Pru­den­tial ac­quires Thanachart Life

The Pak Banker - - Front Page -


Thanachart Bank Pub­lic Com­pany Lim­ited and Pru­den­tial Life As­sur­ance Thai­land Pub­lic Com­pany Lim­ited, a sub­sidiary of Pru­den­tial plc have reached an agree­ment to es­tab­lish an ex­clu­sive 15 year part­ner­ship to de­velop jointly their ban­cas­sur­ance busi­ness in Thai­land.

In con­junc­tion with this agree­ment, Pru­den­tial Thai­land will ac­quire 100 per cent of Thanachart Life As­sur­ance Com­pany Lim­ited, a wholly-owned life in­sur­ance sub­sidiary of Thanachart Bank. The con­sid­er­a­tion for Thanachart Life is GBP358 mil­lion (THB 17.5 bil­lion) set­tled in cash on com­ple­tion, sub­ject to a post-com­ple­tion ad­just­ment based on agreed terms to re­flect the net as­set value as at the com­ple­tion date, with a fur­ther pay­ment of GBP10 mil­lion (THB 0.5 bil­lion) payable 12 months af­ter com­ple­tion. The trans­ac­tion is sub­ject to reg­u­la­tory ap­proval and is expected to close in the first quar­ter of 2013.

For Pru­den­tial, this trans­ac­tion builds on its 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 2011. 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 2007. 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 by num­ber of branches 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 Thai­land with around one mil­lion in-force poli­cies. In the 12 months to 30 June 2012, Thanachart Life's profit af­ter tax was GBP25 mil- lion (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.

Mr Som­jate Moosir­il­ert, CEO and Pres­i­dent of Thanachart Bank, said, "Fol­low­ing the ap­proval of the Of­fice of In­sur­ance Com­mis­sion, Thanachart Bank looks for­ward to part­ner­ing with Pru­den­tial to of­fer mar­ket-lead­ing life in­sur­ance prod­ucts to our cus­tomers throughout Thai­land. With this agree­ment and the com­mit­ment of Pru­den­tial to de­velop in­no­va­tive new prod­ucts and pro­vide train­ing to our staff, we ex­pect to of­fer even bet­ter prod­ucts and ser­vices to our cus­tomers. In this re­gard, this agree­ment strength­ens our com­mit­ment to be a univer­sal bank­ing group which pro­vides full fi­nan­cial ser­vices to all our cus­tomers, in­clud­ing de­posits, auto hire pur­chase, hous­ing and per­sonal loans, SME and cor­po­rate bank­ing ser­vices, in­sur­ance, life as­sur­ance, se­cu­ri­ties bro­ker­age and fund man­age­ment."

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 longterm 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 the Bank of Nova Sco­tia, 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".

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