UPDATE 1-Aviva cites high renewal costs in the end of DBS bancassurance relationship
(Adds details on Manulife, DBS deal)
LONDON, April 8 (Reuters) - Aviva said its attempts to extend its bancassurance agreement with Singapore's DBS Bank Ltd were hamstrung by high renewal costs that were neither "economically viable or justifiable" to shareholders.
The announcement on Wednesday marked the end of a 14-year relationship that spearheaded the British insurer's expansion into Asia's thriving wealth and insurance sector.
Separately, Canadian insurer Manulife Financial Corp announced it would pay $1.2 billion to secure the 15-year partnership that will allow the insurer to sell products through DBS's Asian branch network.
Manulife will pay the amount upfront to the Singaporean bank, while there will be variable payments based on the success of the partnership, the two companies said in a statement.
Prudential and AIA Group Ltd were among those previously 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. Continued...