Siam Commercial Bank (SCB), Thailand’s third-largest lender, has begun accepting bids for its life insurance business, according to sources. If completed, the transaction could net SCB around US$3 billion.
Prudential Plc, AIA, and Manulife are some of the firms reportedly eyeing a deal for SCB Life Assurance.
Last year, SCB planned to sell a 49% stake in the insurance unit, but it was shelved due to changes in foreign ownership rules governing the insurance sector. This time, whether the bank will sell part or all of SCB Life Assurance will depend on the bids it will receive, with the first ones expected to arrive in early February.
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Thailand’s regulations allow a maximum of 49% foreign ownership in domestic insurers, but exceptions are allowed on a case-to-case basis.
The deal will include rights to sell insurance products through SCB’s 1,200 branches all around Thailand. This bancassurance model is attractive to banks as insurers are willing to pay large sums to gain access to lenders’ branch networks, especially in developing markets with an expanding middle class, like Thailand.
SCB is currently the fourth largest life insurer in the country, with Muang Thai Life Assurance Public Co. leading the pack. Thailand and other Southeast Asian markets are seen as areas for potential growth by international insurers, due to faster premium growth rates and low insurance penetration.
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