quit Asia is that it has appeared to be a company in retrenchment since the financial crisis. It stopped writing many kinds of business in the US, especially the capital-hungry and loss-prone variable annuities, and it has shut down and begun to sell off businesses in the UK.
But Connor said those steps were part of an effort to refocus the business and free up capital. He has launched a plan to more than double earnings from the Asian arm from C$110m (US$107m) last year to C$250m by 2015, although that is before any acquisitions.
Local rival Manulife Financial saw net income from Asia of C$1.1bn in 2011, though that number is adjusted for various market impacts. Sun Life’s total Asia premiums were about half those of Manulife, which is roughly number five in Asia in terms of market share, according to analysts.
A bid for the south-east Asian operations of ING would help give Sun Life a big leg up towards its rivals in the region. Connor would not comment directly on that situation but said he believed shareholders would support him in a large deal if it required equity financing.
“I think they would,” he said. “It would have to be compelling story that’s on strategy, but I think they would support that.”
The Aviva business up for sale in Malaysia is a joint venture with CIMB, one of the countries biggest banks and also Sun Life’s partner in the country. Again Connor would not comment on whether that gave him an advantage.
“Our move into Vietnam [through the new joint venture] is indicative of our ambitions in the region,” he said.