The Market Monitor Minding the Nation's Business
East West Banking Corp. (EastWest) has secured the approval of the Securities and Exchange Commission (SEC) for a proposed joint-venture insurance business with Belgian firm Aegas Insurance International N.V.
Formed through the joint venture was East West Ageas Life Insurance Corp. (Ewal) which got the SEC’s certificate of incorporation last October 20.
Ewal will have an initial capital of P2.01 billion, which is double the minimum capital requirement for a new insurance company in the country. Future funding will be dependent on the performance of the business, according to EastWest.
Subject to regulatory approvals, the transaction is expected to be completed in the second half of the year, it added.
“Ewal, a joint venture of East West Banking Corp. and Ageas Insurance International NV, will primarily engage in the business of life insurance,” EastWest said.
On October 6, EastWest said the Bangko Sentral ng Pilipinas (BSP) approved its P500 million initial equity investment in Ewal.
In May, EastWest sealed the partnership deal with Ageas. Among the signatories of the deal were Hans Loozekoot, Ageas managing director for strategy and merger and acquisitions – Asia; Gary Crist, Ageas CEO – Asia; Jonathan Gotianun, EastWest Chairman; Antonio Moncupa Jr., EastWest President and CEO; and Jose Emmanuel Hilado,
EastWest SEVP and chief operating officer. EastWest and Ageas will have equal shareholding in Ewal. It was further agreed that Eastwest 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 Eastwest supported by high quality service and state-of-art technology, EastWest said.
“The insurance business will benefit from EastWest’s fast growing customer base. With more than 400 branch stores, the bank has the 7th largest distribution network among banks in the Philippines. Ageas will contribute its proven Bancassurance skills and best practices from its successful businesses in Asia and Europe,” EastWest added.
“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 segmentsm,” Moncupa said.
Crist said: “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 percent in the Philippines is one of the lowest in Asia. We are very pleased to be a partner to EastWest which has a strong management and clear ambition to grow. We are convinced that together we can deliver another successful partnership in Asia,” he added.
EastWest is a subsidiary of the Filinvest Development Corp. (FDC), one of the largest and well established business conglomerates in the Philippines.
FDC, established in 1955, is identified with the Gotianun family and aside from banking, its business interests include real estate, hospitality and tourism, sugar milling and power generation.
Ageas is an international insurance group with a heritage spanning 190 years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to concentrate its business activities in Europe and Asia, which together make up the largest share of the global insurance market.