Citigroup Inc has selected to partner with AIA Group Ltd to offer life insurance through the latter's branch network located in 11 countries in the Asia Pacific as the US lender decreases the number of insurance partners in the region, Bloomberg reported. The agreement, which will last for 15 years, will enable AIA to sell insurance products to Citigroup's customers in China, Hong Kong, India, Australia, Korea, Malaysia, Indonesia, Singapore, Thailand, the Philippines and Vietnam. Hong Kong-based AIA is the third largest insurance firm in the region in terms of market value.
As Citigroup replaces 150 separate agreements in the Asia-Pacific, the accord will allow AIA to access holders of over 34 million individual accounts. No financial details about the agreement were provided but a source told Bloomberg that the deal, counting commissions and upfront fees, could gather revenue of up to $20 billion.
Mizuho Securities Asia Ltd Analyst Jim Antos told Bloomberg, "For Citigroup, it's revenues without expense -- basically they're getting a new product. They just need the salespeople, and they already have plenty of salespeople."
The agreement would enable companies to tap a region which has not been largely penetrated by insurance firms. In its statement, Citigroup said only 2.6% of the population in the Asia Pacific region have life insurance, lower than the 3.65% in the US and the 8.44% in the US based on data from Swiss Re.
The individual customer accounts of Citigroup in the Asia Pacific had assets worth $218 billion. Bloomberg data showed that Asia is the biggest market of Citigroup outside North America, accounting for 21% of the bank's revenue in the three months ending September.
AIA has operations in 17 markets, with assets of $147 billion at the end of May, it's statement said. Its largest markets are Thailand and Hong Kong, the report said.
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