The new bancassurance partnership is a 15-year distribution agreement covering four markets across Asia: Singapore, Hong Kong, China and Indonesia.
Manulife’s insurance products will be sold through the bank’s network of 200 branches and through its internet and mobile banking platforms. The insurer had worked with DBS in Hong Kong, Singapore and Indonesia for a number of years, but the new agreement means the two companies will now work on an exclusive basis.
“Economically unviable”
In a statement, the chief executive of Aviva’s global life division, Chris Wei, said it could not renew its bancassurance partnership with DBS because it was “far in excess of what we saw as economically viable or justifiable to our shareholders”. He added, however, that Aviva had been “well-placed in this process”.
Prudential and AIA Group were previously shortlisted to partner DBS, according to Finance Asia. The news outlet said Manulife’s 118-year track record in Asia put it at an advantage to AIA, and Pru’s existing partnership with Singapore’s United Overseas Bank was a concern for DBS which was reluctant to share client data with a rival.
“Accelerate our growth”
The deal with the Canadian-headquartered insurer is the latest in a string of bancassurance partnerships set up by life companies trying to increase sales of their products across Asia.
“This agreement will accelerate our growth in Asia, deepen and diversify our insurance business, and give us access to a much wider range of customers,” said Manulife chief executive, Donald Guloien.
Under the agreement, Manulife will pay $1.2bn (£800,000, €1.1bn) upfront, which it plans to fund through its internal resources. Variable payments will be paid on top of this depending on the success of the partnership throughout the 15-year period.
In a joint statement, DBS and Manulife pointed to the “sizeable insurance protection gap” in Asia and said the pact will strengthen the regional distribution of life insurance products, providing for millions of “under-insured” customers.
The partnership will take effect from 1 January next year.
Driving force
In October last year, Manulife signed a bancassurance agreement with RHB Bank Singapore. It has various other partnerships with banks across Asia, which was said to be a driving force in the business’s jump in sales.
In February, Manulife Asia merged its wealth and asset management divisions to target $19trn in untapped cash deposits throughout the region.
The following month the firm’s Singapore-based branch unveiled two insurance products which align with proposals under Singapore’s Financial Advisory Industry Review (FAIR) by removing the need for financial advice and commissions.
