PRUDENTIAL Life Assurance (Thailand), a subsidiary of Prudential plc, has entered into a strategic bancassurance partnership with TMB Bank with an initial term of 15 years to provide Prudential’s leading suite of health and wealth solutions to TMB’s large and growing customer base.
The new agreement, announced on March 19, significantly expands and extends Prudential’s successful partnership with Thanachart Bank to TMB Bank, which, following their merger, is the sixth largest bank by deposits and fourth largest bank by branches in Thailand.
Thailand is the second largest life insurance market and the largest mutual fund market in Asean, and has a significant growth potential. The bancassurance partnership strongly complements Prudential’s top-five market position in the mutual fund market. It also deepens the strong relationship with TMB established through Prudential’s joint venture asset management partnerships, where Prudential has a 12% share of the Thai mutual fund market.
Together, both partners now have a high-quality platform to deliver best-in-class, holistic health and wealth solutions to nine million TMB customers – equivalent to 17% of the country’s adult population.
In December 2019, Eastspring Investments acquired a 50.1% interest in Thanachart Fund, with Thanachart Bank, a wholly-owned subsidiary of TMB, holding the remaining 49.9%. In September 2018, Eastspring acquired a 65% stake in TMB Asset Management, now known as TMBAM Eastspring.
The new strategic partnership with TMB enables Prudential Thailand to achieve scale and presence in the life insurance market, consistent with its ambition of being a leading player. It is also strongly aligned with TMB’s own aspirations of being a partner in its customers’ lives in providing a suite of insurance solutions and digital services.
Prudential Corporation Asia chief executive Nic Nicandrou says the long-term strategic life insurance partnership with TMB further complements its asset management relationships in Thailand. He adds the partnership will provide Thais with access to a fast growing and expanding digital platform and best-in-class holistic solutions to both protect their families and grow their wealth.
TMB chief executive Piti Tantakasem says the partnership will take the bank’s life insurance business to the next level with Prudential Thailand, as it provides innovative offerings to customers across the country.
The extended exclusive partnership agreement will commence on January 1 2021 and until this time the current arrangement with Thanachart Bank will continue. This agreement requires the novation of TMB Bank’s current bancassurance distribution agreement with another insurance group. The change in arrangements will cost 24.5 billion baht (US$754 million), which will be paid in two instalments, with 12 billion baht due in April 2020 and the remainder on January 1 2021.
The funding for this transaction will utilize a mixture of Prudential Asia’s existing resources and Prudential plc’s own resources, potentially also including new debt. In line with the group's policy, the amount described above will be capitalized as an intangible asset representing distribution rights.
Prudential has operated in Thailand for more than 24 years through Prudential Life Assurance (Thailand). Prudential serves more than 1.6 million customers in Thailand and manages more than 112 billion baht of assets on their behalf. In 2019, the Thai business grew IFRS (International Financial Report Standards) operating profits by 8% to US$170 million and life weighted premium by 8% to US$619 million.
