PVI Sun Life stake sale retrospective

September 19, 2016 | 11:46
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Three weeks after PVI Holdings’ complete divestment from the life insurance business, the deal’s effects on both parties are becoming clearer.

At the start of a series of transactions that has seen Sun Life Assurance Company of Canada become sole shareholder in the joint venture PVI Sun Life, local partner PVI Holdings owned 51 per cent of stock in the joint venture while Sun Life Assurance had 49 per cent.

Sun Life Assurance Company of Canada is a subsidiary of Sun Life Financial Inc., a leading Canada-based international financial services company.

Nine months ago, the foreign partner acquired 26 percent of PVI Holdings’ once commanding stake; in late-August Sun Life Assurance acquired PVI Holdings’ remaining 25 percent.

PVI Holdings, a unit under direct control of state-owned oil and gas conglomerate PetroVietnam, manages three insurance businesses: PVI Sun Life, PVI, and PVI Re. In addition to insurance, financial services are within its scope.

PVI Holdings chairman Nguyen Anh Tuan said that the capital divestment from life insurance was a strategic step, coinciding with the company’s business restructuring commitment. The move frees up PVI Holdings to concentrate on its two core insurance segments – non-life insurance and reinsurance – as well as its financial investments.

Life insurance services like those offered by PVI Sun Life are a long-term investment. They may take over five years to begin generating profits, which could affect the business efficiency of the whole PVI system.

Tuan said, “Since its launch in 2013, PVI Sun Life has established itself as the country’s sixth-largest life insurance provider and a market leader and industry pioneer in pensions. That explains why Sun Life has willingly paid 2.5 times more than the original investment.

“For PVI, the proceeds from the stake sale [about $46 million from both deals] will help the whole PVI system, particularly our member units currently operating in the insurance business – PVI and PVI Re – become healthier.”

According to Tuan, as a latecomer in the life insurance market, it wasn’t easy for PVI Sun Life to compete head-on with established brands like Prudential Vietnam, Bao Viet Life Insurance, and Manulife. Due to this crowded field, profitability may have come later than expected.

“However, we did not pull out from life insurance operation due to these difficulties. In contrast, this capital divestment is a win-win for both sides’ development,” Tuan said.

About the stake acquisition, Kevin Strain, president of Sun Life Financial Asia, said, “We have enjoyed 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. 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.”

In the eyes of Sun Life, Vietnam has been one of the fastest growing economies in Asia in recent years. The life insurance and pensions industry is expected to continue experiencing strong growth in the years to come.

By By Kim Lan

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