Thailand's Siam Commercial Bank seeks bids for insurance business -sources (updated)

Krung Thai Bank PCL

23/01/2017 11:41

(Adds comments, sector performance) 
    By Anshuman Daga and Saeed Azhar 
    SINGAPORE, Jan 23 (Reuters) - Siam Commercial Bank Pcl (SCB) 
 SCB.BK  has begun to formally seek bids for its life insurance 
business in a sale that could raise about $3 billion for 
Thailand's third-biggest lender, said people with knowledge of 
the process. 
    Prudential PLC  PRU.L , AIA Group  1299.HK > and Manulife 
Financial Corp  MFC.TO  are among insurers weighing a bid for 
SCB Life Assurance, the people said. 
    SCB was looking to sell a 49 percent stake in the unit last 
year, but the process was delayed due to expected changes in 
foreign shareholder rules governing the sector, according to 
separate sources aware of the process.  
    Whether it sells all or only part of the business depends on 
the offers it receives and who they are from, the people said. 
First round bids are expected to be submitted by early February, 
they added. 
    The sources for this story declined to be identified as they 
were not authorised to speak to the media. 
    SCB's CEO Arthid Nanthawithaya declined to comment. 
Prudential, AIA and Manulife declined comment. 
    Thailand caps foreign companies' stakes in domestic 
insurance ventures at 49 percent, but lawyers said Thailand 
recently amended its rules to allow foreign insurers to seek 
government permission to own more than 49 percent or up to a 100 
percent shareholding in a Thai insurer. 
    Bangkok-based law firm Tilleke & Gibbins said in a note last 
week that the move is a significant reform for Thailand's life 
insurance industry, following liberalisation of the country's 
non-life insurance sector in recent years. 
     
    GLOBAL INSURERS 
    SCB's deal is expected to include rights for a buyer to sell 
insurance products through the bank's 1,200 branch network. The 
so-called bancassurance model is lucrative for banks as global 
insurers are willing to pay hefty fees for access to lenders' 
branch networks and for exposure to a rapidly growing middle 
class in developing markets, such as Thailand. 
    SCB Life is ranked fourth in Thailand's life insurance 
market, with Muang Thai Life Assurance Public Co the market 
leader. 
    Other major players are AIA, France's AXA  AXAF.PA , which 
has a deal with Krung Thai Bank  KTB.BK , and Thai Life 
Insurance. 
    Southeast Asia is seen as a growth region for foreign 
insurers, who are attracted by relatively faster growth rates of 
life premiums and the region's low insurance penetration. 
    The Thai Life Assurance Association said this month that 
total premium income in the country grew 5.4 percent from 
January to November 2016, to 508 billion baht ($14.4 billion). 
Analysts expect strong growth. 
    "The Thai economy is expected to grow and there's more 
savings coming out as well, so things are looking better than 
before," said Rajnish Juta, who looks after Southeast Asia 
insurance services at Deloitte & Touche. 
    "I would look at Thailand and Indonesia as the ones where 
companies will be looking for growth. But the reason why they 
might chose Thailand is because it's much more stable than 
Indonesia. It's easier to do business in Thailand," he said. 
 
 (Additional reporting by Manunphattr Dhanananphorn in BANGKOK; 
Editing by Martin Howell and Susan Fenton) 
 ((anshuman.daga@tr.com; +65 64035676; Reuters Messaging: 
anshuman.daga.thomsonreuters.com@reuters.net)) 
 
Keywords: SIAM COMRCL INSURANCE/