SINGAPORE: HSBC said on Monday (Aug 16) it has agreed to acquire AXA's insurance assets in Singapore for US$575 million, part of its broader strategy of scaling up its wealth management business in Asia and boosting fee income.
The proposed acquisition, which is subject to regulatory approval, is a "key step" in expanding its insurance and wealth franchise in Singapore, the bank said in a news release.
"This combined business will not only materially scale up HSBC’s presence in the regional insurance market, it will also provide an excellent platform for future growth," it added.
The bank said in February it would invest US$3.5 billion in its wealth and personal banking business in Asia, while shifting assets away from some less-profitable business lines in Europe and North America.
It is also trying to generate more revenue from fees it earns from selling products to customers, as it struggles with lending in a low interest rate environment.
HSBC said the combined business would be the seventh-largest life insurer and the fourth-largest retail health insurer, with more than 600,000 policies in force covering life, health and property and casualty insurance.
“This is an important acquisition that demonstrates our ambition to grow our wealth business across Asia. Wealth is one of our highest growth and highest return opportunities, and plays to our strengths as an Asia-centred bank with global reach," said HSBC's group chief executive Noel Quinn.
AXA said in a statement that the deal would probably close by the fourth quarter of this year.
AXA Singapore had net assets of US$474 million, annualised new premiums of US$85 million and gross written premiums of US$739 million.
The sale is part of AXA's moves to streamline its business in a restructuring launched by chief executive Thomas Buberl, a process that includes selling assets in some countries and markets to boost returns.
“This transaction is another step in AXA’s simplification journey,” said Mr Gordon Watson, CEO of AXA in Asia and in Africa, in a press release.
"In line with the group’s strategy, we are focusing on our core markets where we have the size, presence in the right business segments and a strong potential to grow."
AXA Singapore said it will ensure a "seamless transition" for customers.
“The team at AXA Singapore is proud of what we have achieved over the years and of the role we have been able to play in meeting the insurance protection needs of people in Singapore," said Mr Jean Drouffe, CEO of AXA Singapore.
"As we enter a new chapter for AXA Singapore, we remain focused on serving our customers and ensuring a seamless transition for all.”