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6 3.0 Promoting International Trade in Financial Services The international operations of financial services are an important contributor to their overall success and provide direct benefit to Canada. In order to expand internationally, Canada's financial services companies depend on a variety of factors. These include: a supportive domestic environment; the existence of a sound regulatory framework in the host jurisdiction; fair competition with domestic suppliers in the host market; a strong and enforceable international trade framework; and cooperation between financial supervisors. Canadian life and health insurance companies have a strong international reputation. Several of the largest Canadian life and health insurance companies have a long history of international trade. For example, Manulife has been operating in Asia for almost 120 years. In fact, the first Manulife life insurance policy was sold in the Philippines in 1901 and the company remains one of the country's top ten life insurers in terms of premium income. Similarly, Sun Life Financial has been offering life insurance in China, Hong Kong and India since 1892, while Great West Life has enjoyed a successful European presence since 1903. 11 3.1 Domestic Regulatory Regime Canada is the fifth largest financial market internationally and is highly respected for its sound regulatory system. During the 2008 global financial crisis, Canadian financial institutions did comparatively well. They were able to retain their strength at a time when some of their key competitors in Europe, the U.S. and Japan struggled to maintain their international presence. The ability of Canadian financial institutions to successfully compete abroad is dependent on the regulatory regime they operate under domestically. While sound regulatory policy can benefit both consumers and companies, unpredictable, opaque or overly-onerous policies can stymie competition and growth. A balanced regulatory regime is vital for the ongoing competitiveness of a financial market. Consolidated regulation applies in Canada, where regulatory standards apply to the entire operations of a financial institution whether the operations are in Canada or abroad. Experience has shown that this approach is entirely appropriate for ensuring that the complete world-wide operations of the firm can be assessed by a primary regulator. In addition, the strong reputation of Canadian regulators means that foreign regulators can rely on Canada's domestic regulatory system in times of stress. However, capital standards and regulatory requirements that are substantially out of line with international norms can put the industry at a competitive disadvantage with foreign competitors. Regulators need to strike the right balance between safety, soundness and flexibility. They should be 11 Great West Life Insurance Company. Annual Report, 2014. Pg. 3.