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HSBC Will Acquire Axa's Singapore Insurance Assets In A $575 Mln Deal

HSBC Will Acquire Axa's Singapore Insurance Assets In A $575 Mln Deal
French insurance firm Axa's Singapore assets are to be acquired by HSBC Holdings in a deal worth $575 million. This is argued to be a part of the business plan of HSBC of expanding its wealth management business in Asia and increasing revenue from fee income.
The business entity that would result from the combination of HSBC Life Singapore and Axa Singapore would be the seventh largest insurance company in the world and the fourth largest retail health insurance company in Singapore, HSBC said in a statement. The new combined entity will have more than 600,000 policies in-force covering life, health and property and casualty insurance, the company said.
Currently, the status of HSBC is the tenth largest life insurance firm in Singapore, and does not offer any health insurance policies to customers.
"This transaction gives the scale and the capability to continue to invest and grow from here," Bryce Johns, global CEO of HSBC life and insurance partnerships, told the media in an interview on Monday.
According to Dealogic, the completion of this deal will mark the biggest for HSBC since its 2012 merger of its Oman branch with Oman International Bank for $726 million.  
Thousands of global companies use Singapore as a base for their regional operations and this city-state is also one of the biggest offshore wealth hubs of Asia.
The Singapore business of British insurer Aviva was acquired last year by Singapore Life, a startup insurer that is supported by investors including buyout group TPG and insurer Sumitomo Life, in the latter’s strategy of expansion in Southeast Asia.
HSBC was seeking to make about three to four "bolt on" acquisitions in Asia outside of China in business areas of insurance and asset management, HSBC Group Chief Executive Noel Quinn said last month., even as the company pursued its strategy to focus on organic growth in Hong Kong and mainland China.
An investment of $3.5 billion in its wealth and personal banking business in Asia was announced by the Asia focused British bank in February as a part of its new strategy of shifting away assets from some of the less-profitable business lines in Europe and North America.
Earlier this year, its retail banking businesses in the United States and France were sold off by the bank. HSBC is also focusing on generating more revenues from fees it earns from selling products to customers as banks all over the world are struggling to generate revenues from conventional banking services because of the ultra-low interest rate environment.
The acquisition deal was subject to regulatory approvals and would potentially be closed by the fourth quarter, said Axa whose unit in Singapore had net assets of $474 million and annualized new premiums of $85 million with gross written premiums of $739 million.
Access to a large tied-agency sales force, a number of independent and leading financial advisory companies and a large number of insurance policyholders and corporate relationships would be available to it from the acquisition of Axa Singapore, HSBC said.

Christopher J. Mitchell

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