SINGAPORE/KUALA LUMPUR (Reuters) - Malaysian lender CIMB Group Holdings (CIMB.KL) has invited bids from insurers for an agreement to distribute their general insurance products in four Southeast Asian markets, a deal that could fetch it about $400 million, people with direct knowledge of the matter said.
Malaysia’s No. 2 bank has hired JPMorgan (JPM.N) to advise it on the deal, which is expected to draw interest from companies including Australia’s QBE Insurance Group (QBE.AX), Tokyo Marine Holdings Inc (8766.T), France’s AXA (AXAF.PA) and Italy’s Generali (GASI.MI) among others, the people said.
German insurer Allianz’s (ALVG.DE) 10-year bancassurance agreement to distribute general insurance products through CIMB’s branches in Malaysia ends in 2017. Allianz is looking to renew the partnership, people familiar with the process said.
The so-called bancassurance model - as opposed to the traditional agency model - is lucrative for banks because global insurers are willing to pay hefty fees for access to lenders’ branch networks and exposure to the growing middle class in emerging markets to sell life, property, motor and fire insurance.
CIMB has about 1,000 branches servicing about 13 million customers in Malaysia, Indonesia, Thailand and Singapore, with its home market and Indonesia making up the majority.
CIMB was not immediately available to comment. JPMorgan, Allianz, Generali, AXA, Tokio Marine and QBE declined to comment.
Asia has seen three large bank distribution deals for life insurance in the past two years, and all three saw aggressive bidding by insurers who are betting on strong growth in insurance premiums.
“CIMB’s preference is to have a combined bid but you don’t have many regional players, so we could end up seeing bids for individual markets,” said one Singapore-based banker. CIMB has separate non-life insurance partners for its different markets.
First-round bids are due in a few weeks, the people said.
“We haven’t seen too many deals in non-life insurance. Insurers are quite keen to lock in distribution agreements,” said another Singapore-based banker, adding that it was hard to ascertain a deal value as there was no benchmark for non-life deals in Asia.
The $400 million deal value could change on the various sales assumptions bidders could make on these fast-growing insurance markets, bankers said.
Reporting by Anshuman Daga and Yantoultra Ngui; Additional reporting by Swati Pandey in SYDNEY, Taiga Uranaka in TOKYO, Jonathan Gould in FRANKFURT, Leigh Thomas in PARIS Gianluca Semeraro in MILAN and Paul Arnold in ZURICH; Editing by Denny Thomas and Muralikumar Anantharaman