Prudential deal boosts Hiscox DirectAsia: Jefferies

The partnership Hiscox’s online P&C insurer DirectAsia business has signed with Prudential Singapore, a subsidiary of UK-based Prudential, is set to accelerate growth at Hiscox’s DirectAsia business which is already exceeding 27 percent, according to Jefferies analysts.

Under the partnership, Prudential's nearly one million customers will be able to purchase DirectAsia's motor and travel policies through the network of 4,800 financial consultants, diversifying DirectAsia's reach with access to professional agents rather than online only, according to Jefferies. Noting that Prudential Singapore's agents are the most productive in Prudential's Asian franchise, with a remarkable 184 customers per agent and an unusually high cross-selling capacity (2.8 policies per customer - far higher than composite insurers achieve in Europe), Jefferies expects that the deal will allow DirectAsia's growth to accelerate further in 2019. In addition, DirectAsia will offer all customers that purchase a non-life policy the services of one of Prudential's agents, making this mutually beneficial to both businesses.

The deal provides access to more than 900,000 of Prudential's customers, as well as distribution via agents. DirectAsia's current online-only platform includes around 100,000 customers across Singapore and Thailand as of October 2018.

DirectAsia was founded in Singapore in 2010, before expanding into Hong Kong in 2012 and Thailand in 2013. Although its primary focus is on motor, motorcycle and travel insurance, the platform sells ancillary products through partnerships, Jefferies noted. Hiscox purchased the business in 2014 for $55 million to give the group access to modern distribution platforms and expand access to the rapidly growing Asian insurance market.

The platform has been growing at a double-digit pace since the acquisition by Hiscox, more than offsetting the headwind of disposing of the Hong Kong division to Well Link in late 2016, Jefferies noted.

In the first nine months of 2018 year-on-year growth was 31.5 percent ($14.2 million vs $10.8 million) and 27.3 percent in constant FX.