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| Q&A: Jon Boscia, President, Sun Life Financial | | 'The opportunities with India are more compelling than anywhere else' |
| Sumit Sharma / Mumbai Jul 24, 2010, 01:23 IST |
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Sun Life Financial’s president, Jon Boscia, sees Asia as the growth opportunity over the next half century and expects it to emerge as a key market. Sun Life plans to grow into pension, health insurance and wealth management in India. Excerpts from an interview with Sumit Sharma:
How critical is India for your business?
Very critical. The markets outside Asia are developed and mature. They have a certain growth rate which is attractive. But, as we look at the next 10, 20 and 50 years, it is not attractive enough. So, we look at Asia as an important part of our future growth. The demographics and opportunities associated with India are more compelling than anywhere else we have a presence right now. The future is going to be here.
Where do you see the India business in the next five to 10 years, in terms of operations here contributing to your global one?
I would like to see India contributing 15 per cent or more to the profits of our global operations. If I see Sun Life as an organisation with a capacity to earn $2 billion (Rs 9,434 crore)a year, we are talking of $300 million (Rs 1,415 crore)earnings contribution (from India) over 10 years. If I were to look 10 years out, I would not see any hurdles to prevent us from being able to achieve it.
In which other areas do you plan to expand in India?
Through our joint venture, we are in insurance and asset management. We see a very attractive and growing field in wealth management, health business, group business and pension. We are global leaders in health and pensions.
You plan to do it alone or with partners?
Our highest priority is to continue to work with the Birla group and deepen that relationship.
What kind of investments do you plan to bring these plans to fruition?
In terms of capital, we have put in $150-200 million (Rs 710-940 crore). If and when regulations permit us to buy up to 49 per cent from 26 per cent, that’s going to be a significant capital amount. Our intent will be to buy up to 49 per cent.
When could you list in India?
It’s our partners who will drive the listing more than we will be able to do. It’s in everyone’s interest to have it sooner than later, to get fresh capital.
How much of a hindrance to growth is the cap of 26 per cent?
It’s not been a hindrance. We have been able to grow the way we wanted to.
How does India compare with other markets in Asia?
India is very big. The closest we see will likely be China — in terms of demographics, power and penetration rates. The products are different, the needs and orientation are different. There are certain regulatory aspects India could both teach and learn (from other Asian markets.)
With the UK almost burying the FSA (Financial Services Authority), what kind of regulatory system could India benefit from?
Looking at the Securities and Exchange Board of India (Sebi) and the Insurance Regulatory and Development Authority overlap, it’s important to recognise that both were driven by their desire to protect the consumers. We didn’t interpret it as a turf war. What we learn from Canada and what we see happening with the FSA in the UK is that a national regulator with the opportunity to speak for the entire segment of the economy is a preferred way. They (the regulators) are discussing with one other who has the discretion or what kind of products – that’s good. The courts will help them decide who has what responsibility.
Sebi has been pro-active in trimming costs for consumers. Since it removed entry load a year before, inflows into equity funds have declined. How do you see the mutual fund industry evolving?
It is important that a fine line be walked by Sebi in protecting consumers from undue and inappropriate levels of expenses, but not going so far as to have investment advisors walk away from the business because they can’t be compensated in a way that warrants their time. Even in the most financially literate markets of the world, you need qualified investment advice. We shouldn’t expect Sebi will get it right the very first time. It doesn’t happen anywhere in the world.
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