S&P Global: More Asia-Pacific Banks To Shed Insurance Units To Focus On Their Core
July 18, 2022
More banks in Asia-Pacific are expected to shed their capital-heavy insurance businesses to focus on their core as the global economy faces uncertainties.
Lenders in the region have been selling their insurance businesses at a faster rate than acquiring them, S&P Global Market Intelligence data shows. In 2021, the region saw 10 such transactions, from the likes of Australian lenders Westpac Banking Corp. and Commonwealth Bank of Australia, up from seven in the prior year. Buyers have largely been insurance-focused firms such as AIA Group Ltd.
"We expect this trend of vertical disintegration to continue into 2022 and beyond as insurance portfolios face rising claims frequencies and inflation, supply chain issues posing customer satisfaction challenges as well as customer affordability," said Ashish Sharma, partner, financial services and the lead on insurance and wealth management in Australia at consulting firm Oliver Wyman.
Recently, banks have focused on simplifying their core businesses, Sharma said. Insurance businesses have become more costly to banks as regulations around such products become tighter and banks have yielded lower-than-expected benefits from the cross-selling of banking and insurance products. Sharma said the acquirers of these portfolios are often established insurance players looking to grow their scale or penetrate new market segments.
Read the full article on: S&P Global Market Intelligence