SCB Life still seeks foreign investors
Siam Commercial Bank (SCB) said this week it would welcome having foreign investors jointly develop its life insurance business rather than selling off its stake in the subsidiary.
The subsidiary, SCB Life Assurance, not only benefits from the bank’s extensive distribution channel but SCB is also developing a new model for insurance policy sales, said SCB’s president and chief executive Arthid Nanthawithaya.
He did not elaborate on details of the new distribution model but said it should prove attractive to foreign insurance firms seeking business opportunities in Thailand.
Teaming up with a foreign partner would allow Thailand’s third-biggest lender to provide customers with products its subsidiary cannot develop in the short-term, Mr Arthid said.
His remarks come after Reuters reported yesterday that SCB has put off selling its insurance unit in a deal potentially worth US$3 billion as talks with suitor FWD Group of Hong Kong failed on valuation disagreements, according to three people familiar with the matter.
One of the people said differences over using SCB’s vast branch network to sell insurance products after the completion of the deal was partly responsible for the stalemate. FWD is owned by tycoon Richard Li, the youngest son of Hong Kong’s richest man, Li Ka-shing.
It was not immediately clear if the Thai bank will relaunch the sale. Both SCB and FWD declined to comment, while the sources asked not to be named due to the sensitive nature of the issue.
At $3 billion the deal would have marked the largest-ever M&A transaction in the insurance industry in Southeast Asia and the biggest in Asia since August 2016, according to Thomson Reuters data.
Insurers in Asia have been looking to expand their so-called bancassurance tieups — or leveraging bank branch networks for distribution — as opposed to the traditional agency model to tap into the region’s fast-growing insurance market.
The takeover would have helped FWD expand its wholly owned insurance business in Thailand, which started in 2012 and had total assets of about 74.7 billion baht at the end of 2015.
SCB Life Assurance had net premium earnings of 48 billion baht and net profit of 5.8 billion in 2014, as per financials available on the SCB Life Assurance website.