DBS And CGNU Extend Bancassurance Partnership To Hong Kong
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Move Further Builds Pan-Asian Reach for DBS and CGNU
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Partnership Enables Distribution Of CGNU's World-Class Insurance Products To DBS' One Million Customers In Hong Kong
HONG KONG/SINGAPORE, FEBRUARY 18, 2002 - DBS Group Holdings Ltd and CGNU plc today announced their second bancassurance partnership to further expand the Pan-Asian reach of the partnership into Hong Kong. The move allows the partners to target
Hong Kong's growing long-term insurance market estimated at about HK$11 billion (about S$2.6 billion).
DBS, the largest banking group in South East Asia, first teamed up with CGNU, the largest insurer in the U.K., with a bancassurance partnership in Singapore in July 2001. The Hong Kong agreements signed today are a further step in DBS' goal to be an integrated Pan-Asian financial services provider.
Philippe Paillart, chief executive officer of DBS, said: "This partnership with CGNU will further strengthen our bancassurance suite of offerings in Hong Kong and deepen our Pan-Asian reach. We see immense synergies in combining CGNU's bancassurance expertise and DBS' efficient distribution network to hone our presence in Hong Kong. It is an important strategic move that underscores our goal of building an integrated financial services suite to offer a broad range of world-class wealth management solutions to our customers.
"Hong Kong is one of our key markets, following our acquisition of Dao Heng last year, and our goal is to become even stronger here as we expand our regional capabilities."
DBS operates in Hong Kong through its subsidiaries Dao Heng Bank, Overseas Trust Bank and DBS Kwong On Bank (together DBS Hong Kong). With the acquisition of Dao Heng Bank, which was concluded in September 2001, DBS is now the fourth largest bank by assets, the third largest credit card issuer, and one of the premier consumer banks, in Hong Kong.
Paillart added: "The fact that we were able to extend our arrangements to Hong Kong demonstrates our joint faith in our partnership and the powerful combination of our extensive distribution capabilities with CGNU's world-class product know-how."
According to CGNU's projections, the Hong Kong long-term insurance market is expected to see significant growth potential. In 2001, total sales of individual life plans in Hong Kong are estimated at HK$11 billion (about S$2.6 billion), with bancassurance accounting for some 30 per cent of sales.
Under the agreements announced today, CGNU will purchase DBS' Hong Kong insurance subsidiaries - DBS Kwong On Insurance Ltd and Dao Heng Assurance Ltd - and will also make an upfront payment for the exclusive distribution rights with DBS in Hong Kong. DBS will, in turn, enter into an exclusive arrangement to distribute CGNU life and general insurance products throughout its banking network in Hong Kong. The total purchase price and upfront payment will amount to HK$349 million (S$82 million) and will be paid at completion, which is expected to take place in the second quarter of 2002. Prior to completion, DBS Kwong On Insurance Ltd will pay out a dividend of HK$127 million (S$30 million). DBS will also receive continuing payments and commissions depending on actual performance going forward. As part of the partnership, DBS will build a dedicated specialist sales force to sell these and other related wealth management products. The bancassurance partnership is for ten years and will give CGNU exclusive access to DBS' one million customers in Hong Kong.
Philip Twyman, group executive director of CGNU said: "This transaction deepens our strategic relationship with DBS following the encouraging start to our partnership in Singapore. We will also consolidate our top-five position in the Hong Kong general insurance market."
Jackson Tai, president and chief operating officer of DBS, said: "The extension is great news for DBS and CGNU. Last year, DBS became a leading bancassurer in Asia through our partnership with CGNU in Singapore. Adding Hong Kong to this arrangement further strengthens our position. More importantly, the real winners will be our 5 million customers in this region who will have access to the leading bancassurance products in the world."
"This is also great news for our shareholders. We will broaden our fee income base with cross-selling potential as we can offer more wealth management products through our sales force."
The Office of the Commissioner of Insurance of Hong Kong has been kept informed of the transaction, and completion of the transaction is subject to the approval of the relevant regulatory authorities. Legal completion is expected to take place in the second quarter of 2002.
NOTES TO EDITORS:
Exchange rate: HK$1 = S$0.23 = £0.09
About DBS
DBS Group Holdings Ltd is the holding company of DBS Bank and is the largest banking group in Southeast Asia. Beyond Singapore, DBS Group serves corporate, institutional and retail customers through subsidiaries and associated companies in Hong Kong, The Philippines, Indonesia and Thailand, and international banking services through a network of overseas branches and offices. With its acquisition of Dao Heng Bank in June, 2001, DBS is the fourth largest bank in Hong Kong by assets.
In line with DBS' strategy to be the best bank in Asia, the bank has been expanding the range and depth of its product offerings, both through developing a wider and more diverse product range and through acquisitions and strategic partnerships.
The acquisition of 60 percent of Vickers Ballas in September 2001 gives DBS a leading presence in the stock broking business, not only in Singapore but regionally. DBS also formed alliances with global financial services companies as part of its strategy to enhance its wealth management suite of offerings. They include the world's largest investment consultants Frank Russell Company, TD Waterhouse, the world's largest online and self-directed brokerage companies outside of the US, and CGNU.
For more information, check DBS' website at : www.dbs.com
About CGNU
CGNU plc is the world's seventh-largest insurance group, the largest insurer in the UK and one of the top five life companies in Europe. Its main activities are long-term savings, fund management and general insurance. It has worldwide premium and investment sales of £27 billion from ongoing businesses and more than £200 billion in assets under management at 30 June 2001.
In July 2001 CGNU entered into a bancassurance partnership with DBS in Singapore and acquired The Insurance Corpartion of Singapore (ICS), then a subsidiary of DBS. CGNU established a joint venture life operation in Thailand in 1998. CGNU also has representative offices in China and India.
CGNU has a long-established presence in general insurance in Asia with top-five market positions in Singapore, Hong Kong, Malaysia, and Thailand.
For more information, check CGNU's website at : www.cgnugroup.com and www.cguasia.com
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