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LONDON, April 8 (Reuters) - Aviva is quitting its bancassurance agreement with Singapore’s DBS Bank Ltd at the end of 2015, citing high renewal costs that it said were neither “economically viable or justifiable” to shareholders.
The announcement on Wednesday marks the end a 14-year relationship that spearheaded the British insurer’s expansion into Asia’s thriving wealth and insurance sector.
Aviva’s decision leaves the path clear for other insurance and financial services providers keen to distribute their products to DBS’s affluent customer base.
Prudential, AIA Group Ltd and Manulife Financial Corp are among those shortlisted to partner DBS, people familiar with the matter told Reuters in February.
“Given the strength of our relationship with DBS, Aviva was well-placed in this process. However, the cost to renew the agreement was far in excess of what we saw as economically viable or justifiable to our shareholders,” Chris Wei, CEO Global Life and Chairman Asia at Aviva, said in a statement.
“Aviva remains highly disciplined regarding capital allocation.”
Aviva said the conclusion of the agreement was not material at group level, representing less than 3 percent of its total value new business in 2014, and 20 percent of new business in its Singapore arm.
It will retain the existing book of business, associated profits, customer rights relationships purchased in the original transaction with DBS in 2001.
The anticipated acquisition of Friends Life Group adds Friends Provident International to Aviva’s Asian portfolio of companies, expanding its capabilities in Singapore, Hong Kong and Dubai.
Its current local partners include COFCO in China, Astra International in Indonesia, First Financial in Taiwan and VietinBank in Vietnam. (Reporting By Sinead Cruise in London and Abhiram Nandakumar in Bengaluru)