In an effort to expand its international operations, the
Canadian life insurer
Sun Life Financial Inc.
) has announced a bancassurance agreement with CIMB Bank located
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Sun Life Financial Inc. has forged an alliance with Khazanah
Nasional Berhad (Khazanah) to jointly acquire 98% of CIMB Aviva
Assurance Berhad, the life insurer in Malaysia and CIMB Aviva
Takaful Berhad, a
company in Malaysia. The acquisition is expected to culminate in
the first half of this year.pending regulatory approvals in
Canada and Malaysia.
The bancassurance agreement will cover a span of 20 years and
will cost C$586 million.
Sun Life Financial as well as Khazanah are each paying RM900
million (C$293 million) for the deal. For the consideration, each
of the companies will acquire 49% from Aviva International
Holdings Limited and CIMB Group Holdings Berhad (CIMB Group),
respectively. The remaining 2% will be retained by CIMB
With the agreement, Sun Life Financial will obtain instant access
to millions of customers of CIMB Bank. Presently the bank has a
network of 312 branches and serves approximately 8 million
customers. The agreement will give an exclusive right of
distributing insurance as well as access to
products across Malaysia to Sun Life.
is a Shariah-compliant alternative to an insurance scheme.
The transaction is a strategic step in the company's objective to
grow internationally. Sun Life is specifically focusing on the
emerging economies of Asia, which is expected to provide higher
return and growth compared to the North American markets.
Historically, the company's Asian operation represented an
average of only 2-3% of the company's consolidated earnings and
premiums. However, management plans to drive 12.5% of
consolidated operating earnings from Sun Life Asia by 2015.
Other life insurers
Manulife Financial Corp.
American International Group, Inc.
) also have an active presence in Asia.
Sun Life retains a Zacks Rank #3 (Hold). The company is
expected to release fourth quarter earnings on Feb.14, 2013. The
Zacks Consensus Estimate for fourth quarter earnings is 56 cents
per share, compared with reported loss of 38 cents per share in
the year ago quarter.