EastWest Banking Corporation (“EW Bank”) signed a joint venture agreement with Ageas Insurance International NV (“Ageas”) to establish a new life insurance company to be called “EastWest Ageas Life”.
The JV will be a start-up company in which EW Bank and Ageas will both have an equal shareholding of 50%. It was further agreed that EW Bank and EastWest Ageas Life will enter into a 20-year exclusive distribution agreement.
The ambition is to build the premier Bancassurance business in the Philippines offering tailor-made insurance solutions to the customers of EW Bank supported by high quality service and state-of-art technology. The insurance business will benefit from EW Bank’s fast growing customer base. With more than 400 branch stores, the bank has the 7th largest distribution network amongst banks in the Philippines. Ageas will contribute its proven Bancassurance skills and best practices from its successful businesses in Asia and Europe.
Tony C. Moncupa Jr., President and CEO of EW Bank said “We have always viewed Bancassurance as an integral part of our business model. We see it as a necessary ingredient to have complete product offerings for the financial services needs of our target market segments. Specifically, the consumer and middle market corporate segments. We are pleased to partner with Ageas, one of the major insurance providers in the world. In Ageas, we are comfortable that we have a common set of objectives and aligned philosophy on how to conduct business and best serve our customers. For us in EW, alignment is most important. This is why we have always preferred a JV arrangement. We are confident that this partnership will be mutually beneficial to EW and Ageas. We are very excited in this new venture and we look forward creating value for all our stakeholders.
“As part of our Asia strategy, we have made no secret that we wish to enter the Philippines as the insurance market is highly attractive with a population of around 100 million people, a fast growing middle class and low insurance penetration. The potential is huge given that the current Life insurance penetration rate of around 1.5% is one of the lowest in Asia. We are very pleased to be a partner to EW Bank which has a strong management and clear ambition to grow. We are convinced that together we can deliver another successful partnership in Asia,” commented Gary Crist CEO of Ageas Asia.
The JV will have an initial capitalization of PHP2.01 billion, which is double the minimum regulatory capital required for a new insurance company in the Philippines. Future funding will be dependent on the performance of the business.
Subject to regulatory approvals, the transaction is expected to be completed in the second half of the year. Ageas and EW are looking forward to EastWest Ageas Life writing its first insurance policy before the end of the year.