HSBC Holdings said on Monday it had agreed to acquire French insurer AXA's Singapore assets for $575 million, a move aimed to scale up its wealth management business in Asia and boost fee income. The agreement was signed by HSBC Insurance (Asia-Pacific) Holdings Ltd, an indirect wholly-owned subsidiary of HSBC Holdings, to acquire 100 percent of the issued share capital of AXA Insurance Pte Limited (AXA Singapore). The proposed acquisition is subject to regulatory approval. It is a "key step in achieving HSBC's stated ambition of becoming a leading wealth manager in Asia, by expanding its insurance and wealth franchise in Singapore, a strategically important scale market for HSBC, and a major hub for its ASEAN wealth business." HSBC said in a statement. AXA Singapore is currently the 8th largest life insurer in Singapore by annualised new premiums, 5th largest property and casualty (P&C) insurer and a leading group health player. It had net assets of $474 million, annualised new premiums of $85 million, gross written premiums of $739 million and profit before tax of $23 million for the year ended 31 December 2020. "AXA Singapore is a good fit with HSBC's existing HSBC Insurance (Singapore) Pte Ltd's (HSBC Life Singapore) business. Both businesses have complementary products across the spectrum of insurance solutions and distribution channels, while AXA Singapore provides access to a sizeable tied-agency sales force, several leading independent financial advisory firms, and a large pool of insurance policyholders and corporate relationships." According to the statement, this combined business will not only materially scale up HSBC's presence in the regional insurance market, it will also provide an excellent platform for future growth. "The combined business would be the 7th largest life insurer (based on annualised new premiums) and 4th largest retail health insurer (based on gross premiums) with over 600,000 policies in-force covering life, health and P&C1." the statement added. Noel Quinn, group chief executive of HSBC Holdings (Photo Credit: HSBC Holdings Plc) Noel Quinn, group chief executive of HSBC Holdings, said: "This is an important acquisition that demonstrates our ambition to grow our Wealth business across Asia. Wealth is one of our highest growth and highest return opportunities, and plays to our strengths as an Asia-centred bank with global reach." "We are acquiring a good business that fits well with our existing operations, and which strengthens our status as one of Asia's leading wealth and insurance providers." Following deal completion and regulatory approval, the intention is to merge the operations of HSBC Life Singapore and AXA Singapore, subject to further approval by the Singapore regulator and courts. "The proposed acquisition will immediately put us in a leading position in health and employee benefits, and accelerate our build out of a distinctive and holistic wealth and health planning business, operating beyond our branch network." Nuno Matos, HSBC's Chief Executive for Wealth and Personal Banking, said. Nuno Matos, HSBC's Chief Executive for Wealth and Personal Banking (Photo Credit: El Economista via Adriana Hernandez) "Burgeoning affluent and high net worth populations in Singapore and across Southeast Asia will drive strong demand for an array of wealth, health and insurance solutions for individuals, their families and SMEs." The proposed acquisition will be funded from existing resources and will have a minimal (c.5bps) impact on HSBC's common equity tier 1 ratio.
HSBC said it expects the acquisition to be immediately accretive to the earnings of the Group upon completion. In February 2020, HSBC combined its mass affluent, asset management, insurance, and private banking businesses to create Wealth and Personal Banking. Asia generates nearly half of HSBC's $1.7 trillion global wealth balances and 65 percent of the Group's wealth revenues. In 2020, HSBC Insurance recorded an adjusted profit before tax of $1.4 billion globally.
