Manulife, the Canadian insurance company, says its five-year-old life insurance joint venture in Shanghai is expected to break even for the first time this year. Victor Apps, president and CEO at Manulife (International) in Hong Kong, says the rule of thumb for a business starting from scratch is to break even after seven years. The JV with Sinochem, a Chinese chemicals company, launched in November 1996, had originally been expected to record a profit in 2003.

Apps says business in Shanghai is booming thanks to a rapidly growing agency sales force and a profit-sharing life insurance product. For the fourth quarter of 2000, Manulife-Sinochem’s sales growth was 165% greater than the last quarter of 1999. Total premium income grew 73% last year, while the size of the agency force was doubled to 1950 people.

Manulife was the second foreign insurer to enter Mainland China after AIG. Unlike AIG, it was required to do so via a JV, and owns 51% of Manulife-Sinochem. The firm is in discussions with the central government – primarily Premier Zhu Rongji – to open its second branch in Guangzhou, and Apps says he is confident of getting approval by the end of this year.

Apps foresees massive business opportunities in the People’s Republic. Once China enters the World Trade Organization, foreign insurers are supposed to receive equal treatment vis-a-vis locals, and Apps wants to expand to many Chinese cities. “This will be big business over the next 10 to 20 years,” he says. “We’re breaking even in Shanghai with 2000 agents – now multiply that by dozens of cities.” Although other foreign insurers will also enter the market, Apps says this is not a concern to Manulife, given the size of the market. “What’s important is our ability to manage growth,” he says.

Manulife is feeling rather good about its performance in Hong Kong as well. It claims 300,000 Mandatory Provident Fund scheme members, probably putting it at number two against HSBC as a market provider. Individual insurance premiums rose 7% to HK$707 million ($90.65 million) and the group insurance business grew 56%. The firm’s North American and Asian premiums totalled HK$6.6 billion in 2000.