Insurers mull buying stake in SCB Life

Insurers mull buying stake in SCB Life

AIA Group and Britain's Prudential Plc are among insurers considering bids to buy at least 49% of the US$3-billion insurance unit of Siam Commercial Bank (SCB), according to people with direct knowledge of the matter.

A successful sale of the stake in SCB Life Assurance Plc would make it one of Southeast Asia's biggest insurance transactions. The deal would also allow the new partner to distribute insurance products through the branch network of SCB, Thailand's third-biggest lender.

While the sale process is only expected to get under way in the third quarter of 2016, the insurers have started preliminary discussions with potential advisers for prospective bids, the people told Reuters. The list of interested insurers also includes Switzerland's ACE Group and Canada's Manulife Financial Corp, they said.

Southeast Asia is a battleground for foreign insurers, who are attracted by the region's lower insurance penetration levels and faster growth rates of life insurance premiums compared with levels in the developed world.

Bank distribution deals, termed bancassurance, are also emerging as a popular means to sell insurance products in Asia, complementing the more commonly used agency channel route.

AIA, Aviva, Prudential and Canadian insurers Manulife and Sun Life Financial Inc have battled it out every time a bancassurance deal has come to the market in Asia in recent years.

SCB, with its 1,200 domestic outlets, offers one of the last meaningful bank distribution deals available in Southeast Asia. The lender is seeking a partner for the insurance unit to accelerate growth in the business.

Thailand, with a population of 68 million, trails Southeast Asian markets such as Singapore and Malaysia in insurance penetration.

Total life insurance premium income in the country is forecast to grow by 9% to 586 billion baht in 2016 after rising by 6.7% last year, said the Thai Life Assurance Association.

Insurers "see growth potential in Thailand, which has a big population and simple products at the moment", one of the people said.

SCB is working with Morgan Stanley and Credit Suisse on the sale process, the people said.

The people declined to be identified because details of the sale process and names of potential buyers are not public.

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