Group News Releases
Prudential plc and Thanachart Bank PCL enter into a long-term exclusive bancassurance partnership in Thailand
05 Nov 2012
Prudential plc (“Prudential”), through its subsidiary Prudential Life Assurance (Thailand) Public Company Limited (“Prudential Thailand”), and Thanachart Bank Public Company Limited (“Thanachart Bank”) have today entered into an agreement to establish an exclusive 15-year partnership to develop jointly their bancassurance business in Thailand. In addition, Prudential Thailand will acquire 100 per cent of Thanachart Life Assurance Company Limited (“Thanachart Life”), a wholly-owned life insurance subsidiary of Thanachart Bank. The consideration for Thanachart Life is £358 million (THB 17.5 billion) settled in cash on completion, with a further payment of £10 million (THB 0.5 billion) payable 12 months after completion, subject to a post-completion adjustment to reflect the net asset value as at the completion date. The transaction is subject to regulatory approval and is expected to close in the first quarter of 2013.
This transaction builds on Prudential’s strategy of focusing on the highly attractive markets of South East Asia. Thailand’s life insurance market is significant in size, comparable in premium terms to each of Indonesia and Malaysia1. Life insurance penetration in Thailand remains low at only 2.7 per cent1 providing substantial long-term profitable growth opportunities. Market gross premium income increased at a 16 per cent compound annual growth rate between 2007 and 20111. Bancassurance has been the main driver of growth over this period, accounting for 50 per cent of life insurance first year premiums in 2011, compared to 28 per cent in 20072.
For Thanachart Bank, this partnership supports its strategy of providing market leading products and services throughout Thailand. By partnering with Prudential, Thanachart Bank’s staff will benefit from additional training and sales tools while its customers will have access to a comprehensive range of protection and savings products.
Thanachart Bank is the fifth-largest retail bank in Thailand with over four million customers and over 630 branches. The acquisition of Siam City Bank in 2010 enabled Thanachart to increase its distribution network from 256 branches to its current size. Thanachart Life has only recently started to distribute life insurance products through these additional Siam City Bank branches. As part of the bancassurance partnership, Prudential and Thanachart Bank will collaborate in providing excellent customer service and a wide variety of market leading life insurance, protection and savings products across all the branches. Prior to its acquisition by Thanachart Bank, Siam City Bank had its own life insurance company, which was not merged with Thanachart Life and is not part of the acquisition being announced today.
Thanachart Life is a top-10 life insurer in Thailand3 with around one million in-force policies. In the twelve months to 30 June 2012, Thanachart Life’s profit after tax was £25 million (THB 1,226 million). The acquisition of Thanachart Life will immediately double Prudential Thailand’s market share2. Upon completion of the transaction, Thanachart Life will become a wholly-owned subsidiary of Prudential Thailand.
Tidjane Thiam, Group Chief Executive, Prudential plc, said: “We have had a long standing ambition to significantly increase our presence in Thailand, one of our key target markets in South East Asia. This long-term exclusive partnership with Thanachart Bank positions us well for the future and is in line with our multichannel distribution strategy. We continue to invest and grow our partnership business, alongside our well established and successful agency workforce.
“We are especially proud to be the partner of Thanachart Bank, one of the largest and most successful banks in Thailand, with a major shareholder such as Scotiabank, a leading international financial institution. Our combined strong product offering, distribution platform and operational excellence will continue to bring attractive benefits to customers, sales staff and shareholders of both organisations”.
Mr Somjate Moosirilert, CEO and President of Thanachart Bank, said, “We remain committed to meeting all of the financial services needs of our customers throughout Thailand, including life assurance. To best be able to do this, we are very pleased to enter into this long-term exclusive bancassurance partnership with Prudential, one of the world’s leading life insurance companies. We are confident that with the strong branch network and dedicated staff of Thanachart Bank, together with Prudential’s expertise in bancassurance, we will be ideally positioned to service our clients and meet all their insurance needs.”
About Prudential plc
About Thanachart Bank
As a leading commercial bank in Thailand, Thanachart Bank is further strengthened by the strong support of its strategic shareholder, the Bank of Nova Scotia (“Scotiabank”). Scotiabank owns 49 per cent of Thanachart Bank and with headquarters in Canada, is a leading international bank serving 19 million customers in 55 countries around the world with a strong presence in Thailand since 1980. Scotiabank is ranked as one of the world’s 50 safest banks (No. 12) in 2012 by Global Finance Magazine.
1 Source: Swiss Re Sigma Report, March 2012; life
insurance penetration expressed as life insurance premiums as a
percentage of GDP
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