Thai bank’s $3bn insurance unit sale breaks down

Disagreement over valuation cause of the deal’s cancellation, say sources

Thai bank’s $3bn insurance unit sale breaks down

Insurance News

By Gabriel Olano

Siam Commercial Bank (SCB) of Thailand’s plan to sell its insurance unit SCB Life Assurance has ended in failure, as it was unable to agree on a suitable valuation with potential buyer FWD Group of Hong Kong, sources said.

The transaction was estimated to have been worth around US$3 billion had it succeeded. According to Thompson Reuters data, it could’ve been the largest insurance M&A deal in the Southeast Asian region, and the biggest in Asia since 2016.

A source told Reuters that there were also differences on how to use SCB’s expansive network of branches to sell insurance products, contributing to the stalling of the deal. No announcement has been made whether SCB would try to sell the insurer again.

Bancassurance, which is a tie-up that leverages a bank’s branch networks to distribute insurance products, is gaining popularity in Asia over the traditional agent-based model in reaching the fast-growing insurance market.

SCB Life Assurance is one of the top insurers in Thailand, thanks to its parent bank’s wide reach. Its net premium earning for 2016 was THB48 billion (US$1.41 billion), while net profit was at THB5.8 billion (US$170.19 million).

Aside from FWD, several other insurance juggernauts such as AIA, Manulife, and Prudential were reported to be interested in SCB Life Assurance.

Related stories:
FWD enters exclusive talks to buy Thai bank’s insurance arm
Third-largest Thai bank to sell life insurance arm
Thailand’s economic growth prospects stable, says Allianz

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