UK’s Prudential to Buy Thai Bancassurance Partnership from FWD Group

By | March 19, 2020

Prudential Plc, the UK insurer besieged by activist investor Third Point, has agreed to acquire a bancassurance partnership in Thailand from FWD Group Ltd. in a 24.5 billion baht ($753 million) deal.

Prudential’s Thai unit will buy the exclusive rights from FWD to sell life insurance products through TMB Bank Pcl, the Thai lender said in an exchange filing on Thursday, confirming an earlier Bloomberg report. The initial term for the partnership is 15 years and Prudential will pay in two installments, with 12 billion baht due next month, according to a separate statement by the UK insurer.

TMB, backed by ING Groep NV, had been exploring options for its existing bancassurance partnerships following a planned merger with Thanachart Bank Pcl that will create the country’s sixth-largest lender. Alternatives included renewing the partnership with FWD or finding a new partner, Bloomberg News reported in November.

For FWD, a sale of its partnership with TMB would ease potential antitrust concerns after the Hong Kong-based company last year agreed to pay about $3 billion for the life insurance operations of Thailand’s Siam Commercial Bank Pcl in its biggest acquisition.

FWD will receive 20 billion baht for the TMB contract, according to its statement. Concurrently with the SCB Life acquisition, FWD agreed its own 15-year bancassurance partnership with SCB, Thailand’s second largest bank by market capitalization.

[Editor’s note: Swiss Re is a long-term backer of FWD, which announced in 2013 that it would receive US$425 million from the reinsurer].

Third Point, which is run by Dan Loeb, in February announced it had built a stake of just under 5% in Prudential, and wanted the firm to separate its Asia business from Jackson National Life Insurance. The activist investor said such move would eliminate nearly 200 million pounds ($233 million) of duplicate costs. The insurer this month said it was preparing to list a minority stake in the U.S. business.

There will be a nine-month transition period in which TMB will continue to sell FWD products, while it will onboard products by Prudential, the filing said. Prudential will fund the deal with a mixture of its existing resources in Asia and potentially through new debt.

Shares of TMB Bank rose 1.4% as of 3:14 p.m. in Bangkok. Prudential slumped 10.7% in Hong Kong, while Hang Seng Index fell 2.6%.

JPMorgan Chase & Co. acted as financial adviser to TMB, while HSBC Holdings Plc advised Prudential, the people said.

Photograph: The Prudential Plc logo is displayed on a banner atop a building in Hong Kong, China, on Thursday, Aug. 9, 2018. Photo credit: Anthony Kwan/Bloomberg.

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