AIA, Pru among insurers considering bumper Thai deal: report

AIA Group and UK’s Prudential are among insurers said to be considering bids to buy at least 49% of the US$3bn (£2.04bn) insurance unit of Thai lender Siam Commercial Bank (SCB), according to sources.

Any potential deal, revealed by ‘people with direct knowledge of the matter’ on Reuters today, would make it one of the Southeast Asia region’s biggest insurance transactions ever.

It would also allow the winning bidder to be able distribute its insurance products through the branch network of SCB, Thailand’s third-biggest bank.

A formal bid process is not expected to begin until the third quarter of this year, but the insurers have started preliminary discussions with potential advisers for prospective bids, the people concerned told Reuters.

The list of interested insurers also includes Swiss ACE Group and Canada’s Manulife Financial Corp they said.

Southeast Asia’s biggest insurance transaction so far stands at US$1.73bn when Asian financial giant AIA’s deal to buy Dutch lender ING’s Malaysian insurance business was concluded in 2012.

SCB is understood to be seeking a partner for the insurance unit to accelerate growth in the business.

And with more than 1,200 distribution outlets in the region, it could offer any potential suitor one of the last large-scale bank distribution deals available in Southeast Asia.

Thailand has a cap on foreign companies’ stakes in domestic insurance at 49%, but can permit higher holdings on a case-by-case basis.

Southeast Asia is a regular battleground for insurance companies, as they are attracted by the region’s potentially lower insurance penetration levels and faster growth rates of life insurance premiums compared to levels in the developed world.

AIA, Aviva, Prudential and Canadian insurers Manulife and Sun Life Financial Inc have fought over many bancassurance deals as they have come to the market in Asia in recent years.

Reuters said that the people declined to be identified because details of the sale process and names of potential buyers are not public.

Spokespeople for Manulife, Prudential, AIA, ACE, Morgan Stanley and Credit Suisse also declined to comment on the matter.

Gary Robinson
Head of Video and Ezines at Open Door Media Publishing. Deputy Editor, International Investment. An experienced journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as a fully qualified IFA, Gary works across both International Investment and InvestmentEurope titles. Previous video production credits include projects on BBC, C4 and SKY.

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