Bank of East Asia sells Blue Cross to AIA Group

The Bank of East Asia (BEA) will be selling Blue Cross (Asia-Pacific) Insurance (Blue Cross) to AIA Group. As part of the transaction, Blue Cross will become the exclusive provider of non-life insurance products for BEA’s personal banking customers in Hong Kong for a period of 15 years.

In a statement, BEA said this transaction will expand the scope of BEA’s existing life partnership with AIA, bringing benefits to customers and providing further sales opportunities. The total consideration for the transactions is HK$2.17 billion. BEA is expected to book a disposal gain of approximately HK$1.53 billion in the current financial year. Taking into account the prevailing business conditions upon completion of the transactions, the bank said its board of directors will decide on the use of proceeds from the disposals, which may include a return to shareholders.

“With our shared vision and excellent working relationship, the partnership between BEA and AIA, which officially commenced in July last year, has enjoyed a promising start. We are delighted to announce yet another milestone in this partnership by extending our cooperation into the general insurance arena. The transactions once again demonstrate our continued commitment to enhancing the value of our business and positioning the bank for growth and success over the long term," said Adrian Li and Brian Li, co-chief executives of BEA.

“I am delighted to expand our successful partnership with BEA and welcome Blue Cross to AIA. Our unrivalled multi-channel distribution platform is at the heart of our strategy and this new agreement deepens our exclusive relationship with one of the leading domestic banks in Hong Kong. Powered by our digital transformation and a full suite of health insurance propositions, we will unlock further growth potential and help many more people live healthier, longer, better lives," said Jacky Chan, AIA’s regional chief executive.

Both companies said they have begun preparations to launch the distribution partnership. The disposal of Blue Cross is expected to be completed within this year subject to relevant regulatory approvals.

Last December, BEA was reportedly planning to sell Blue Cross, according to a report from Bloomberg. The report said BEA sought to continue raising cash through selling non-core assets. The bank is also working with Goldman Sachs Group for the potential transaction which could be worth up to US$400 million. It is expected that the plan will kick off early next year.

However, according to a report from Hong Kong Economic Times, BEA does not have the final decision over the transaction and keeping Blue Cross (Asia Pacific) Insurance in its portfolio for the long-term development of the company, could be an option as well. The bank also said it has been assessing its portfolio, including the aspects that match its strategy. 

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