HK group FWD buys Thai bank Siam's insurance business for US$3bn
2019-08-22 16:41 Thursday
FWD Group, the Asia-wide insurance company backed by the HK-based Pacific Century Group (PCG), has announced it is acquiring the life insurance business of Siam Commercial Bank (SCB) in Thailand for around US$3bn.
The major insurtech-led business deal is the biggest so far regionally, broadening a rapid Southeast Asian expansion by PGC, which is itself owned by Zurich-based insurance giants Swiss Re.
By market share, Swiss Re is the world's second-largest reinsurance firm. Meanwhile, SE Asia has emerged as a key strategic location for foreign companies attracted by low insurance penetration levels and quicker growth rates compared to those found in the west.
SCB is Thailand's largest lender in terms of assets. It said in a joint statement that the deal by FWD to acquire a 100% stake in SCB Life Assurance Public Co Ltd is set to go through later in 2019, subject to obtaining regulatory and shareholder approval.
FWD is owned by Richard Li, the tycoon and youngest son of Hong Kong's richest person, Li Ka-shing. He has aggressively expanded its footprint in the sector in the last few years with its businesses now spread throughout Singapore, Indonesia, Malaysia and Japan.
The statement stated that: "Under the arrangement, SCB will distribute FWD's life insurance products to customers of the bank in Thailand, leveraging the bank's distribution channels for a period of fifteen years."
"SCB will receive a total deal amount of 92.7bn baht along with additional payments common in bancassurance transactions over the course of the bancassurance partnership," it added.
The latest deal comes shortly after FWD also agreed to buy the HK operations of U.S.-based insurer MetLife Inc.
"SE Asia is growing and we want to be part of that market," said Huynh Thanh Phong, CEO of FWD, who siad that FWD was keen to invest further in the nation.
SCB and FWD revived talks about the deal several months ago, two years after they first attempted to reach a deal but stalled over disagreements on valuation.
FWD executives said the country of Thailand was a promising insurance market for the firm. "It is already a key market for FWD with highly attractive macroeconomic fundamentals and favorable demographics," said Ronald Arculli, the company's board chairman.
SCB Life and FWD are ranked 5th and 8th, respectively, or 14% combined in terms of market share of total premiums in the Land of Smiles, according to data from Thai Life Assurance Association for Q1 2019.
Sources told reporters in 2018 that FWD was working on a stock market listing, plans for which were likely to be formulated by around 2021.
The dealmakers have consistently been number one in HK's life insurance direct-sale market, thanks to its award-winning digital commerce platform iFWD.
The company's current insurtech strategy has focused on 3 core areas, being mobile services, internet and big-data analytics.
In 2017, FWD Hong Kong formed a partnership with HKT Payment to integrate Tap & Go payment services into the iFWD platform.
Under the partnership, customers can arrange instant cash withdrawal services from their Savie Insurance Plan and Provie Insurance Plan policies through the platform directly into their Tap & Go e-wallet accounts.