MANILA, Philippines - The AIA Group, Manulife Financial Corp. of Canada, Prudential Plc, Metlife, and the FWD Group has submitted bids to enter into a bancassurance distribution partnership with Citigroup.
The five insurers have either a strong global or Asian presence, including the Philippines.
The Philippine American Life and General Insurance Co. (Philam Life) is a subsidiary of the AIA Group, while Prudential Plc through PruLife UK Philippines.
Manulife Financial Corp. of Canada presence is through Manulife Financial Philippines, and the FWD Group through its soon-to-be launched FWD Philippines. Metlife used to operate in the Philippines.
According to Reuters, an exclusive bancassurance distribution partnership with Citigroup covers 14 Asian nations with the potential to generate $10 billion over a 15-year period.
The same report said that the winning bidder “will make an exclusivity payment of $1.5 to $2 billion to Citigroup and split the sales with the US bank. In return, the insurer will gain access to Citigroup’s 600 branches and more than 34 million consumer accounts.â€
Industry sources said that Prudential Plc might be the weakest bidder since the European insurer already has an existing partnership with Standard Chartered Bank.
Bancassurance allows insurers to access the distribution channel of banks, in effect, doubling the size and reach of its distribution channel. Traditionally, insurers relied solely on its sales agency platform.
In the Philippines, the top 10 life insurers have an exclusive bancassurance relationship with a domestic commercial bank.
The once-exclusive and expensive bancassurance practice however may soon be a thing of the past as restrictions may be lifted, under certain conditions. And theoretically, bancassurance will be open for practice to all banks, from commercial to rural banks.