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Banking & Finance

Sun Life acquires 100% of PVI Sun Life

Released at: 06:44, 05/09/2016

Sun Life acquires 100% of PVI Sun Life

Photo: Duc Anh

PVI Holdings sells its 25% stake in PVI Sun Life to joint venture partner Sun Life.

by Tue Lam

PVI Holdings (PVI) and the Sun Life Assurance Company of Canada (Sun Life) announced on August 29 that they have entered into an agreement to transfer PVI’s holding in the PVI Sun Life Insurance Company Limited (PVI Sun Life), a joint venture between PVI and Sun Life, to Sun Life.  

Sun Life therefore increases its equity in PVI Sun Life from 75 per cent to 100 per cent. Under the terms of the proposed transaction, Sun Life will become the sole owner of PVI Sun Life.

The companies will maintain their strong relationship, with PVI continuing as a Sun Life distribution partner. The transaction is expected to close in the fourth quarter of 2016, subject to required regulatory approvals and customary closing conditions.

“We have enjoyed into a successful partnership with PVI since establishing the business together and look forward to continuing a close working relationship with them as our distribution partner,” said Mr. Kevin Strain, President of Sun Life Financial Asia.

“We have great momentum in Vietnam and remain committed to helping our Vietnamese clients achieve lifetime financial security by offering a strong suite of insurance and wealth management products.” 

Vietnam has been one of the fastest growing economies in Asia over recent years and the life insurance and pensions industry is expected to continue experiencing strong growth. However, it is not actually an ideal destination for all investors due to the tough competition. 

Since its launch in 2013, PVI Sun Life has become the country’s sixth-largest life insurance provider and a market leader and industry pioneer in pensions.

PVI Sun Life was launched on March 15, 2013, with charter capital of VND1 trillion ($44.9 million). PVI owned a 51 per cent stake and Sun Life 49 per cent.

PVI Sun Life has not hidden its ambition to set foot in Vietnam’s life insurance sector, which is dominated by Bao Viet Insurance and Prudential, who have nearly half of the market share. PVI Sun Life became the first insurer in the country in all three insurance operations: life, non-life, and reinsurance.

The tough competition in the country, however, presented difficulties for PVI Sun Life’s ambitions. In 2014 PVI recorded a net loss of VND118.4 billion ($5.3 million), with original premium income reaching just VND276 billion ($12.4 million).

In 2015, despite slight improvements in business results, PVI still had a dismal year, recording a net loss of VND78.5 billion ($3.5 million).  

Insurance premiums increased 21.43 per cent year-on-year in 2015 to VND68 trillion ($3 billion), the highest growth in five years, according to the Ministry of Finance. The increase was higher than the 14.89 per cent in 2014, 7.6 per cent in 2013, and 11 per cent in 2012.

New premiums in the life insurance segment saw stronger growth last year, of 29 per cent, while non-life insurance saw revenue rise by over 10 per cent. Assets in the local insurance market totaled VND201.1 trillion ($8.94 billion) last year.

In the first four months of this year insurance premiums rose 20 per cent against the end of last year, according to the Association of Vietnamese Insurers (AVI).

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