The Monetary Authority of Singapore (MAS) has approved HSBC’s acquisition of AXA Singapore, paving the way for HSBC to scale up its presence in the regional insurance market.
The bank said on Friday (Feb 11) that its indirect wholly owned subsidiary, HSBC Insurance (Asia-Pacific), has completed the acquisition of AXA Insurance in Singapore for US$529 million (S$711 million) – US$46 million less than the initial consideration of US$575 million when the deal was first announced in August last year.
Its completion will see the integration of AXA Singapore and HSBC’s existing HSBC Life Singapore business, which is expected to take place in the second half of this year, subject to local regulatory and court approvals.
There will be no impact on the terms of any of the policies in-force underwritten by AXA Singapore, said HSBC.
The integrated entity will become the seventh-largest life insurer in Singapore based on annualised new premiums, and the fourth-largest retail general insurance health insurer based on gross premiums.
Mr Surendra Rosha, HSBC’s co-chief executive for the Asia-Pacific, said the acquisition of AXA Singapore will boost the bank’s ability to serve the wealth and protection needs of people in Asia.
“Asia’s growing middle class, high savings rate and resilient economic growth are creating huge opportunities in the region’s wealth management industry,” he said.
AXA Singapore is currently one of the top players in general insurance in terms of gross written premiums – the total premium written by an insurer before deductions for reinsurance, commissions and administrative costs.
Its net assets for the year ended Dec 31, 2020 stood at US$474 million, with annualised new premiums of US$85 million and profit before tax of US$23 million.
Industry watchers said the competitively low premiums and extensive coverage of its motor insurance policies have appealed to consumers, but the low profit margin may not be sustainable in the long run.
HSBC Life Singapore chief executive Ho Lee Yen said: “AXA has turned around in terms of their profitability from 2020. So we are very confident that the business is in good shape.”
Its over 850 employees will also help to boost HSBC’s bench strength, said Ms Ho, adding that she and her team are still finalising the business plan and strategy.
The Straits Times understands that a number of senior staff quit AXA Singapore last year, including the chief customer and operations officer, managing director (commercial lines), managing director of the life strategic business unit and its chief data officer.
When asked about staff movement, AXA Singapore declined to comment.
A senior employee of the company, who spoke on the condition of anonymity, said he decided to stay as he did not want to leave his team behind.
“Even though HSBC does not have a general insurance arm, I hope that it will continue to grow AXA’s general insurance business, otherwise all the work that I have put in to turn the AXA motor business around will be wasted,” he said.
AXA Singapore will be moving out of its current corporate office at AXA Tower in Shenton Way to The Metropolis in North Buona Vista Drive on Feb 18.
AXA Insurance has been an anchor tenant at AXA Tower since 2011, occupying five floors spanning at least 70,000 sq ft.
AXA Insurance has been an anchor tenant at AXA Tower since 2011. PHOTO: ST FILE
A spokesman for Perennial Holdings, which holds a 50 per cent stake in AXA Tower through a consortium, told ST that the building is slated for redevelopment works in the second half of this year.
Most of the tenants have since moved out of the 50-storey building, whose new name has not been determined.
Ms Ho said HSBC, which took up a space recently at South Beach for its insurance operations, is in the midst of making arrangements for office space for AXA Singapore staff and there are several venues options.
Currently, AXA Singapore’s processing and issuance of policies are carried out by its subsidiary in India.
Asked if there are plans to bring the operations back to Singapore, Ms Ho said it would have to be done in a manner that is not disruptive to customers, but it is still too early to tell.
However, with the combined entity, she expects to see more new roles created.
“We don’t shrink to grow. I foresee more opportunities for our people in the integrated business,” said Ms Ho.
Source: https://www.straitstimes.com/business/banking/sale-of-axa-singapore-to-hsbc-gets-mas-nod-insurer-moving-to-the-metropolis
