First Financial Holding Co (第一金控), the nation's fourth-largest financial holding company by assets, announced yesterday it will form a joint venture with Aviva Plc, the biggest insurer in the UK, to enter the bancassurance market.
Bancassurance refers to the distribution of insurance products through a bank's distribution channels, a service that can fulfill both banking and insurance needs at the same time.
The startup will have NT$2 billion (US$60 million) in capitalization, with First Financial contributing half of the funds, according to First Financial spokesperson Lee Lih (李立).
The two parties will sign the partnership's memorandum of understanding within the next two days, said Lee, who runs First Financial's investment department.
The new venture could be established by the end of this year if everything goes smoothly and start operations next year, she added.
The joint venture is expected to enhance the penetration of bancassurance products and profit sources by leveraging Aviva's know-how in the insurance business and First Financial's 5 million savings accounts and 182 branches nationwide, according to First Financial.
As of last month, First Financial had sold NT$10.4 billion worth of insurance policies through its insurance agent arm. The company sold NT$15 billion in policies last year.
The joint venture will become First Financial's eighth subsidiary, along with First Commercial Bank (第一銀行), the fifth-largest lender in the country.
"We've been talking for some time about accessing the Taiwanese market and this is the first step in that direction," Aviva spokeswoman Hayley Stimpson told Bloomberg yesterday. "Taiwan is the fourth-largest market in Asia and offers substantial potential."
First Financial shares closed up 0.65 percent at NT$23.15 on the Taiwan Stock Exchange yesterday. The announcement of the new venture with Aviva came after the closure of the stock market.