8th Apr 2015 12:23
LONDON (Alliance News) - Aviva PLC Wednesday said it couldn't justify the cost of renewing its bancassurance deal with Singapore's DBS Bank Ltd, meaning the arrangement will come to an end, as the Singaporean bank partnered with Manulife Financial Corp's Manulife Financial Asia Ltd in a 15-year tie-up.
The deal between Manulife and DBS will cover Singapore, Hong Kong, China and Indonesia and is due to come into effect at the start of 2016.
Manulife will make an initial payment of USD1.2 billion to DBS under the deal, according to a joint statement. There is the potential for further payments depending on the success of the deal.
Aviva downplayed the significance of the deal's end by claiming that the agreement represented just one-fifth of its Singaporean operation's value of new business in 2014 and under 3% of the group's value of new business in the same year.
In addition, Aviva said that its GBP5.6 billion takeover of life insurance rival Friends Life Group Ltd will add the acquisition's Provident International to its Asian portfolio of companies, which will expand what it can offer to wealthy clients in Singapore, Hong Kong and Dubai.
"Given the strength of our relationship with DBS, Aviva was well-placed in this process. However, the cost to renew the agreement was far in excess of what we saw as economically viable or justifiable to our shareholders. Aviva remains highly disciplined regarding capital allocation," Chris Wei, CEO Global Life and Chairman Asia, said in a statement.
Wei also said that Aviva has a strong network of local partners across the region, including COFCO in China, Astra International in Indonesia, First Financial in Taiwan and VietinBank in Vietnam.
"In addition to our valued bancassurance partners, we have a diverse and rapidly evolving distribution platform in Asia, including a growing direct and online capability and a strong financial adviser and agent network, all of which benefit from the strength of the Aviva brand," Wei said.
Aviva said it will retain the existing book of business, associated profits, and customer rights and relationships which were purchased in the original transaction with DBS in 2001.
Aviva shares, which went ex-dividend on Wednesday, were up 0.3% at 550.20 pence on Wednesday afternoon.
By Samuel Agini; [email protected]; @samuelagini
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