TMB Bank Public Company Limited (TMB) would like to inform you of the developments in the collaborated sale of life insurance products through TMB and Thanachart Bank Public Company Limited (TBANK), as set out as follows:
After negotiations between FWD Life Insurance Public Company Limited (FWD), the current bancassurance partner of TMB, and Prudential Life Assurance (Thailand) Public Company Limited (Prudential), the current bancassurance partner of TBANK, a mutual conclusion has been reached that Prudential has agreed to acquire the rights to sell life insurance products through TMB from FWD and the original bancassurance agreement between TMB and FWD would be revised to reflect the new partnership.
Key components of the agreements to be entered into between the parties can be summarised as follows:
1) Prudential will have the exclusive rights to sell the life insurance products through the network of TMB, TBANK and subsequently the merged bank for an initial term of 15 years, with effect on and from 1 January 2021.
2) To facilitate customer services of both banks during the transition period in 2020, TMB will continue to sell the life insurance products of FWD until the end of this year and also onboard the products of Prudential through the various channels operated by TMB. The transition period lasts between 1 April 2020 and 31 December 2020. Nevertheless, TBANK will continue selling the life insurance products of Prudential exclusively.
In addition, TMB and TBANK undertake to respectively take care of FWD’s and Prudential’s policy holders in accordance with the terms and conditions stated in the relevant policies without change.
TMB and Prudential have extensive expertise and experience in bancassurance distribution and are highly committed to jointly growing their bancassurance franchised by offering the best-in-class life insurance products that both protect their customers’ financial well-being and grow their wealth.
The purchase price of TBANK shares was entered in TMB’s books according to the cost allocation method. In respect of the assessment of the fair value of deferred revenue to be generated from the bancassurance agreement between TBANK and Prudential, the fair value after the entry into the Agreements is equal to the book value recorded in the financial statements of TBANK as at the share acquisition date (as earlier reported to the SET on 20 February 2020).
Revenue which will be recognized in 2020 from Prudential’s acquisition of rights under the original bancassurance agreement between TMB and FWD is valued at THB 1.3 billion. Revenue to be gradually recognized throughout the combined initial contractual term and transition period (15 years 9 months) is evaluated for THB 20.8 billion, starting 1 April 2020.
TMB will stop the recognition of revenue from FWD under the original bancassurance agreement, starting from 1 April 2020, and the entry into the agreements by the relevant parties will have no effect on TMB’s recognized revenue from FWD of THB 4.4 billion (from 1 January 2017 to 31 March 2020).