UOB announced yesterday the sale of their life insurance business, UOB Life, to Prudential for S$428 million.

Completion of the Sale is scheduled for 31 January 2010 or such other date as parties may mutually agree.

As part of the sales agreement, UOB will also start offering Prudential’s life, accident and health insurance products through their respective bank branches for an initial term of 12 years. This arrangement is a win-win for both parties as it allows Prudential to strengthen its market share while UOB will be able to grow its bancassurance business by leveraging more on its distribution capabilities rather than product creation.

This sale will not affect the policy terms of existing UOB Life customers. A FAQ that addresses some of the questions UOB Life policy holders might have is shown below:

Who is Prudential?

Headquartered in the UK, Prudential is a leading international financial services group with more than 160 years of history and heritage and operations spanning 13 countries in Asia. Their Singapore businesses, which include both life insurance and asset management, have provided investment, savings and protection products and solutions to Singaporean individuals and families since 1931. You can learn more about Prudential Singapore by visiting www.prudential.com.sg.

What will happen to my UOB Life policy after the sale?

There will be no change to your policy. The issuer of your policy, UOB Life, will continue to honour and service your policy before and after UOB Life is acquired by Prudential. The name of the company, UOB Life, will be changed by Prudential after completion of the sale. Prudential will inform you directly of any relevant change.

Who do I contact if I have questions about my existing UOB Life policy?

Please continue to contact UOB Life. There is no immediate change in customer support, and UOB Life will continue to service your product. Following legal completion of the transaction, Prudential will inform you directly of any relevant change.

Will the value of my UOB Life policy be affected by the sale?

The value of your UOB Life policy will be determined in accordance with the terms of your policy contract, which will be honoured by UOB Life, before and after the sale.

Which company will service my policy and life insurance needs?

You will be serviced by UOB Life. After the sale, Prudential will inform you directly if there is to be any change to this arrangement.

When will completion take place and will I be informed?

The sale is anticipated to be completed within the first half of 2010. Prudential will notify you of the completion of the sale.

Can I terminate my policy?

As the owner of the policy, you have the right to terminate your policy at any time. However, do note that any termination ofyour policy will have to be in accordance with the terms of your policy.

Should I terminate my policy?

This decision should be made in consultation with your relationship manager or financial adviser, who will consider factors like your risk profile, financial objectives, as well as your original reasons for buying the policy

UOB has made a buyback offer to the 4000 customers who purchased Pru Yield 15 or Yield 20 through them.

Investors will be able to redeem back their principal less any interest they have already received if they opt for UOB’s offer by 6 Nov 2009.

This works out to be $0.88 for Pru Yield 15 and US$0.82 for Pru Yield 20.

These 2 funds were mostly sold as capital protected products but had seen their price drop to as low as $0.375 in March 2009 at the height of the credit crisis. The price has since rebounded to $0.815 and US$0.842 respectively.

Investors who do not opt for the buyback offer will have to wait until June 2010 to get a full repayment of their capital. They will have tol continue to bear default risk of the Yield 15 and 20 product.

As of 16th June 2009, there were 14 defaults out of a total of 100 entities making up the notes. The notes can take around 9 more defaults before the capital is adversely affected.

Actually, the buyback offer for the Yield 20 is a purely token one as the price of the notes is currently trading at above the buyback offer price.

Note that the buyback offer only applies to UOB customers who bought the Yield 15 or 20 through them.

Our three local banks – DBS, UOB and OCBC have been the target of scammers/phishers recently.

Computer trojan programs installed into infected computers can trick users into revealing their internet banking passwords. 

The login page looks very similar to the actual one, except are a minor difference. 

Here’s how the fake DBS login page looks like:

Notice that you are prompted to enter your token pin on the first login page. The request for the token pin is usually done on the second page.

If you observe the url of the fake site, it is identical to the real one. Even users who bookmark the normal login page can be taken to a fake site if your computer is infected with the trojan.

Do update your anti-virus software carefully and if you detect anything suspicious, do not hesitate to contact your bank.

In a joint press statement issued by MAS and Ministry of Finance yesterday night, the Singapore government announced that it would guarantee all Singdollar and foreign currency deposits of individual and non-bank customers in licensed banks, finance companies and merchant banks. 

The guarantee of up to S$150 billion will be more than enough to cover possible liabilities arising from the failure of any financial institution. It takes immediate effect and will remain in place until 31 December 2010.

This announcement came in the light of other countries also providing similar guarantees. Not following in their footsteps might mean an outflow of funds from Singapore banks.

As a sign of how much fear there is in the market right now, my friend told me his mum was frantically telling him that OCBC was collapsing. A rumour triggered no doubt by this announcement.

And I cheekily turned to my friend and said, “Look, here’s another sign that the market is close to a bottom.“

I found out yesterday that UOB was offering a 2.88% p.a. promotional interest rate for balance transfers from a CashPlus account. The current market rate for a promotional balance transfer is around 3.88% p.a. There are also interest free offers around but typically these come with an admin fee of 2.0% to 2.2%.

A note of caution:

I’m not asking you to do a balance transfer from your UOB CashPlus account.

Debt is a two edged sword and should always be used with caution. Most people would probably be better off not utilising their line of credits, but there are times when taking on debt might be beneficial.

More on this in tomorrow’s post.