Prudential Plc, the UK insurer which makes more than a third of its sales in Asia, will pay $428 million for United Overseas Bank’s life assurance unit to expand in the region.

United Overseas, Singapore’s second-largest lender, will distribute Prudential’s life, accident and health insurance products in Singapore, Indonesia and Thailand for at least 12 years, the bank said in a statement to the Singapore exchange.

Prudential, the UK’s biggest insurance company, is seeking to increase sales in Asia to combat weaker demand for savings products in its home market. The insurer’s nine-month sales to Sept 30 fell 9% on lower demand for savings and insurance products in the UK.

“This bancassurance partnership offers us significant new profitable growth opportunities in Singapore and Indonesia, and substantially increases our scale in Thailand, a key market in the region,” said Tidjane Thiam, Prudential’s group chief executive, in a separate statement.

Prudential has life insurance and asset management operations in 13 markets in Asia, with more than 11 million life customers and retail funds under management of 16.4 billion pounds ($36.6 billion) as of June 30, 2009. The insurer in November said it set up its first Islamic asset management business in Malaysia to tap the growing wealth of Muslims globally.

The UK company’s products will be distributed through United Overseas’s 414 bank branches in Singapore, Thailand and Indonesia under the agreement. United Overseas said the sale is scheduled to be completed by the end of the month.

 

The bank in October reported third-quarter profit that beat analysts’ estimates on investment gains and increased net interest income. The shares gained 1.7% to $19.96 after a trading halt was lifted at 4 p.m. local time.

“It makes sense for UOB to exit the insurance business and re-enter it by linking up with Prudential to redistribute the products,” said Trevor Kalcic, the head of Southeast Asia equity research at Royal Bank of Scotland Group Plc, before the release. “I’m not sure that banks are good at manufacturing insurance products. It might be better for them to distribute it.”

 

The Hongkong and Shanghai Banking Corp. was the financial adviser to United Overseas on the deal.

 

The Financial Times earlier today reported that Prudential would buy the unit from United Overseas.