AIA Group (1299) has formed a 15-year strategic partnership with Bank of East Asia (0023).
That will see AIA buying the lender's life insurance business for HK$5.07 billion - a move to strengthen the insurer's competitiveness across the Greater Bay Area.
The acquisition of BEA Life is expected to be completed by the end of this year subject to regulatory approvals.
AIA will also acquire a closed portfolio of life insurance policies underwritten by Blue Cross (Asia-Pacific) Insurance.
Under the bancassurance partnership, BEA will distribute AIA's life and long-term savings products to its retail banking customers in Hong Kong, the mainland and Macau. BEA has more than 140 outlets in Hong Kong and the mainland, though cooperation will cover eight markets.
"Our complementary and broad capabilities across the GBA enable AIA and BEA to build a unique partnership and harness the growth potential as the region develops," said Jacky Chan, the insurer's regional chief executive.
BEA expects to book a profit of HK$1 billion from the deal. Part of the proceeds will be paid to shareholders while other money will be used to support business development. The bank announced plans in September to sell BEA Life after pressure from activist investor Elliott Management for reforms to boost shareholder returns
Shares of AIA dropped 3.74 percent to HK$92.75 yesterday while BEA slid 1.76 percent to HK$16.7.
From left: BEA executive chairman David Li, BEA co-chief executives Brian Li and Adrian Li, AIA chief executive and president Lee Yuan Siong, Jacky Chan and AIA non executive chairman Edmund Tse. SING TAO
