AIA plans bancassurance to penetrate industry further

American International Assurance Company Ltd (AIA) which signed a deal to buy a 92.3 per cent stake in Aviva NDB Insurance for US$ 109 million, from British insurer Aviva and Sri Lanka's National Development Bank (NDB) earlier this month, plans to strike bancassurance partnerships with local banks, officials said.

“We want many bancassurance partnerships with other local banks which will facilitate more penetration in this sector," an official told the Business Times on the sidelines of a media conference to introduce AIA's Group Chief Executive President, Mark Tucker recently.

“We are deeply committed to developing the insurance sector, as well as the country by investing diverse aspects such as in the bond market, infrastructure and support the government in health initiatives and so forth,” he said.

The conclusion of the transaction and the subsequent rebranding and renaming of AVIVA NDB as AIA is subject to necessary legal, statutory and regulatory approvals, Huynh Thanh Phong, Regional CEO, AIA Group Ltd told media on an earlier occassion. “This may possibly be the largest insurance sale in the country," he said. This deal was done through Aviva NDB Holdings Lanka (Pvt) Ltd.

"The remaining 7.7 per cent of Aviva NDB Insurance not acquired represents the shares publicly held and traded on the Colombo Stock Exchange and no offer will be made for the remaining shares. Total net consideration payable by AIA with respect to the transaction including the exclusive bancassurance agreement with NDB and the sale of the NDB Aviva Wealth Management Ltd stake is US$109 million,” a company statement said earlier.

The acquisition reflects the quality of the Sri Lanka business, operations and management, and its position of strength in the Sri Lankan market. Customers will benefit from the strength, security and certainty associated from being part of the AIA Group, which is the fifth largest insurance company in the world by market capitalisation.

Sri Lanka is the 16th Asian market which AIA entered into and has further expanded its Asian leadership position. AIA is one of the fastest growing insurance companies and which is the fifth largest insurance company in the world by market capitalisation.

According to recent statistics and ratings of Standard and Poor AIA is one of the strongest companies, functioning in the Asian region. AIA being awarded with the best IPO of the year and the best deal of the year in 2010 has conducted operations for over 90 years.