Manulife Financial Corp., Canada’s largest life insurer, will pay DBS Group Holdings Ltd. S$1.6 billion ($1.2 billion) to sell its insurance products in Asia, replacing Aviva Plc, whose contract expires at the end of 2015.
The 15-year accord, effective Jan. 1, covers Singapore, Hong Kong, China and Indonesia, Manulife said in a statement on Wednesday. Aviva said the conclusion of its 2001 deal “is not material at group level,” representing 3 percent of its new business.
Global insurers have been seeking distribution tie-ups with lenders that have large Asian branch networks. AIA Group Ltd. has an agreement to distribute its products through Citigroup Inc. outlets in Asia Pacific, and last year Prudential Plc extended its arrangement to sell life-insurance products in the region via Standard Chartered Plc.
The agreement “accelerates our growth in Asia, deepens and diversifies our insurance business, and gives us access to a much wider range of customers,” Manulife President and Chief Executive Officer Donald Guloien said in the statement.
Manulife will pay for the contract with internal resources, according to the statement. There will be additional variable payments depending on the amount of business, the statement showed.
Aviva Chief Executive Officer Mark Wilson has been targeting high-growth markets such as Asia as he rebuilds capital depleted by the financial crisis.
Aviva said in the statement its acquisition of Friends Life Group Ltd strengthens its position in Singapore, Hong Kong and Dubai. It will retain the existing book of business, customer rights and relationships purchased in the original with DBS.
Aviva’s shares rose 0.4 percent to to 544.5 pence at 2:22 p.m. in London, valuing the company at 16.4 billion pounds ($24.5 billion).