UOB and Prudential renew, expand regional strategic bancassurance alliance
SINGAPORE (Jan 10): United Overseas Bank (UOB) and Prudential have signed an agreement to renew their strategic regional bancassurance arrangement, extending the alliance by 15 years up to 2034.
The new agreement also increases the geographical scope of the alliance to include a fifth market, Vietnam. The strategic bancassurance arrangement currently covers Singapore, Malaysia, Thailand and Indonesia.
Under the arrangement, UOB will distribute Prudential's life insurance products to its consumer banking customer base in the five markets.
In addition, Prudential will use its digital capabilities to deliver protection focused propositions to aid UOB’s digital bank expansion and customer acquisition aspirations.
As part of this transaction, Prudential has agreed to pay UOB an initial fee of £662 million ($1.15 billion) for distribution rights, which is not dependent on future sales volumes.
This amount will be paid in three instalments of £230 million in Feb 2019, £331 million in Jan 2020 and £101 million in Jan 2021. Prudential says the fees will be funded via internal resources.
“We have built a highly effective bancassurance partnership with our colleagues at UOB that has driven double-digit annual sales and new business profit growth since 2010. The extended partnership provides UOB’s growing customer base with continued access to Prudential’s market-leading and innovative product suite, and demonstrates our commitment to fulfilling the evolving savings and protection needs of consumers,” says Mike Wells, group chief executive of Prudential.
“We believe there is a significant opportunity for future growth in Southeast Asia and the renewal reflects our commitment to using our capabilities to benefit our customers and shareholders,” he adds.
Wee Ee Cheong, deputy chairman and group chief executive officer of UOB, says the renewed agreement reflects the long-term approach and success of this partnership since 2010.
“UOB is focussed on creating financial solutions in the best interests of customers and which are essential to their lifestyles and life stages. We believe that our continued partnership with Prudential will create greater value for our customers and our stakeholders across the region and reinforces our position as the premier Asean bank,” Wee says.
“We look forward to working together with Prudential to continue developing unique and innovative insurance solutions for Asia’s burgeoning affluent population and its increasing number of mobile-first and mobile-only consumers,” he adds.
As at 3.05pm, shares in UOB are trading 16 cents higher at $25.71 while shares in Prudential are trading flat at $31.456.