American International Group struck a deal to sell its Taiwan life insurance for $2.15 billion,marking its largest disposal of a division since a government bailout last year saved it from collapse.
Primus Financial, a new firm founded by Citigroup's former Asia investment banking head, together with a Hong Kong partner, agreed to buy Nan Shan Life,ending a five-month auction that saw big interest from many corporates and private equity bidders.
"The deal priced Nan Shan at about one time price to book, which is fair when you compare 1.9 times for Cathay Financial and Fubon Financial, and one time for smaller rival Shin Kong Financial," said Dexter Hsu, an analyst at JP Morgan in Taiwan yesterday.
With the Nan Shan agreement sealed,AIG is now likely to raise cash from two other major assets in Asia.
Hong Kong-based life insurer AIA is seeking a more-than $2 billion initial public offering while American Life Insurance Co, which generates half its revenue in Japan, is seeking a reported $5 billion in an IPO.
Both companies have also attracted acquisition interest, though nothing yet has materialised.
The sale of Nan Shan, in an auction run by Morgan Stanley, allows AIG to check one business off its list of units to sell, after the United States injected $80 billion in taxpayer money into the firm after it nearly collapsed late last year.
Primus, run by former Citi executive Robert Morse, and Hong Kong investment group China Strategic Holdings would pay $2.15 billion for AIG's 97.5%stake in Nan Shan, AIG said yesterday.
Earlier this year, Primus co-chief executive Wing-fai Ng said in an interview with Reuters that Primus planned to use Nan Shan, Taiwan's No.3 life insurer,as a base to expand to Hong Kong, Malaysia and Japan.
Nan Shan has assets of $46.4 billion and employs 36,000 sales agents in Taiwan and has a market share of 10%with its four million customers.
Some analysts and bankers involved in the deal said putting a valuation on the AIG's Taiwan life insurance unit was difficult.
"The pricing is tricky. If you just look at the book value of Nan Shan, then the acquisition price is at a 30% discount,"said Pandora Lee, an analyst with UBS.
First Commercial Bank and Taiwan Cooperative Commercial Bank in Taiwan are arranging a NT$20 billion (around US$588 million) loan for Primus to back its purchase of Nan Shan, according to Thomson Reuters LPC.
FCB and Taiwan Cooperative are expected to each prefund NT$10 billion (around US$294 million) of the loan before Primus settling the Nan Shan transaction.
The agreement marks the end of an auction that spanned several months and involved multiple bidders, including private equity firms, such as the Carlyle Group. Primus had been competing in the end with Chinatrust Financial.
Saturday, October 31, 2009
BAY taps bancassurance
Bank of Ayudhya has set an ambitious growth target for its bancassurance business next year, helped by its "boxed"insurance policies, says senior vicepresident Kris Chantanotoke.
The bank aims to increase first-year premiums by 50% next year, thanks to its low base and the growth potential of business segmentation. For the first eight months of the year, BAY recorded firstyear premiums of 3.5 billion baht. The bank expects to achieve its target of 4 billion this year compared with 3 billion last year.
Business expansion will be supported by its products and services, particularly the bundled or boxed policies. BAY is the first bank in Thailand to offer this convenient and simple product.
For the remainder of the year, the bank expects to sell 200,000 boxes (policies). BAY, the country's fifth-largest bank by total assets, launched three insurance boxes after the bank entered the market three years ago.
Bancassurance in Thailand has grown for more than five years and the market showed significant growth in the past two years because of added players. The market started with some banks around 2004, but now most banks in the country offer the financial product.
Thailand's third-largest bank by total assets, Siam Commercial Bank, ranks number one in bancassurance, followed by Kasikornbank and Bangkok Bank,respectively. The nationwide network of large banks is supporting the rapid growth rate of bancassurance.
Mr Kris forecast that the country's insurance market would grow 13% next year, while the bancassurance business is expected to grow 15%. He said that 95% of insurance sales from the products of its three partners come from its branches, with 3% from telemarketing.
The bank aims to increase first-year premiums by 50% next year, thanks to its low base and the growth potential of business segmentation. For the first eight months of the year, BAY recorded firstyear premiums of 3.5 billion baht. The bank expects to achieve its target of 4 billion this year compared with 3 billion last year.
Business expansion will be supported by its products and services, particularly the bundled or boxed policies. BAY is the first bank in Thailand to offer this convenient and simple product.
For the remainder of the year, the bank expects to sell 200,000 boxes (policies). BAY, the country's fifth-largest bank by total assets, launched three insurance boxes after the bank entered the market three years ago.
Bancassurance in Thailand has grown for more than five years and the market showed significant growth in the past two years because of added players. The market started with some banks around 2004, but now most banks in the country offer the financial product.
Thailand's third-largest bank by total assets, Siam Commercial Bank, ranks number one in bancassurance, followed by Kasikornbank and Bangkok Bank,respectively. The nationwide network of large banks is supporting the rapid growth rate of bancassurance.
Mr Kris forecast that the country's insurance market would grow 13% next year, while the bancassurance business is expected to grow 15%. He said that 95% of insurance sales from the products of its three partners come from its branches, with 3% from telemarketing.
Tuesday, October 20, 2009
Aviva expects windfall from Delta float
British insurer Aviva expects to pocket 1.2 billion ($1.79 billion) for future growth and possible acquisitions when it floats Dutch unit Delta Lloyd in Europe's largest IPO this year.
Aviva said yesterday that Delta Lloyd shares would be offered on Euronext's Amsterdam exchange at between 15.5 and 19 each, valuing the business at 2.6 billion to 3.1 billion.About 42% of Delta's shares will be sold, leaving Aviva as the group's biggest investor with 57%. The balance is held by Dutch charitable trust Fonds NutsOhra.
"This step, which will be the largest IPO in western Europe this year, will free up capital for us to use elsewhere and give us the option of exploring further growth opportunities," Aviva chief executive Andrew Moss said in a statement.
"There are no surprises there, the timing and details were as people were expecting," said MF Global analyst Peter Eliot."From Aviva's point of view, it is probably less than they would have like to have received for it, at less than embedded value, but at the same time it is a loss-making business."
At the upper end of the price range,the shares represent a 24% discount to Delta Lloyd's market-consistent embedded value (MCEV), a measure of insurance companies' worth which includes the present value of future earnings from life policies.
Delta Lloyd calculated its own MCEV at 4.1 billion at the end of June.Reuters reported on Sunday that the IPO would be offered at a discount to MCEV to stimulate investor interest amid a raft of competing share sales.
But under Aviva's more conservative approach, Delta Lloyd had an MCEV of
2.7 billion at the half-year, putting the IPO at a slight premium at the midpoint of the price range.
Aviva said in August that it would consider using the proceeds of the Delta IPO to acquire rivals weakened by the financial crisis.
The company yesterday reiterated that Delta Lloyd's stock market listing could also help it make acquisitions as the Benelux insurance market undergoes a period of consolidation.
Aviva would have to give its approval to any merger or takeover involving Delta Lloyd that took the British insurer's stake below 50%.
Delta Lloyd said yesterday that it made a net loss of ฃ88 million ($143.4 million)in the nine months to Sept 30, while life new business sales for the period fell 12% to ฃ2.8 billion.
Trading in Delta Lloyd shares is expected to begin in Amsterdam on Nov 3, Aviva said.
Aviva said yesterday that Delta Lloyd shares would be offered on Euronext's Amsterdam exchange at between 15.5 and 19 each, valuing the business at 2.6 billion to 3.1 billion.About 42% of Delta's shares will be sold, leaving Aviva as the group's biggest investor with 57%. The balance is held by Dutch charitable trust Fonds NutsOhra.
"This step, which will be the largest IPO in western Europe this year, will free up capital for us to use elsewhere and give us the option of exploring further growth opportunities," Aviva chief executive Andrew Moss said in a statement.
"There are no surprises there, the timing and details were as people were expecting," said MF Global analyst Peter Eliot."From Aviva's point of view, it is probably less than they would have like to have received for it, at less than embedded value, but at the same time it is a loss-making business."
At the upper end of the price range,the shares represent a 24% discount to Delta Lloyd's market-consistent embedded value (MCEV), a measure of insurance companies' worth which includes the present value of future earnings from life policies.
Delta Lloyd calculated its own MCEV at 4.1 billion at the end of June.Reuters reported on Sunday that the IPO would be offered at a discount to MCEV to stimulate investor interest amid a raft of competing share sales.
But under Aviva's more conservative approach, Delta Lloyd had an MCEV of
2.7 billion at the half-year, putting the IPO at a slight premium at the midpoint of the price range.
Aviva said in August that it would consider using the proceeds of the Delta IPO to acquire rivals weakened by the financial crisis.
The company yesterday reiterated that Delta Lloyd's stock market listing could also help it make acquisitions as the Benelux insurance market undergoes a period of consolidation.
Aviva would have to give its approval to any merger or takeover involving Delta Lloyd that took the British insurer's stake below 50%.
Delta Lloyd said yesterday that it made a net loss of ฃ88 million ($143.4 million)in the nine months to Sept 30, while life new business sales for the period fell 12% to ฃ2.8 billion.
Trading in Delta Lloyd shares is expected to begin in Amsterdam on Nov 3, Aviva said.
Saturday, October 17, 2009
Ayudhya plans acquisitions
SET-listed Ayudhya Insurance Plc, a Bank of Ayudhya affiliate, is considering an aggressive acquisitions strategy to become a top-10 firm by the end of 2010.
The Office of the Insurance Commission has set a 2011 deadline for local insurers to meet the regulator's new risk-based capital requirements. These require insurers to maintain capital funds proportionate to their assets, debts,liabilities and risks, to protect customers and the general public.
This is likely to make many weaker insurers with low capital reserves consider the mergers and acquisitions market. Snapping up such firms would help Ayudhya increase its market share, said president Rowan D'Arcy.
"To become number 10 by 2010 would be great. We are currently at about number 23 and expect to move up the ladder a little this year as we are growing faster than the market at present," he said
"Being in a strong position, we would naturally be interested in exploring these (M&A) avenues."
Ayudhya has a 3-billion-baht war chest comprising retained earnings and locked capital funds - share premium reserves that cannot be distributed to shareholders, said Mr D'Arcy."As the company has a strong capital base and a proven record in management, it is natural to consider investing further in its own core business," he said.
If the company cannot find firms to acquire by the end of 2011 it will continue to drive growth organically, he said. Potential acquisitions must be correctly priced and offer further distribution possibilities, particularly for bancassurance and telemarketing, he said.
Despite keeping its relatively low profile Ayudhaya Insurance has grown stea-
ily in the last five or six years, both in written premiums and its bottom line.
Last year it reported total written premiums of 1.68 billion baht,a rise of about 7.3%from a year earlier.D'Arcy: Aiming to be However, net proin market's top 10 fit slumped by 14%to 357 million baht in the same period, due to weaker investment incomes.
For the first six months of the year,the company reported written premiums of 885.73 million baht, a rise of 9.07%from the same period last year, while net profit dropped to 128.97 million baht from 175.28 million.
The company projects its written premiums this year will grow by about 10%to 1.84 billion baht despite poor economic conditions.
It expects to maintain the same growth trajectory throughout 2010 thanks partly to its balanced distribution channels and income structure.
High-risk motor insurance constitutes only 29% of the company's written premiums, while the profitable segments of fire, miscellaneous and marine make up 25%,34% and 12% respectively.
Ayudhya's network of external insurance agents contributed 37% of sales,and bancassurance 30%, while the rest came from its brokerage and direct sales.
The insurer has implemented several measure to mitigate the impact of the global and domestic recession.
"We've instituted myriad actions ...from reducing employment costs, changing our production technology, rebranding our products and services to broaden distribution and [improving] corporate communications," he said.
"More importantly, we've made it easy for potential buyers to buy our products by focusing on simplifying the buying process and making the products the most simple and convenient."
Ayudhya Insurance is a German-Thai joint venture in which the Allianz Group holds a 16.84% stake.
The Office of the Insurance Commission has set a 2011 deadline for local insurers to meet the regulator's new risk-based capital requirements. These require insurers to maintain capital funds proportionate to their assets, debts,liabilities and risks, to protect customers and the general public.
This is likely to make many weaker insurers with low capital reserves consider the mergers and acquisitions market. Snapping up such firms would help Ayudhya increase its market share, said president Rowan D'Arcy.
"To become number 10 by 2010 would be great. We are currently at about number 23 and expect to move up the ladder a little this year as we are growing faster than the market at present," he said
"Being in a strong position, we would naturally be interested in exploring these (M&A) avenues."
Ayudhya has a 3-billion-baht war chest comprising retained earnings and locked capital funds - share premium reserves that cannot be distributed to shareholders, said Mr D'Arcy."As the company has a strong capital base and a proven record in management, it is natural to consider investing further in its own core business," he said.
If the company cannot find firms to acquire by the end of 2011 it will continue to drive growth organically, he said. Potential acquisitions must be correctly priced and offer further distribution possibilities, particularly for bancassurance and telemarketing, he said.
Despite keeping its relatively low profile Ayudhaya Insurance has grown stea-
ily in the last five or six years, both in written premiums and its bottom line.
Last year it reported total written premiums of 1.68 billion baht,a rise of about 7.3%from a year earlier.D'Arcy: Aiming to be However, net proin market's top 10 fit slumped by 14%to 357 million baht in the same period, due to weaker investment incomes.
For the first six months of the year,the company reported written premiums of 885.73 million baht, a rise of 9.07%from the same period last year, while net profit dropped to 128.97 million baht from 175.28 million.
The company projects its written premiums this year will grow by about 10%to 1.84 billion baht despite poor economic conditions.
It expects to maintain the same growth trajectory throughout 2010 thanks partly to its balanced distribution channels and income structure.
High-risk motor insurance constitutes only 29% of the company's written premiums, while the profitable segments of fire, miscellaneous and marine make up 25%,34% and 12% respectively.
Ayudhya's network of external insurance agents contributed 37% of sales,and bancassurance 30%, while the rest came from its brokerage and direct sales.
The insurer has implemented several measure to mitigate the impact of the global and domestic recession.
"We've instituted myriad actions ...from reducing employment costs, changing our production technology, rebranding our products and services to broaden distribution and [improving] corporate communications," he said.
"More importantly, we've made it easy for potential buyers to buy our products by focusing on simplifying the buying process and making the products the most simple and convenient."
Ayudhya Insurance is a German-Thai joint venture in which the Allianz Group holds a 16.84% stake.
Tuesday, October 13, 2009
AIG sells Taiwan unit for $2.15bn
American International Group struck a deal to sell its Taiwan life insurance for $2.15 billion,marking its largest disposal of a division since a government bailout last year saved it from collapse.
Primus Financial, a new firm founded by Citigroup's former Asia investment banking head, together with a Hong Kong partner, agreed to buy Nan Shan Life,ending a five-month auction that saw big interest from many corporates and private equity bidders.
"The deal priced Nan Shan at about one time price to book, which is fair when you compare 1.9 times for Cathay Financial and Fubon Financial, and one time for smaller rival Shin Kong Financial," said Dexter Hsu, an analyst at JP Morgan in Taiwan yesterday.
With the Nan Shan agreement sealed,AIG is now likely to raise cash from two other major assets in Asia.
Hong Kong-based life insurer AIA is seeking a more-than $2 billion initial public offering while American Life Insurance Co, which generates half its revenue in Japan, is seeking a reported $5 billion in an IPO.
Both companies have also attracted acquisition interest, though nothing yet has materialised.
The sale of Nan Shan, in an auction run by Morgan Stanley, allows AIG to check one business off its list of units to sell, after the United States injected $80 billion in taxpayer money into the firm after it nearly collapsed late last year.
Primus, run by former Citi executive Robert Morse, and Hong Kong investment group China Strategic Holdings would pay $2.15 billion for AIG's 97.5%stake in Nan Shan, AIG said yesterday.
Earlier this year, Primus co-chief executive Wing-fai Ng said in an interview with Reuters that Primus planned to use Nan Shan, Taiwan's No.3 life insurer,as a base to expand to Hong Kong, Malaysia and Japan.
Nan Shan has assets of $46.4 billion and employs 36,000 sales agents in Taiwan and has a market share of 10%with its four million customers.
Some analysts and bankers involved in the deal said putting a valuation on the AIG's Taiwan life insurance unit was difficult.
"The pricing is tricky. If you just look at the book value of Nan Shan, then the acquisition price is at a 30% discount,"said Pandora Lee, an analyst with UBS.
First Commercial Bank and Taiwan Cooperative Commercial Bank in Taiwan are arranging a NT$20 billion (around US$588 million) loan for Primus to back its purchase of Nan Shan, according to Thomson Reuters LPC.
FCB and Taiwan Cooperative are expected to each prefund NT$10 billion (around US$294 million) of the loan before Primus settling the Nan Shan transaction.
The agreement marks the end of an auction that spanned several months and involved multiple bidders, including private equity firms, such as the Carlyle Group. Primus had been competing in the end with Chinatrust Financial.
Primus Financial, a new firm founded by Citigroup's former Asia investment banking head, together with a Hong Kong partner, agreed to buy Nan Shan Life,ending a five-month auction that saw big interest from many corporates and private equity bidders.
"The deal priced Nan Shan at about one time price to book, which is fair when you compare 1.9 times for Cathay Financial and Fubon Financial, and one time for smaller rival Shin Kong Financial," said Dexter Hsu, an analyst at JP Morgan in Taiwan yesterday.
With the Nan Shan agreement sealed,AIG is now likely to raise cash from two other major assets in Asia.
Hong Kong-based life insurer AIA is seeking a more-than $2 billion initial public offering while American Life Insurance Co, which generates half its revenue in Japan, is seeking a reported $5 billion in an IPO.
Both companies have also attracted acquisition interest, though nothing yet has materialised.
The sale of Nan Shan, in an auction run by Morgan Stanley, allows AIG to check one business off its list of units to sell, after the United States injected $80 billion in taxpayer money into the firm after it nearly collapsed late last year.
Primus, run by former Citi executive Robert Morse, and Hong Kong investment group China Strategic Holdings would pay $2.15 billion for AIG's 97.5%stake in Nan Shan, AIG said yesterday.
Earlier this year, Primus co-chief executive Wing-fai Ng said in an interview with Reuters that Primus planned to use Nan Shan, Taiwan's No.3 life insurer,as a base to expand to Hong Kong, Malaysia and Japan.
Nan Shan has assets of $46.4 billion and employs 36,000 sales agents in Taiwan and has a market share of 10%with its four million customers.
Some analysts and bankers involved in the deal said putting a valuation on the AIG's Taiwan life insurance unit was difficult.
"The pricing is tricky. If you just look at the book value of Nan Shan, then the acquisition price is at a 30% discount,"said Pandora Lee, an analyst with UBS.
First Commercial Bank and Taiwan Cooperative Commercial Bank in Taiwan are arranging a NT$20 billion (around US$588 million) loan for Primus to back its purchase of Nan Shan, according to Thomson Reuters LPC.
FCB and Taiwan Cooperative are expected to each prefund NT$10 billion (around US$294 million) of the loan before Primus settling the Nan Shan transaction.
The agreement marks the end of an auction that spanned several months and involved multiple bidders, including private equity firms, such as the Carlyle Group. Primus had been competing in the end with Chinatrust Financial.
Monday, October 12, 2009
BAY taps bancassurance
Bank of Ayudhya has set an ambitious growth target for its bancassurance business next year, helped by its "boxed"insurance policies, says senior vicepresident Kris Chantanotoke.
The bank aims to increase first-year premiums by 50% next year, thanks to its low base and the growth potential of business segmentation. For the first eight months of the year, BAY recorded firstyear premiums of 3.5 billion baht. The bank expects to achieve its target of 4 billion this year compared with 3 billion last year.
Business expansion will be supported by its products and services, particularly the bundled or boxed policies. BAY is the first bank in Thailand to offer this convenient and simple product.
For the remainder of the year, the bank expects to sell 200,000 boxes (policies). BAY, the country's fifth-largest bank by total assets, launched three insurance boxes after the bank entered the market three years ago.
Bancassurance in Thailand has grown for more than five years and the market showed significant growth in the past two years because of added players. The market started with some banks around 2004, but now most banks in the country offer the financial product.
Thailand's third-largest bank by total assets, Siam Commercial Bank, ranks number one in bancassurance, followed by Kasikornbank and Bangkok Bank,respectively. The nationwide network of large banks is supporting the rapid growth rate of bancassurance.
Mr Kris forecast that the country's insurance market would grow 13% next year, while the bancassurance business is expected to grow 15%. He said that 95% of insurance sales from the products of its three partners come from its branches, with 3% from telemarketing.
The bank aims to increase first-year premiums by 50% next year, thanks to its low base and the growth potential of business segmentation. For the first eight months of the year, BAY recorded firstyear premiums of 3.5 billion baht. The bank expects to achieve its target of 4 billion this year compared with 3 billion last year.
Business expansion will be supported by its products and services, particularly the bundled or boxed policies. BAY is the first bank in Thailand to offer this convenient and simple product.
For the remainder of the year, the bank expects to sell 200,000 boxes (policies). BAY, the country's fifth-largest bank by total assets, launched three insurance boxes after the bank entered the market three years ago.
Bancassurance in Thailand has grown for more than five years and the market showed significant growth in the past two years because of added players. The market started with some banks around 2004, but now most banks in the country offer the financial product.
Thailand's third-largest bank by total assets, Siam Commercial Bank, ranks number one in bancassurance, followed by Kasikornbank and Bangkok Bank,respectively. The nationwide network of large banks is supporting the rapid growth rate of bancassurance.
Mr Kris forecast that the country's insurance market would grow 13% next year, while the bancassurance business is expected to grow 15%. He said that 95% of insurance sales from the products of its three partners come from its branches, with 3% from telemarketing.
Thursday, October 8, 2009
CONGRESS FOR UNDERWRITERS
More than 11,000 life insurance underwriters from around the world are expected to attend the 12th Asia Pacific Life Insurance Council Congress next year.
Impact Exhibition Management Co has signed an agreement with the Thai Life Underwriters Association to organise the congress, which is aimed at promoting professionalism of financial advisory services in the region.
The event is scheduled for May 5-7 at Impact Muang Thong Thani.
The congress once again returns to Thailand as the largest life insurance congress in the world. The Kingdom was the host for the Sixth APLIC Congress in 2001.
Paul Kanjanapas, managing director of the organiser, said yesterday on behalf of the official venue, that the collaboration to host this world-premier conference proves yet again Thailand's expertise in hosting major international events and as the preferred Mice destination despite the global economic uncertainty.
Montri Saeng-Uraiporn, adviser to the Thai Life Underwriters Association and the organising chairman of the congress, said the event is expected to generate a considerable amount for the Thai economy. The last congress in 2001 contributed Bt1 billion in tourism receipts.
The congress under the theme "Change Lives, Forever; Live a Good Life by Changing Lives of Others", will offer the opportunity to enlighten the career path of life insurance and financial services practitioners from the region.
The key speakers include international well-known professionals such as Norman Levine, Ed Deutshlander, Shan McDuffee, Phillip Richards and Medhi Fakharzadeh.
Impact Exhibition Management Co has signed an agreement with the Thai Life Underwriters Association to organise the congress, which is aimed at promoting professionalism of financial advisory services in the region.
The event is scheduled for May 5-7 at Impact Muang Thong Thani.
The congress once again returns to Thailand as the largest life insurance congress in the world. The Kingdom was the host for the Sixth APLIC Congress in 2001.
Paul Kanjanapas, managing director of the organiser, said yesterday on behalf of the official venue, that the collaboration to host this world-premier conference proves yet again Thailand's expertise in hosting major international events and as the preferred Mice destination despite the global economic uncertainty.
Montri Saeng-Uraiporn, adviser to the Thai Life Underwriters Association and the organising chairman of the congress, said the event is expected to generate a considerable amount for the Thai economy. The last congress in 2001 contributed Bt1 billion in tourism receipts.
The congress under the theme "Change Lives, Forever; Live a Good Life by Changing Lives of Others", will offer the opportunity to enlighten the career path of life insurance and financial services practitioners from the region.
The key speakers include international well-known professionals such as Norman Levine, Ed Deutshlander, Shan McDuffee, Phillip Richards and Medhi Fakharzadeh.
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