Swiss Re-Backed FWD in Talks for Biggest-Ever Southeast Asian Insurance Deal

By | March 22, 2019

FWD Group, backed by billionaire Richard Li, has revived talks about a potential acquisition of the life insurance operations of Thailand’s Siam Commercial Bank Pcl after a two-year hiatus.

Siam Commercial reached a preliminary pact with FWD on a potential life-insurance partnership, the lender said in a Bangkok exchange filing Friday, confirming an earlier Bloomberg News report. A deal would see FWD acquire Siam Commercial’s life insurance unit and sign a long-term distribution agreement with the lender, according to the filing.

FWD and Siam Commercial have entered into exclusive negotiations to finalize terms of a transaction, the filing shows. The business could be valued at around $3 billion, people with knowledge of the matter said. A deal at that price would be the biggest-ever acquisition of an insurer in Southeast Asia, according to data compiled by Bloomberg.

“Thailand is attractive to most insurers, especially foreign ones, because the proportion of insurance policy holders are still low compared with the entire population,” Adisorn Mungparnchon, an analyst at Phillip Securities Pcl, said by phone Friday. “SCB’s bank branch network will also be a key platform for FWD’s sales.”

The final price tag would depend on the outcome of due diligence, the people said, asking not to be identified because the information is private. No binding agreements have been reached, and there’s no certainty the discussions will result in a deal, according to Friday’s filing.

Shares of Siam Commercial jumped as much as 3.1 percent in Friday afternoon trading, the biggest intraday gain since August, and were up 2.7 percent at 4:17 p.m. in Bangkok.

Siam Commercial, Thailand’s biggest listed lender by assets, had unsuccessfully explored a sale of its life insurance business back in 2017 at a mooted valuation of around $3 billion. It held talks with potential buyers including FWD, AIA Group Ltd., Manulife Financial Corp. and Prudential Plc, though discussions ultimately fell apart over price, people with knowledge of the matter said at the time.

After the previous talks with Siam Commercial fell apart, FWD renewed a distribution deal with Bangkok-based TMB Bank Pcl. An acquisition of SCB Life Assurance Pcl would help FWD expand in a nation where it already has more than 900,000 customers.

FWD, which manages more than $28 billion of assets and is backed by Swiss Re AG, had over 3 million customers spread across eight Asian markets, according to its website. Li, the son of Hong Kong’s richest man, formed the company after spending $2.1 billion to buy ING Groep NV’s insurance and pension units in Hong Kong, Macau and Thailand in 2013.

FWD has been acquisitive as it expands across Asia. It agreed in October to buy control of Commonwealth Bank of Australia’s Indonesian life insurance arm. In 2017, it bought American International Group Inc.’s Japanese life unit, after earlier making acquisitions in Singapore and Vietnam. It has also hired former Deutsche Bank AG dealmaker Tan Boon-Kee as senior adviser for mergers and acquisitions.

–With assistance from Anuchit Nguyen.


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