You are here
UOB renews bancassurance deal with Prudential for S$1.15b
UNITED Overseas Bank (UOB) has renewed its bancassurance deal with Prudential for 15 years, amid a growing trend of insurance products making up a critical component in the suite of wealth management offerings sold by banks.
London-based Prudential will pay UOB S$1.15 billion over this period, UOB said on Thursday.
The new pact extends their original alliance, which began in 2010, when UOB sold its life insurance unit to Prudential for S$428 million and began distributing Prudential's products through its branches in Singapore, Indonesia and Thailand.
The pact, effective next year, will take bank and insurer through 2034.
It will also add Vietnam as a fifth market for Prudential's life insurance products, said the firm in a statement.
The insurer's offerings are already available to the bank's consumer-banking customers in Singapore, Indonesia, Malaysia and Thailand. UOB has more than 400 branches across the five markets, providing access to over four million UOB customers.
In addition, Prudential will use its digital capabilities to deliver protection-focused propositions to aid UOB in the expansion of its digital bank and customer acquisition aspirations.
Wee Ee Cheong, UOB deputy chairman and chief executive, said the renewed agreement reflects the long-term approach and success of this partnership.
"UOB is focused on creating financial solutions in the best interests of its customers and which are essential to their lifestyles and life stages.
"We believe that our continued partnership with Prudential will create greater value for our customers and our stakeholders across the region and reinforce our position as the premier Asean bank."
Mike Wells, Prudential's group chief executive, said: "We have built a highly effective bancassurance partnership with our colleagues at UOB that has driven double-digit annual sales and new business profit growth since 2010.
"We believe there is a significant opportunity for future growth in South-east Asia, and the renewal reflects our commitment to using our capabilities to benefit our customers and shareholders."
The UOB-Prudential deal is not exclusive; Prudential's products are also available through other banks.
A Prudential spokeswoman said: "Prudential Singapore will continue to work with all bank partners, including UOB and Standard Chartered Bank as well as our financial consultants, to provide broad offerings that meet the evolving protection and savings needs of customers."
Prudential inked its 15-year agreement with StanChart in 2014 for US$1.25 billion, giving it access to 11 markets.
Other banks have entered into similar pacts: In 2013, AIA struck an US$800 million, 15-year deal with Citibank in Asia.
In 2015, DBS signed its 15-year deal with Canadian insurer Manulife Financial Asia to cover four markets, namely Singapore, Hong Kong, China and Indonesia. Manulife paid DBS US$1.2 billion for the deal.
OCBC Bank sells bancassurance products from its 87-per-cent owned subsidiary, Great Eastern Holdings.
Bancassurance deals in Asia have become necessary for both banks and insurers to cater to an ageing population, and also earn more fees from selling to the region's burgeoning ranks of affluent individuals.
In 2016, there were 2.6 million millionaires in the Asia-Pacific, excluding Japan. Of that number, 110,000 were in Singapore, said a Capgemini wealth report. The total wealth of these millionaires was estimated at US$11.8 trillion, with cash making up 21 per cent, or S$2.3 trillion, the report said.
UOB's Mr Wee had said in 2010, when the bank started its partnership with Prudential, that the deal would enable UOB to focus on commercial banking, while expanding its distribution of insurance products through its branch network.
It was reported then that Prudential gained some 50,000 policyholders, who held more than 70,000 policies through UOB Life Assurance.
Bancassurance deals contribute directly to a bank's bottom line and are regarded positively.
"We view such distribution deals positively, and on pricing, a lot depends on how the deals are structured," said Krishna Guha, Jefferies Singapore equity analyst.