(Adds comments, sector performance)
By Anshuman Daga and Saeed Azhar
SINGAPORE, Jan 23 (Reuters) - Siam Commercial Bank Pcl (SCB) SCB.BK has begun to formally seek bids for its life insurance business in a sale that could raise about $3 billion for Thailand's third-biggest lender, said people with knowledge of the process.
Prudential PLC PRU.L , AIA Group 1299.HK > and Manulife Financial Corp MFC.TO are among insurers weighing a bid for SCB Life Assurance, the people said.
SCB was looking to sell a 49 percent stake in the unit last year, but the process was delayed due to expected changes in foreign shareholder rules governing the sector, according to separate sources aware of the process.
Whether it sells all or only part of the business depends on the offers it receives and who they are from, the people said. First round bids are expected to be submitted by early February, they added.
The sources for this story declined to be identified as they were not authorised to speak to the media.
SCB's CEO Arthid Nanthawithaya declined to comment. Prudential, AIA and Manulife declined comment.
Thailand caps foreign companies' stakes in domestic insurance ventures at 49 percent, but lawyers said Thailand recently amended its rules to allow foreign insurers to seek government permission to own more than 49 percent or up to a 100 percent shareholding in a Thai insurer.
Bangkok-based law firm Tilleke & Gibbins said in a note last week that the move is a significant reform for Thailand's life insurance industry, following liberalisation of the country's non-life insurance sector in recent years.
GLOBAL INSURERS
SCB's deal is expected to include rights for a buyer to sell insurance products through the bank's 1,200 branch network. The so-called bancassurance model is lucrative for banks as global insurers are willing to pay hefty fees for access to lenders' branch networks and for exposure to a rapidly growing middle class in developing markets, such as Thailand.
SCB Life is ranked fourth in Thailand's life insurance market, with Muang Thai Life Assurance Public Co the market leader.
Other major players are AIA, France's AXA AXAF.PA , which has a deal with Krung Thai Bank KTB.BK , and Thai Life Insurance.
Southeast Asia is seen as a growth region for foreign insurers, who are attracted by relatively faster growth rates of life premiums and the region's low insurance penetration.
The Thai Life Assurance Association said this month that total premium income in the country grew 5.4 percent from January to November 2016, to 508 billion baht ($14.4 billion). Analysts expect strong growth.
"The Thai economy is expected to grow and there's more savings coming out as well, so things are looking better than before," said Rajnish Juta, who looks after Southeast Asia insurance services at Deloitte & Touche.
"I would look at Thailand and Indonesia as the ones where companies will be looking for growth. But the reason why they might chose Thailand is because it's much more stable than Indonesia. It's easier to do business in Thailand," he said.