By Rick Carew
HONG KONG-- Manulife Financial Corp. has reached a multiyear
deal worth over $1 billion that will allow the Canadian firm to
exclusively distribute its insurance products through Singaporean
lender DBS Group Holdings Ltd.'s branches across Asia.
The deal with DBS, signed Wednesday, is the latest by a global
insurer seeking access to one of the world's fastest-growing
life-insurance markets. The Wall Street Journal reported details of
the deal earlier Wednesday. Banks across Asia have been fetching
high prices for multiyear exclusive access to their branch
networks, giving insurers a way to increase their sales quickly in
the region.
Prudential PLC last year renewed a distribution partnership with
Standard Chartered PLC. That followed AIA Group Ltd. and Citigroup
Inc. inking a multibillion-dollar deal for AIA to distribute its
insurance products through Citigroup's Asian-Pacific retail branch
network in late 2013. HSBC Holdings PLC sells its own insurance
products through its banking network.
The terms of the DBS deal include a one-time, upfront $1.2
billion payment from Toronto-based Manulife to DBS, with additional
variable payments to be made based on the performance of the
partnership, the two companies said in a joint statement. The
agreement is known as a bancassurance deal, which means the
insurance products are distributed through a bank's branch network
rather than through individual insurance agents.
The duration of the agreement would be an industry standard
15-year contract covering Singapore, Hong Kong, China and
Indonesia, the statement said.
Manulife is taking over from U.K. insurer Aviva PLC, which was
previously the primary distributor of insurance products via the
DBS network across Asia. The contract between Aviva and DBS wasn't
renewed, although Aviva participated in the bidding process for the
new contract, a person familiar with the situation said.
Global insurers are eager to grow their sales across Asia as
penetration rates for insurance products remain low relative to
more mature markets. Manulife currently operates across 12 markets
in Asia and has more than 57,800 agents in the region, according to
its annual report. Manulife's Asia operations recorded $1.3 billion
in insurance sales last year, an increase of 31% over its 2013
insurance sales, which totaled just over $1 billion.
Asia accounted for 18% of Manulife's total premiums and deposits
last year and 13% of its total assets under management, according
to its annual report.
Morgan Stanley advised DBS on the deal and JPMorgan Chase &
Co. advised Manulife.
Write to Rick Carew at rick.carew@wsj.com
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