Citibank, a division of
), has entered into an exclusive deal with AIA Group Limited for
distribution of the Asian life insurer's products through
Citibank's retail branch network across the Asia-Pacific region.
The deal, better known as bancassurance, is expected to start
from Jan 2014 with the establishment of a local territory each in
CITIGROUP INC (C): Free Stock Analysis Report
METLIFE INC (MET): Free Stock Analysis Report
MANULIFE FINL (MFC): Free Stock Analysis
PRUDENTIAL FINL (PRU): Free Stock Analysis
To read this article on Zacks.com click here.
The partnership arrangement will operate in 11 markets in the
Asia-Pacific region covering Hong Kong, Singapore, Thailand,
China, Indonesia, Philippines, Vietnam, Malaysia, Australia,
India and Korea. Notably, these are the fastest growing life
insurance markets in the world, paving the way for both companies
to gain from rising premiums.
The deal is valued at more than $4 billion and will run for a
period of 15 years. Though the financial terms were not disclosed
by the company, as per the deal, insurer AIA group is required to
pay an upfront fee amounting more than $1 billion to Citigroup in
addition to an annual fee based on the gains from the new
Through this partnership arrangement, AIA group got the
opportunity to cater to a huge client base of 13 million retail
card holders and banking customers across Citibank's 600 branches
in the above mentioned 11 markets. Notably, Citibank has
experienced strong growth in its Asian operations over the last
few years. This distribution deal will not only serve retail, but
also cater to corporate life insurance products through all
retail distribution networks including branches, telemarketing
and online platforms.
Apart from traditional market agency channel, in some countries,
banks are also insurance sellers. Citigroup expanded its
footprint in this bancassurance deal that is expected to fetch
revenue in the billions of dollars.
Citibank is not the first company to take such a move.
Recently, insurers from Europe, the U.S. and Japan began seeking
distribution agreements in Southeast Asia that local insurers and
banks offer. This led to increased momentum in Asia's
Notably, companies that bid for this multi-billion dollar
distribution deal include N.J.-based
Prudential Financial, Inc.
), New York-based
) and Canada-based
Manulife Financial Corp.