Insurance giant Aviva prepares for $1bn Asian battle to hang on to lucrative Singapore links with the DBS Group

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Insurance giant Aviva faces a battle next year to hang on to a lucrative contract in Singapore to sell policies through the DBS Group, which it has held since 2001.

Mark Wilson, chief executive of Aviva, has just sealed a deal in the UK to take over Friends Life. The takeover surprised some in the market, who had expected him to make a move in Asia.

DBS – the Development Bank of Singapore – has a ‘bancassurance’ tie with Aviva. The deal could cover more than 260 branches in the fast growing markets of Singapore, Hong Kong, Indonesia, Taiwan and elsewhere in Asia.

Ready for battle: Insurance giant Aviva faces a battle next year to hang onto a lucrative contract in Singapore to sell policies through the DBS Group

Winning the contract for a second time could cost Aviva as much as $1billion, industry sources said.

Rivals including ManuLife, AIA, Prudential and Axa are believed to be jostling to take the business when Aviva’s contract runs out at the end of next year.

AIA Group last year struck a 15-year exclusive deal with Citibank in Asia for $800million and the Prudential paid $1.25billion to Standard Chartered to extend an existing agreement for 15 years.

Credit Suisse analysts said in a note last month that ‘renewal of the DBS relationship would be desirable given it is an important distribution partner for the Asian business’.

Object of desire: DBS – the Development Bank of Singapore – has a ‘bancassurance’ tie with Aviva

Wilson believes that as the holder of the contract, Aviva is in a good position because there would be a lot of disruption involved in selecting a new partner, but he has said he is not prepared to renew at any price.

His view is that the £5billion-plus Friends Life deal will give Aviva a stronger base at home in the UK, and a strong platform for investing overseas.