Sun Life Financial Inc. is looking to Indonesia as a key driver of growth within its broader Asia strategy, chief financial officer Timothy Deacon said during an appearance at a Barclay’s investor conference.
Deacon noted the Canadian insurer first entered Indonesia about 30 years ago and now sees it as central to its ambitions in the region. “The reason we like Indonesia as a market, first of all, it’s the most populous ASEAN (Association of Southeast Asian Nations) country, so it’s got a great population base,” he said.
He pointed to the country’s low insurance penetration – with only about 0.8% of the eligible population holding coverage – as a significant opportunity for expansion. “So, there’s a huge upside. And it’s a growing market – GDP growth of over 5%, so that’s quite healthy relative to more established markets. And they’re one of the most digital economies,” Deacon said.
Sun Life reported strong performance in its Asian operations in the second quarter, helping boost overall earnings. Net income to shareholders rose to C$716 million (US$520.7 million) from C$646 million a year earlier, supported by a 15% increase in Asia underlying net income to C$206 million.
Deacon described Asia as a “high savings and wealth market” where the low rate of insurance adoption leaves room for expansion. He highlighted Hong Kong as another area of strength, noting Sun Life is the third-largest provider of the city’s mandatory provident fund, a privately managed retirement program required for employees and the self-employed.
The company said it remains a significant player in the high-net-worth insurance market across Asia. “Bringing our asset management capabilities to the high-net-worth market has been a key strategic focus,” Deacon said.
While Sun Life’s Asia operations see growth, the company faces challenges in the United States. Deacon said Sun Life is re-pricing its US dental business after higher utilization and Medicaid-related funding pressures weighed on results in recent quarters.
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