Leading Canada-based financial services company,
Manulife Financial Corporation
(
MFC
) has set up a head office in the Southeast Asian country of
Cambodia. The new office has been set up to expand its business and
presence in the Cambodian region, though it has already started its
operations from June this year. The country, with a population of
approximately 15 million, promises to be a good market for
Manulife.
Earlier, during November 2011, Manulife received an approval
from the Canadian government to establish a fully-owned life
insurance operation in the region. The inauguration was scheduled
to coincide with Manulife's 125th anniversary. The company was
established in 1887 and has been providing clients with reliable
and progressive solutions and helped them to make significant
financial decisions.
With market-leading positions in Asia, Canada and the United
States, the company leverages a diverse business platform that
offers a range of financial products in both developed and
developing markets around the world.
The Cambodian operations will fall under its ASEAN segment and
will mark the 11th Asian country in which Manulife has a
presence.
The insurance industry in Cambodia seems lucrative, especially
after the opening up of the sector in 2000, which allowed the entry
of foreign players in the country. The country's regulations
required an insurance company to have a minimum paid up capital of
$7 million. Though it was very easy to meet the financial
requirements, it will it will be relatively tough for Manulife to
educate its masses, which is unaware of its numerous insurance
products and their benefits.
However, Manulife is enthusiastic about cashing in on the
emerging life insurance needs of the people of Cambodia. The
insurance market in this country remains largely underpenetrated
with a mere 0.3% of the total population carrying insurance
protection.
There are at present a handful of insurance companies, which
include six general insurance players (led by Forte Insurance) and
one life insurance company, Cambodia Life, which is a newly-formed
joint venture between the government and four Asian firms. In the
reinsurance space, there is just one domestic reinsurance company,
the state-owned Cambodia Re.
With only a few companies in the market, competition is not much
of a problem, and there are limited insurance choices for people.
Also, high premium costs allow only 1-2% of the total Cambodian
population to buy insurance protection at present.
Manulife is bent on serving the remaining population via its
differentiated cost-effective products. Moreover, growing awareness
about the importance of insurance will make it easy for Manulife to
gain customers.
Manulife closely competes with
China Life Insurance Co. Ltd.
(
LFC
) and
Sun Life Financial Inc.
(
SLF
). The stock currently retains a Zacks # 2 Rank, which translates
into a short-term Outperform rating. Considering the fundamentals,
we are also maintaining our long-term Outperform recommendation on
the shares.
CHINA LIFE INS (LFC): Free Stock Analysis
Report
MANULIFE FINL (MFC): Free Stock Analysis Report
SUN LIFE FINL (SLF): Free Stock Analysis Report
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