HSBC in agreement to buy AXA Singapore for $780 million

HSBC said the move will help cement its aim of becoming a leading wealth and insurance manager targeting high net worth populations in Asia.
HSBC said the move will help cement its aim of becoming a leading wealth and insurance manager targeting high net worth populations in Asia.PHOTO: REUTERS

SINGAPORE - HSBC has agreed to acquire AXA's Singapore insurance business for US$575 million ($780 million), the banking heavyweight said on Monday (Aug 16).

HSBC Insurance (Asia-Pacific), which is an indirect wholly owned subsidiary of HSBC, has proposed to acquire 100 per cent of the issued share capital of AXA Insurance in Singapore, subject to regulatory approval.

AXA Singapore is currently the eighth-largest life insurer in Singapore by annualised new premiums. It is also the fifth-largest property and casualty (P&C) insurer and has a share of the health insurance market.

The combined business would create the seventh-largest life insurer based on annualised new premiums and fourth-largest retail health insurer based on gross premiums. This comes to about 600,000 policies in force, covering life, health and P&C, HSBC said in a statement.

If the deal goes through, the intention is to merge the operations of HSBC Life Singapore and AXA Singapore, subject to further court and regulatory approvals. 

The merged entity will target high net worth individuals and their families in Singapore and across the region, as well as employees of smaller companies.

“We see significant opportunity to offer employees digital and health protection benefits,” said Mr Bryce Johns, group general manager and global chief executive of HSBC Life and Insurance Partnerships.

Mr Wong Kee Joo, chief executive of HSBC Singapore, said the acquisition will “enhance HSBC’s proposition to customers and businesses, and provide an avenue for us to add on to our wealth business in Singapore”.

Mr Johns added that “there is a lot of synergy with both units coming together”. 

The move will also enable HSBC to scale its business in Singapore and accelerate its plan to become one of the top five insurance providers in the city by 2025, he said.

Once the acquisition is complete, AXA's policies in Singapore will be rebranded as HSBC policies. However, the terms and conditions will remain unchanged, an agent for AXA Singapore told The Straits Times.

The agent, who requested not to be named, said there will also be a wider range of products, including investment products, available to AXA clients.

As at Dec 31 last year, AXA Singapore had net assets of US$474 million, annualised new premiums of US$85 million and gross written premiums of US$739 million. It reported a profit before tax of US$23 million for last year.

The move comes at a time when demand for life insurance coverage has been on the rise amid the coronavirus pandemic.

According to a recent report released by the Life Insurance Association, Singapore's life insurance industry drew $2.68 billion in weighted new business premiums for the first six months of this year, surpassing the same period in 2019 and last year.

New sales for the first half of this year surged 61 per cent from $1.66 billion in first half of last year. This was also higher than the $1.91 billion in new sales for the first half of 2019.