SINGAPORE: DBS Bank and Manulife Financial Asia on
Wednesday (Apr 8) announced a 15-year regional distribution agreement
whereby the Canadian insurance group will pay the Singapore lender an
initial US$1.2 billion (S$1.6 billion).
The exclusive life partnership, which takes effect on Jan 1, 2016, will cover Singapore, Hong Kong, China and Indonesia. DBS' current bancassurance agreement with Aviva will conclude at the end of 2015.
Manulife will gain access to DBS' large and growing retail, wealth and small and medium enterprise (SME) customer base of 6 million, while DBS will be able to sell a suite of life and health insurance solutions from Manulife through its branch network as well as via its internet and mobile banking platforms.
Besides the initial payment of US$1.2 billion, Manulife will also make ongoing, variable payments to DBS "based on the success of the partnership", the two firms said in a joint statement.
The bancassurance model - which involves selling insurance through banks as opposed to the traditional agency - is lucrative for commercial banks in Asia because global insurers are willing to pay hefty fees for access to lenders' branch networks.
According to Reuters, AIA Group struck a 15-year exclusive deal with Citibank in Asia in 2013, for which AIA made a US$800 million upfront payment. UK insurer Prudential also struck an agreement last year with Standard Chartered, agreeing to pay US$1.25 billion in fees to extend its current agreement for 15 years.
DBS CEO Mr Piyush Gupta said: “Bancassurance is a key focus for DBS and an important part of our overall customer value proposition."
Manulife is the world's sixth-largest life insurer with principal operations in Asia, Canada and the United States, where it operates under the John Hancock name. The company first established a presence in Singapore in 1898 while its Hong Kong operations began in 1897. Assets under management by Manulife and its subsidiaries were approximately C$691 billion (S$753 billion) as at Dec 31, 2014.
The exclusive life partnership, which takes effect on Jan 1, 2016, will cover Singapore, Hong Kong, China and Indonesia. DBS' current bancassurance agreement with Aviva will conclude at the end of 2015.
Manulife will gain access to DBS' large and growing retail, wealth and small and medium enterprise (SME) customer base of 6 million, while DBS will be able to sell a suite of life and health insurance solutions from Manulife through its branch network as well as via its internet and mobile banking platforms.
Besides the initial payment of US$1.2 billion, Manulife will also make ongoing, variable payments to DBS "based on the success of the partnership", the two firms said in a joint statement.
The bancassurance model - which involves selling insurance through banks as opposed to the traditional agency - is lucrative for commercial banks in Asia because global insurers are willing to pay hefty fees for access to lenders' branch networks.
According to Reuters, AIA Group struck a 15-year exclusive deal with Citibank in Asia in 2013, for which AIA made a US$800 million upfront payment. UK insurer Prudential also struck an agreement last year with Standard Chartered, agreeing to pay US$1.25 billion in fees to extend its current agreement for 15 years.
DBS CEO Mr Piyush Gupta said: “Bancassurance is a key focus for DBS and an important part of our overall customer value proposition."
Manulife is the world's sixth-largest life insurer with principal operations in Asia, Canada and the United States, where it operates under the John Hancock name. The company first established a presence in Singapore in 1898 while its Hong Kong operations began in 1897. Assets under management by Manulife and its subsidiaries were approximately C$691 billion (S$753 billion) as at Dec 31, 2014.
- CNA/hs
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Under the agreement, there will be an initial payment by Manulife to DBS of USD 1.2 billion3, which Manulife intends to fund with internal resources. This payment will be amortised by both parties over 15 years
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