Last July, EastWest gets SEC okay for insurance brokerage, and has secured another requisite approval to set up its planned wholly owned non-life insurance brokerage subsidiary. East West Insurance, a wholly owned subsidiary of East West Banking Corporation, will primarily engage in the business of non-life insurance brokerage.
EastWest Bank said this subsidiary will be separate from its planned joint venture life insurance firm. Also, the Bangko Sentral ng Pilipinas (BSP), the country’s central bank, has approved the initial equity investment of East West Banking Corporation (PSE:EW) in the proposed joint venture with Ageas Insurance International.
Last May, the listed lender announced that it has entered into a joint venture agreement with Belgium-based insurer Ageas Insurance International N.V. (Ageas) to up a new life insurance company in the Philippines which is seen starting operations by the end of the year.
The aim 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, the bank said in a statement.
Ageas will contribute its proven Bancassurance skills and best practices from its successful businesses in Asia and Europe.
“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,” said Tony C. Moncupa Jr., President and CEO of EW Bank, during the signing of the agreement earlier.
“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,” Gary Crist, CEO of Ageas Asia was quoted as saying.
The new insurance company to be named EastWest Ageas Life, subject to the requisite regulatory approvals, will enable EastWest Bank to offer life insurance products to its customers and increase its revenue base and market share, the listed lender said in an earlier disclosure to the Philippine Stock Exchange.
The initial paid-in capital of the joint venture will be Php2 billion and EastWest will hold 50% minus one share, while Ageas will hold 50% plus one share. EastWest Bank said it will get approximately 50% income share from the life insurance company, it said.
The partnership will be for a 20-year exclusive distribution agreement, EastWest Bank said.
EastWest Bank posted a net income of Php2.073 billion in 2014, which is almost flat compared to the Php2.056 billion it posted in 2013 as lower trading gains dragged on its profit.
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