July 1, 2019 / 5:51 AM / 17 days ago

FWD buys Thai insurance unit for $3 billion, in top SE Asian sector deal

BANGKOK (Reuters) - FWD Group is acquiring the life insurance business of Thailand’s Siam Commercial Bank (SCB) (SCB.BK) for 92.7 billion baht ($3 billion) in Southeast Asia’s biggest insurance M&A deal, broadening a rapid Asian expansion by the Hong Kong-based firm.

Southeast Asia has emerged as a battleground for foreign insurers who are attracted by the region’s lower insurance penetration levels and faster growth rates for life insurance premiums than in their home markets.

FWD and SCB, Thailand’s biggest lender by assets, said in a joint statement on Monday that the deal by FWD to acquire SCB’s entire stake in SCB Life Assurance Public Co Ltd is expected to be completed later this year, subject to obtaining regulatory approvals and approval by the bank’s shareholders.

Owned by tycoon Richard Li, the youngest son of Hong Hong’s richest person Li Ka-shing, FWD has aggressively expanded its insurance footprint in the last few years with its businesses now spread out in Indonesia, Malaysia, Singapore and Japan as it competes with the likes of Prudential (PRU.L) and AIA (1299.HK).

“Under this arrangement, SCB will distribute FWD’s life insurance products to the bank’s customers in Thailand, leveraging the bank’s distribution channels for a period of 15 years,” the statement said.

“SCB will receive a total deal amount of 92.7 billion baht along with additional payments common in bancassurance transactions over the course of the bancassurance partnership,” it said.

The deal comes days after FWD agreed to buy the Hong Kong operations of U.S. insurer MetLife Inc (MET.N).

“Southeast Asia is growing and we want to be part of that market,” said Huynh Thanh Phong, FWD’s CEO, adding that FWD was keen to invest more in Thailand.

FWD and SCB revived talks about the transaction in March, two years after they failed to reach a deal over disagreements on valuation, Reuters has reported.

FWD executives said Thailand was a promising insurance market for the company. “Thailand is already a key market for FWD with highly attractive macroeconomic fundamentals and favorable demographics,” Ronald Arculli, FWD’s board chairman, told reporters in Bangkok.

SCB Life and FWD are ranked fifth and eighth, respectively, or 14% combined in terms of market share of total premiums in Thailand, according to data from Thai Life Assurance Association for the first quarter of 2019.

Sources told Reuters in October that FWD was working on a stockmarket listing, plans for which were likely to be formulated over the next two years.

Reporting by Chayut Setboonsarng; Writing by Anshuman Daga; Editing by Muralikumar Anantharaman

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