AIA, Prudential, others weigh bids for Thai SCB's insurance unit stake-sources

By Saeed Azhar and Denny Thomas
SINGAPORE/HONG KONG, May 31 (Reuters) - AIA Group 1299.HK
and Britain's Prudential PLC PRU.L are among insurers
considering bids to buy at least 49 percent of the $3 billion
insurance unit of Thai lender Siam Commercial Bank (SCB)
SCB.BK , people with direct knowledge of the matter said.
A successful stake sale in SCB Life Assurance Public Company
Limited would make it one of Southeast Asia's biggest insurance
transactions ever. The deal would also allow the new partner to
distribute insurance products through the branch network of SCB,
Thailand's third-biggest lender.
While the sale process is only expected to kick off in the
third quarter of 2016, the insurers have started preliminary
discussions with potential advisers for prospective bids, the
people told Reuters. The list of interested insurers also
includes Swiss ACE Group and Canada's Manulife Financial Corp
MFC.TO , they said.
Southeast Asia is a battleground for foreign insurers, who
are attracted by the region's lower insurance penetration levels
and faster growth rates of life insurance premiums compared to
levels in the developed world.
And bank distribution deals, termed bancassurance, are
emerging as a popular means to sell insurance products in Asia,
complementing the more commonly used agency channel route.
AIA, Aviva AV.L , Prudential and Canadian insurers Manulife
and Sun Life Financial Inc SLF.TO have bitterly fought every
time a bancassurance deal has come to the market in Asia in
recent years.
SCB, with its 1,200 domestic outlets, offers one of the last
meaningful bank distribution deals available in Southeast Asia.
The lender is seeking a partner for the insurance unit to
accelerate growth in the business. POTENTIAL
Thailand, with a population 65.7 million, trails Southeast
Asian markets such as Singapore and Malaysia in insurance
penetration.
Total life insurance premium income in the country is
forecast to grow by 9 percent to 585.7 billion baht ($16.40
billion) in 2016 after rising by 6.7 per cent last year, the
Thai Life Assurance Association has said.
Insurers "see growth potential in Thailand - big population
and simple products at the moment," one of the people said.
SCB is working with Morgan Stanley (NYSE:MS) MS.N and Credit Suisse
CSGN.S on the sale process, the people said.
The people declined to be identified because details of the
sale process and names of potential buyers are not public.
Spokespeople for Manulife, Prudential, AIA, ACE, Morgan
Stanley and Credit Suisse declined to comment.
SCB did not respond to several Reuters requests for
comments. In the past it has declined to comment on the process.
SCB Life is ranked fifth in Thailand's life insurance
market, which AIA leads. Other major players are France's AXA
AXAF.PA , which has a deal with Krung Thai Bank KTB.BK ,
Prudential, which has tied up with Thanachart Bank, and Bangkok
Life.
Southeast Asia's biggest insurance deal so far is AIA's
$1.73 billion purchase of Dutch lender ING's ING.AS Malaysian
insurance business in 2012.
Thailand caps foreign companies' stakes in domestic
insurance ventures at 49 percent, but may permit higher holdings
on a case-by-case basis.
($1 = 35.7100 baht)