* Deal includes $1.5-2 bln in exclusivity payment
* Citigroup has 34 mln retail accounts in Asia
* Bancassurance sales have much room to grow in Asia
By Denny Thomas
HONG KONG, Nov 29 Five insurers including
Metlife Inc and AIA Group Ltd have submitted
final bids to have their products distributed by Citigroup
in Asia, a deal estimated to generate more than $10 billion in
revenue over 15 years, people familiar with the matter told
British insurer Prudential Plc, Canada's Manulife
Financial Corp and Hong Kong tycoon Richard Li's
insurance company FWD Group are the other companies that have
submitted final bids, they said.
Global insurers are increasingly relying on bank
distribution to ramp up insurance sales in Asia, where rises in
personal incomes for many countries have enabled individuals and
families to afford insurance.
If successful, the Citigroup deal would be Asia's
second-biggest bancassurance deal behind Prudential Plc's
agreement with Standard Chartered Plc, people
familiar with the matter said.
There will most likely be just one successful bidder,
although there is an outside chance that Citigroup may pick two
given that the deal covers 14 Asian markets, one person said.
FWD has only bid for bancassurance in four markets, while
rest of the suitors are seeking Citigroup's partnership in most
of the 14 markets, they said.
All the bids have come in around the same value, and suitors
have improved their offers from the preliminary round,
underscoring the strong interest in the sale process, a person
said, adding that a deal should come early next year.
The estimated $10 billion in future sales would be split
between the winning insurer and Citigroup, and the deal also
includes an exclusivity payment of $1.5-2 billion by the insurer
to Citigroup, the people added.
A Citigroup spokesman declined to comment, as did
representatives for the five insurance companies. Sources
declined to be identified as the discussions are private.
A successful bid would give that firm access to Citigroup's
600 branches and over 34 million retail accounts in the region
where the Wall Street bank has about $218 billion under
management, including the assets of its private bank.
Last year, Citigroup's Asian consumer bank business
accounted for about half of the $15 billion generated by
Citigroup Asian unit.
Bancassurance, as these agreements are called, was virtually
non-existent in Asia but it has taken off since early 2000 and
now accounts for 40 percent of insurance sales in Indonesia and
half of all sales in Hong Kong. Still, it lags the sales in
developed markets such as Spain, where 60 percent of all
insurance sales come from bancassurance.
Bancassurance has been a central plank of the roughly $32
billion insurance industry M&A struck in Asia-Pacific region in
the past two years. That includes Sun Life Financial Inc's
and Malaysian state investor Khazanah's deal to buy
Aviva Plc's Malaysian insurance joint venture with lender
CIMB Group for $597 million earlier this year.