HSBC acquires AXA Singapore for US$575m, to expand its wealth management footprint in Asia

HSBC is acquiring AXA Singapore, a move that is expected to strengthen and expand its wealth management footprint in Asia.

HSBC Insurance (Asia Pacific) Holdings has entered into an agreement to acquire 100 per cent of the issued share capital of AXA Insurance Pte Ltd (AXA Singapore) for US$575 million.

In a statement, HSBC said the proposed acquisition is a key plank in its ambition to become a leading wealth manager in Asia, by expanding its insurance and wealth franchise in Singapore. It said Singapore is a strategically important scale market for HSBC and a major hub for its Asean wealth business.

Data has shown that wealth levels in the Asia-Pacific continued to rise despite the pandemic. Capgemini's World Wealth Report 2021 found an 8.4 per cent expansion of wealth in the Asia-Pacific in 2020, although the US was the fastest growing wealth market.

HSBC has set its sights on becoming the number one wealth manager in Asia in about five years, with ambitious plans for China. It has also said that its Asian growth will be driven by around US$6 billion of additional investment in the wealth management and international wholesale businesses.

Asia generates nearly half of HSBC's US$1.7 trillion global wealth balances and 65 per cent of the group's wealth revenues. In 2020, HSBC Insurance recorded an adjusted profit before tax of US$1.4 billion globally.

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The proposed acquisition of AXA Singapore will be funded from existing resources and will have minimal impact on HSBC's common equity tier 1 ratio. The acquisition is also expected to be immediately accretive to the earnings of the group upon completion.

AXA Singapore is currently the eighth largest life insurer in Singapore by annualised new premiums, the fifth largest property and casualty (P&C) insurer and a leading group health player. AXA Singapore had net assets of US$474 million, annualised new premiums of US$85 million, gross written premiums of US$739 million and profit before tax of US$23 million for the year ended Dec 31, 2020.

HSBC said AXA Singapore is a good fit with good fit with the HSBC Insurance (Singapore) business under HSBC Life. Both businesses provide complementary products and distribution channels. AXA Singapore provides access to a tied agency sales force of about 800, as well as independent financial advisory firms and corporate relationships.

The intention is to merge the operations of HSBC Life Singapore and AXA Singapore, subject to further approval by the Singapore regulator and courts.

The combined business is expected to "materially scale up" HSBC's presence in the regional insurance market and provide a platform for future growth. The merger would be the seventh largest life insurer in Singapore based on annualised new premiums, and the fourth largest health insurer based on gross premiums with over 600,000 in-force policies covering life, health and P&C.

Noel Quinn, HSBC Holdings group chief executive, said: "This is an important acquisition that demonstrates our ambition to grow our wealth business across Asia. Wealth is one of our highest growth and highest return opportunities, and plays to our strengths as an Asia-centred bank with global reach.

"We're acquiring a good business that fits well with our existing operations, and which strengthens our status as one of Asia's leading wealth and insurance providers."

Nuno Matos, chief executive for wealth and personal banking, said the deal is a key milestone for HSBC Life to materially scale up, grow and diversify the insurance and wealth business. "The proposed acquisition will immediately put us in a leading position in health and employee benefits, and accelerate our build-out of a distinctive and holistic wealth and health planning business, operating beyond our branch network."