HSBC Life Assurance (Malta) is set to triple in size to €1.6 billion and make up around 25 per cent of the bank’s wider local operation when a portfolio transfer agreement with HSBC Life (Europe) is completed towards the end of the year.
A demonstration of the bank’s confidence in the local team’s capabilities
The transaction, for nil consideration, is subject to regulatory approval. Essentially, the global group is transferring one entity into another, and this development does not involve the acquisition of the legal entity, HSBC Bank Malta’s head of insurance James Hewitson told The Sunday Times.
It means, however, that HSBC Malta’s life company is to become one of the largest financial services companies on the island. The development also creates 10 new job opportunities for Maltese candidates.
In a company announcement on the Malta Stock Exchange on Thursday, HSBC Bank Malta explained that its life company subsidiary was to receive the portfolio of Irish-domiciled HSBC Life (Europe). The portfolio consists of unit-linked investment policies sold across the European Union to affluent customers with total funds under management of €1.1 billion. It also includes a closed book of life protection business sold in Italy.
The portfolio to be transferred to Malta produced gross annual management charges of around €2.75 million last year.
“HSBC Group is undergoing considerable strategic change and it has been decided to consolidate insurance operations into a smaller number of sites,” Mr Hewitson explained.
“We previously had around 16 insurance sites around the world which have now been reduced to eight, of which Malta is one. These sites – including the UK, France, Hong Kong, Singapore, Mexico, Brazil and Argentina – are now the core sites for HSBC Life Insurance around the world.”
Mr Hewitson added there could be further business prospects for the Malta bank – potentially insurance management activity.
He said this week’s development is an opportunity because HSBC is already managing some of this portfolio from an operational perspective – the bank holds an insurance management licence – and the bank is still looking at opportunities from France and the UK.
“One of the key project challenges is making sure we transfer this portfolio as seamlessly for the customers as possible,” Mr Hewitson said. “What we do here is already is similar. This new portfolio includes considerable policies for high net worth customers.
“It ‘supersizes’ some of our existing propositions and gives us a much broader spread. This will give us customers in 20 European countries. Our current business is mainly retail banking and wealth management, and this will give us access to high net worth people, particularly from the expatriate proposition we have in Jersey, and private banking customers.”
The transfer from HSBC Life (Europe) also includes a portfolio of policies related to creditor protection sold to 400,000 customers in Italy. This activity has been closed to new business for a long time and the portfolio is in run-off. It is fully third-party administered and managed.
Mr Hewitson emphasised that HSBC was investing in people, and systems and infrastructure attached to the transferred business were being relocated to Malta. He said it was a “very strong message” that insurance manufacturing was a key part of HSBC’s strategy in Malta.
This development was also a demonstration of the bank’s confidence in the capabilities of the local team to service customers with whom HSBC has very strong, long-term relationships around the globe, Mr Hewitson said.