Bank of East Asia sells life insurance unit to AIA for US$653 million in a nod to activist fund’s prodding

Bank of East Asia (BEA) said it would sell its life insurance unit to Hong Kong’s biggest publicly traded life insurer AIA Group Limited, the result of a strategic review prodded by an activist shareholder over the direction of the city’s largest family-owned lender.

BEA will receive HK$5.07 billion (US$653 million) cash from the sale and will become the exclusive distributor of AIA’s life insurance and long-term savings products to its retail banking customers in the city, in Macau, and in the nine mainland China cities in the Greater Bay Area (GBA) for 15 years, according to a statement.

“Our complementary and broad capabilities across the GBA enable AIA and BEA to build a unique partnership and harness the growth potential as the region develops”, AIA’s regional chief executive officer Jacky Chan said in a filing to the Hong Kong stock exchange.

BEA will book a HK$1 billion profit from the sale, first announced last September following a months-long strategic review of BEA’s businesses prompted by a long-running shareholder battle with Paul Singer’s US hedge fund Elliott Management over the bank’s direction.