Manulife signs $1.2bn distribution deal with DBS

Manulife has agreed a $1.2bn deal with Singapore's DBS to exclusively distribute its products through the bank's network in a mark of the Canadian insurer's commitment to Asia and the value insurers are still prepared to place on the region's potential.

The agreement is considered the last big tie-up to be done among the region's banks and insurers following billion dollar, multiyear agreements inked between Citigroup and AIA and Standard Chartered and Prudential. No other comparable deal is due for at least three more years.

Many insurance products in the region are still sold door-to-door through vast networks of agents, meaning the use of an established bank network has extra value because bank customers generally represent a different market.

Manulife's 15-year deal starts in January 2016 and covers DBS's 200-plus branches in Hong Kong, Singapore, China and Indonesia as well as online and mobile channels. It involves about $1.2bn upfront plus annual payments linked to products sold.

Insurers have long considered Asia their biggest opportunity to develop new markets. The Pru's chief executive Tidjane Thiam - now heading to Credit Suisse - told investors in December he wanted the group to be ""30 times bigger" in Asian markets.

The Canadian group is the world's seventh-largest life insurer by market capitalisation and has made much of its longstanding presence in the region - it has been active for more than 100 years. However, it faced tough competition from leading international rivals to secure the deal.

Other bidders included Aviva - who had an existing deal with DBS - the Pru, AIA and SunLife, according to people with knowledge of the transaction. Manulife had deals with smaller local banks but its lack of a regional partner, unlike AIA or the Pru, was one factor that helped it win the DBS deal.

Typically, the deals involve a mix of price, technology and crucially partnership potential since they involve a large amount of bank staff training and general co-operation to set up.

The AIA-Citi deal, signed in 2013, also covered 15 years and involved an upfront payment of $1bn to put AIA products in front of the bank's 13m customers in the region and annual payments from the insurer based on the profits from business sold through the lender.

Last year, the Pru and StanChart extended their partnership, which first began in 1998, with a new deal covering 11 markets in Asia, up from nine previously.

JPMorgan advised Manulife, Morgan Stanley advised DBS.

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