The sale of BEA Life will help Bank of East Asia focus on its core banking operations in Hong Kong and China
The Bank of East Asia (BEA) has launched a sale process for its fully-owned subsidiary BEA Life, which is engaged in offering life insurance products in Hong Kong.
The sale is being taken up by the Hong Kong-based banking and financial services company following a strategic review of its portfolio of businesses and assets announced in March 2020.
According to the banking group, the divestiture of the life insurance subsidiary will boost the value of its businesses. Besides, it will enhance its financial position and allow its management team to concentrate on its main banking operations in Hong Kong and Mainland China.
Bank of East Asia will have a bancassurance partnership with BEA Life
The bank, as part of the process, will look to get into a long-term exclusive distribution agreement that will offer an ongoing source of recurrent revenue as a distributor of insurance products via its banking platform.
It has retained Goldman Sachs as financial advisor for the divestiture of the life insurance subsidiary.
Bank of East Asia co-chief executives Adrian and Brian Li said: “Today’s announcement is a direct result of our continued efforts to assess and act in the best interest of all our shareholders.
“The sale of BEA Life will allow the Bank to focus on core banking operations in Hong Kong and Mainland China, while also providing BEA Life with additional support to grow the business and achieve synergies through a bancassurance partnership with BEA.
“With a more nimble business, we will be better positioned to pursue our strategic priorities, thereby strengthening our core operations, supporting our growth initiatives and optimizing shareholder return.”
BEA Life, which serves individual and also corporate customers, had gross written premiums of HKD4.8bn ($619m) in 2019.
The life insurance firm distributes its products through the vast network of branches and online channels of Bank of East Asia.
The bank has secured support from one of its stakeholders Elliott Management for the sale process of the life insurance unit.
Elliott Management co-CEO and chief investment officer Jonathan Pollock said: “The sale of BEA Life will be a good first step and we look forward to continuing our engagement while the Company follows through on this and the other important conclusions of the review on strategic initiatives to create value for shareholders.”
Apart from BEA Life, Bank of East Asia has another fully-owned insurance subsidiary in the form of Blue Cross (Asia-Pacific) Insurance, which underwrites general insurance products.