Strategy
DBS, Manulife To Create Bancassurance Partnership In Four Asia Markets
The Singapore-based banking group, and the insurance firm, have inked a 15-year deal involving an initial payment of $1.2 billion to the bank.
DBS Bank and Manulife Financial Asia have entered a 15-year
regional distribution agreement covering Singapore, Hong Kong,
China and Indonesia to combine DBS’s banking franchise and the
wealth management and insurance capability of Manulife.
The agreement, which was signed yesterday, takes effect from the
beginning of 2016.
There will be an initial payment by Manulife to DBS of $1.2 billion, which
Manulife intends to fund with internal resources. This payment
will be amortised by both parties over 15 years. There will also
be ongoing, variable payments, which are based on the success of
the partnership, and Manulife expects the agreement to be
accretive to core earnings per share in 2017. The initial payment
for this regional agreement is expected to reduce Manulife’s
regulatory capital ratio by 10 points on or before 1 January
2016.
Such an agreement highlights how bancassurance - the sale of insurance products and services through a bank network - is an important part of financial services generally. With this field, the wealth management industry continues to witness the cases of insurance firms selling products aimed at high net worth individuals, and which are often distributed via private banks and related entities.
The pact followed a partner selection process by DBS Bank, which
it said attracted strong interest from a number of regional and
multinational insurance firms.
The agreement brings together DBS and the sixth-largest life
insurer in the world, with more than six million clients in 12
markets in the Asia region. Manulife first established a presence
in Singapore in 1898; it started operations in Hong Kong in
1897.
As part of the deal, DBS will boost its regional life insurance
distribution capabilities, aiming for status as a major
bancassurer in Singapore. Manulife gains exclusive access to DBS
customers in four regional markets.
“Bancassurance is a key focus for DBS and an important part of
our overall customer value proposition,” Piyush Gupta, DBS’s
chief executive, said.
