AIA Group has agreed to purchase Bank of East Asia’s life insurance unit six months after it first began exploring a sale.
AIA Group has agreed to buy the unit at HK$5.07 billion ($653 million), according to an exchange filing, alongside a closed portfolio of life insurance policies written by Blue Cross (Asia-Pacific) Insurance Ltd.
The sales agreement includes a signed distribution partnership with Bank of East Asia (BEA) to distribute AIA’s life and long-term savings products exclusively to its retail banking customers in Hong Kong and mainland China for 15 years.
The Hong Kong-based family-owned lender is expected to book a profit of HK$1 billion from the disposal and plans to give part of the proceeds to shareholders, according to a separate filing, with both BEA and AIA looking to complete the deal by the end of the year.
6-Month Sale
This marks an end to the sales process which first kicked off in September last year as a consequence of a 9-month review of BEA’s business and assets, led by Goldman Sachs.
In addition to AIA, Hong Kong-listed financial firm China Strategic was reportedly the other interested bidder.
New premium income from BEA Life's whole life and annuity products surged 9.5 times in 2020, according to its financial report, which drove sales commission income to grow 83 percent.
