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AIA, Citi in bancassurance tie-up in Asia

Hong Kong-based insurer AIA Group has entered into an exclusive deal to sell its insurance products through Citibank’s Asian-Pacific retail branch network. The deal, described as a bancassurance arrangement, is valued at more than US$4 billion over its 15-year lifespan and is one of the biggest of its kind. It will enable AIA access nearly 600 Citibank branches across Asia, generating billions of dollars in revenue for the bank. The tie-up is expected to start in February and AIA will get the right to distribute life insurance products, apart from credit insurance, to Citibank customers. The deal will cover Australia, China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Citigroup is trying to capitalize on growing sales of basic life insurance and savings products to the middle class in many Asian countries. Life-insurance premiums in Asia’s emerging markets are expected to grow 9.8% this year, which is almost double the 5.2% growth it projects for developed Asia – Australia, South Korea and Japan – and more than four times its forecast of 2.2% for industrialized countries overall. Citibank has been growing in Asia, having expanded its retail branch network in the region by more than sixfold over the past decade. Its Asian retail banking generated more than US$7.9 billion of revenue in 2012, more than half of the bank’s total revenue in the region that year.

AIA, which was carved out from American International Group a few years ago, operates in 17 markets in Asia Pacific and had total assets of US$147 billion.

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