Exclusive: Citigroup to
seek bids for Asia general insurance distribution deal -
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[March 28, 2017]
By Anshuman Daga
SINGAPORE
(Reuters) - Citigroup Inc will seek bids from global insurers keen to
sell general insurance products across the U.S. bank's Asia-Pacific
markets, in a deal that could be worth at least $500 million, a source
with knowledge of the matter told Reuters.
Citi's move underscores how banks are leveraging their network of
branches and customer base to generate assured revenue over many years,
as demand for insurance grows in the region, the source said.
The multi-year, bancassurance deal for products such as motor, property
and travel insurance, will be one of the largest of its kind in the
region, and give insurers access to 15 million customers of Citibank in
12 markets including Singapore, Hong Kong, China, India and Australia.
Citi will kick off the process for the 15-year deal in a few days, and
expects to choose a partner in a few months, said the person who
declined to be identified as the information was not public.
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The deal is expected to be pitched to a number of insurers including AIG
and Allianz, two sources said.
The exact value of the non-life insurance deal will depend on various
issues including how bidders structure upfront payments and calculate
net present value of future commissions and deferred payments, the first
source said.
A spokesman at Citi declined to comment. AIG and Allianz also declined
to comment.
Citi's plan to seek partners follows the bank's move to allow insurer
AIA <1299.HK> in 2013 to sell life insurance through its Asia network in
a multi-year deal.
"The bank has invested a lot to grow its technology platform and digital
engagement over several years. The idea now is to complement the life
insurance partnership with another one for general insurance," said the
source.
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![](../images/032817pics/busine25.jpg)
People walk past a branch of Citibank in Beijing, China, April 18,
2016. REUTERS/Kim Kyung-Hoon
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Global
insurers are increasingly relying on bank distribution tie-ups to help generate
billions of dollars in revenue in Asia, where rising personal incomes are
enabling individuals and families to afford insurance.
"You
are bound to see participation across-the-board, from Japanese insurers to
Europeans and others for this kind of a deal," said the second person, who has
dealt with bank distribution transactions, referring to the Citi deal.
"More and more banks are monetizing their distribution networks as this doesn't
cost them much and the fees goes straight to the bottom line," he said.
The first source said Citi has an initial preference for one partner for all
markets but is open to considering more than one, given the range and scale of
the bank's retail platform.
Asia has seen a spate of bank distribution deals for life insurance in the last
five years and transactions for non-life insurance are also heating up.
In January, Standard Chartered and Allianz announced a 15-year deal that enabled
the German insurer to sell its general insurance products to StanChart's
customers in five Asia markets.
(Reporting by Anshuman Daga; Additional reporting by Carolyn Cohn in LONDON and
Suzanne Barlyn in NEW YORK; Editing by Randy Fabi and David Evans)
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