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Prudential Thailand, TMB Bank in bancassurance tie-up

PRUDENTIAL plc on Thursday said its Thai subsidiary, Prudential Life Assurance (Thailand), has entered into a strategic bancassurance partnership with TMB Bank.

With an initial term of 15 years, the tie-up will see TMB offering Prudential Thailand’s health and wealth solutions to the bank’s nine million customers.

This extends Prudential’s partnership with Thanachart Bank to TMB. The two Thai lenders merged last year to create the sixth-largest bank by deposits in the country.

The extended exclusive partnership agreement with TMB will commence on Jan 1, 2021. Until this time, the insurer’s current arrangement with Thanachart Bank will continue.

The latest agreement requires the novation of TMB's existing bancassurance distribution agreement with another insurer, FWD Group.

This change will cost Prudential 24.5 billion baht (S$1.08 billion), which will be paid in two instalments, with 12 billion baht due in April 2020 and the remainder due on Jan 1, 2021.

The funding for this transaction will come from a mixture of Prudential Asia’s existing resources and Prudential plc’s own resources, and may potentially include new debt.

In line with the Prudential group’s policy, the amounts described above will be capitalised as an intangible asset representing distribution rights.

JPMorgan acted as exclusive financial adviser to TMB Bank.

FWD also released a statement on Thursday, announcing it has agreed to sell its bancassurance contract with TMB to Prudential Thailand for 20 billion baht.

The novation will start from Apr 1, with the remaining term of FWD's bancassurance contract to be entirely transferred to Prudential Thailand on Dec 31 this year.

"During the transition, FWD will continue to offer its products and services to TMB customers," the insurance group said.

FWD added that the disposal of the contract comes amid the group's increasing presence in Thailand. Last September, it acquired SCB Life from Siam Commercial Bank and also commenced a 15-year bancassurance partnership in Thailand with the lender.

Meanwhile, Prudential said in its bourse filing on Thursday that Thailand is South-east Asia’s second-largest life insurance market and largest mutual fund market.

The bancassurance partnership complements Prudential’s top-five market position in the mutual fund market.

“It also deepens the strong relationship with TMB established through Prudential’s joint-venture asset management partnerships, where Prudential has a 12 per cent share of the Thai mutual fund market,” Prudential said.

Nic Nicandrou, chief executive of Prudential Corporation Asia, noted that the tie-up with TMB will provide Thais with access to a digital platform and holistic solutions to both protect their families and grow their wealth.

TMB chief executive Piti Tantakasem said: “We look forward to taking our life insurance business to the next level with Prudential Thailand, as we provide innovative offerings to customers across the country.”

Shares of Prudential plc on the Singapore bourse last traded at US$18.70 on March 3.