Industrial and Commercial Bank of China Ltd (ICBC) and soon-to-be listed AIA Group Ltd have signed an agreement under which ICBC will sell AIA’s life insurance products at its branches, the two companies said on Friday.
The distribution agreement comes as AIA, American International Group Inc.’s Asian life insurance unit, prepares for a Hong Kong initial public offering that could raise about $15 billion.
AIA, the only foreign company to own its Chinese operating licence outright, already has 80 similar agreements with banks in the Asia-Pacific region.
“By leveraging core strengths … we aim to build a strong foundation and platform to help us take full advantage of the rapid development in China’s bancassurance business,” AIA Chief Executive Mark Tucker said in a statement.
China is the world’s sixth-largest life insurance market, with about $96 billion in total premiums collected in 2008.
“AIA will work jointly with ICBC in areas such as sales and marketing system, product innovation, service quality, technological advancement and sustainable profitability,” Tucker added.
ICBC, the world’s largest bank by market value, has more than 16,000 branches.
AIA is the dominant foreign life insurer in China, accounting for an about 21 percent market share of premiums earned by foreign life insurance companies in 2008. Still, that is merely 1 percent of total life insurance premiums earned by domestic and foreign life insurance companies.
Bancassurance is a business model employed by many insurance companies through which they use bank branch networks to sell their products.
AIA already has 17 bancassurance agreements in China.
(Reporting by Denny Thomas and Clare Jim; Editing by Chris Lewis)
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