HSBC in life insurance distribution deal with Allianz in Asia

The Hongkong and Shanghai Banking Corporation Limited, a wholly-owned subsidiary of HSBC Holdings plc, has entered into a 10-year bancassurance agreement with Allianz SE (Singapore) Branch.

Under the deal HSBC Group companies will distribute Allianz Life insurance products in the following markets across Asia: Taiwan, Indonesia, Malaysia and mainland China, Australia, Sri Lanka, Brunei and the Philippines. The arrangements for distribution of products will be on an exclusive basis, subject to the exceptions noted below.

The agreement is conditional upon country-specific distribution agreements being entered into in respect of the key territories between the HSBC Group companies and Allianz Group companies listed below.

Consideration of US$ 100.5 m in cash will be paid under the agreement by Allianz (Singapore) Branch, specifically for the opportunity for Allianz Group companies to be the exclusive providers of life insurance products distributed by HSBC Group companies to customers in Taiwan, Indonesia and Malaysia.

HSBC Life (International) Limited (‘HSBC Life’), a wholly-owned Life insurance subsidiary of HBAP, has also entered into a sale and purchase agreement to sell the assets and liabilities, other than the statutory deposits of approximately US$ 10 m, of the Taiwan branch of HSBC Life to Allianz Taiwan Life Insurance Company Limited. Consideration of US$ 18 m in cash will be paid under this agreement by Allianz Taiwan Life Insurance Co Ltd.

The agreement and the sale and purchase agreement, which is subject to regulatory approvals, and four country-specific distribution agreements being entered into in the key territories are expected to be completed no later than the first half of 2013.

The total value attributed to the Taiwan branch of HSBC Life and the opportunity for Allianz Group companies to be providers of life insurance products distributed by HSBC Group companies to customers in Taiwan, Indonesia and Malaysia is US$ 128.5 m.

These distribution arrangements and the sale of the Taiwan Life insurance unit represent further progress in the execution of the HSBC Group strategy.

•  In mainland China, Malaysia and Indonesia the arrangements are as follows:

nIn mainland China, HSBC Group companies may continue to distribute Life insurance products of Ping An Insurance and HSBC Life Insurance Company Limited, in addition to Allianz products.

• In Malaysia, HSBC Group companies may continue to distribute Islamic insurance products of HSBC Amanah Takaful (Malaysia) Sdn Bhdc under existing distribution arrangements, in addition to Allianz products.
• In Indonesia, PT Bank Ekonomi Raharja Tbk, an HSBC Group company, is not subject to the distribution arrangement agreed with Allianz.

a. HSBC holds a 15.6% stake in Ping An Insurance.

b. A joint venture in which HBAP and National Trust each holds 50%.

c. A joint venture in which HBAP holds a 49% interest, Jerneh Asia Bhd (31%) and Employees Provident Fund Board (20%).

In the distribution countries other than the key territories, the granting of full exclusivity will depend on local market regulations.

The agreements will be between:

• In Malaysia: HSBC Bank Malaysia Berhad and Allianz Life Insurance Malaysia Berhad.
• In mainland China: HSBC Bank (China) Company Limited and Allianz China Life Insurance Company Limited.
• In Indonesia: The Hongkong and Shanghai Banking Corporation Limited and PT Asuransi Allianz Life Indonesia.
• In Taiwan: HSBC Bank (Taiwan) Ltd. & HSBC Insurance Brokers (Taiwan) Limited and Allianz Taiwan Life Insurance Company, Limited.

Following the agreement becoming unconditional, there will also be agreements between:

• In Sri Lanka: The Hongkong and Shanghai Banking Corporation Limited and Allianz Insurance Lanka Ltd.
• In Australia: HSBC Bank Australia Ltd. and Allianz Australia Life Insurance Limited.
• In Brunei and the Philippines, Allianz Group companies may work with non-Allianz Group companies to provide products to HSBC Group companies for distribution in these markets.