HSBC enters deal to buy AXA Singapore for US$575M

HSBC branch in SingaporeHSBC branch in Singapore

HSBC announced Monday its subsidiary HSBC Insurance (Asia-Pacific) has entered a deal to acquire AXA Insurance (AXA Singapore) for US$575 million in a move to expand the Hong Kong-listed bank’s wealth management franchise in Singapore.

“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,” Noel Quinn, group CEO for HSBC Holdings, said in the statement.

“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,” he added.

The deal will be funded with HSBC’s existing resources and will have a minimal impact on the bank’s common equity tier-one ratio, the statement said, adding the deal is expected to be immediately accretive to earnings.

AXA Singapore is Singapore’s eighth-largest life insurer by annualised new premiums, fifth-largest property and casualty insurer and a leading health-insurer, with net assets of US$474 million and a 2020 profit before tax of US$23 million, the statement said.

The combined business would be the seventh-largest life insurer, based on annualised new premiums, and the fourth-largest retail health insurer, based on gross premiums, with more than 600,000 policies across life, health and property and casualty, the statement said.

HSBC said AXA Singapore was a good fit with HSBC’s existing insurance operations in Singapore, with complementary products across services and distribution channels.

“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. 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,” HSBC said.

The deal is subject to regulatory approval.