Fo­sun buys US in­surance company

China Daily (Canada) - - ACROSSAMERICAS - BY JACK FREIFELDER in New York jack­freifelder@ chi­nadai­lyusa.com

Chi­nese con­glom­er­ate Fo­sun In­ter­na­tional Ltd is mov­ing into the US prop­erty and ca­su­alty (P&C) in­surance mar­ket by ac­quir­ing Mead­ow­brook In­surance Group for about $433, ac­cord­ing to Fo­sun’s chair­man Guo Guangchang.

Guo said the deal is “another mile­stone” for China’s big­gest pri­vately held con­glom­er­ate, one that will en­able it to “fur­ther strengthen its com­pre­hen­sive in­surance-ori­ented fi­nan­cial ca­pa­bil­i­ties”.

He also said the deal is con­sis­tent with the company’s ef­forts to ex­pand its core in­surance business.

“Mead­ow­brook has a tal­ented em­ployee base, com­pre­hen­sive of­fer­ing of high-qual­ity spe­cialty in­surance prod­ucts, ro­bust dis­tri­bu­tion net­work and a strong com­mit­ment to meet­ing the evolv­ing needs of its pol­i­cy­hold­ers,” Guo said Tues­day in a state­ment.

Robert S Cub­bin, pres­i­dent and CEO of Mead­ow­brook, said the part­ner­ship with Fo­sun gives the company good support to strengthen its cap­i­tal base. Ad­di­tion­ally, the pact will al­low the US-based in­surance firm to im­prove its un­der­writ­ing ser­vices and drive prof­itabil­ity, he said.

Tripp Levy, a New York­based law firm, may chal­lenge the deal be­tween Fo­sun and Mead­ow­brook, ac­cord­ing to a press re­lease is­sued on Wed­nes­day.

Tripp Levy said it is in­ves­ti­gat­ing “pos­si­ble breaches of fidu­ciary duty and other vi­o­la­tions of state law,” and “seeks to de­ter­mine if there was an ad­e­quate auc­tion process and if Fo­sun is un­der­pay­ing for Mead­ow­brook’s shares.”

A spokesman for Mead­ow­brook de­clined to com­ment.

Mead­ow­brook will con­tinue to main­tain its head­quar­ters in the US, the com­pa­nies said. The trans­ac­tion is ex­pected to close in the sec­ond half of 2015.

Mead­ow­brook, founded in 1955 and based in South­field, Michi­gan, is a lead­ing provider in the spe­cialty in­surance mar­ket.

e group fo­cuses on three main ar­eas: in­surance car­rier op­er­a­tions, in­surance ser­vices, and re­tail/whole­sale in­surance agency op­er­a­tions. The company also over­sees six P&C in­surance un­der­writ­ing com­pa­nies.

Fo­sun Group, founded in 1992, is a China-based in­dus­trial con­glom­er­ate with in­vest­ments in in­surance, in­dus­trial op­er­a­tions, phar­ma­ceu­ti­cals and as­set man­age­ment. The company’s head­quar­ters is in Shang­hai and it has a work­force of more than 35,000 em­ploy­ees world­wide.

Fo­sun, has more than $50 bil­lion in to­tal as­sets and more than one-third are in­vested in the in­surance business.

Some of Fo­sun’s in­surance sub­sidiaries in­clude: Yong’an P&C In­surance (Xi’an, Shaanxi prov­ince); Pramer­ica Fo­sun Life In­surance (a US-Sino joint ven­ture (JV) with Pru­den­tial Fi­nan­cial Inc); and Caixa Se­guros e Saude SGPS SA (a sta­te­owned Por­tuguese in­surance provider).

At the time, Fo­sun’s $1.36 bil­lion deal for a con­trol­ling in­ter­est in Caixa Se­guros, — Por­tu­gal’s largest in­surance group — was the first time a Chi­nese company bought an over­seas in­surance firm. The deal closed in May.

Fo­sun has been ac­tive in over­seas ac­qui­si­tions in re­cent years. Its more re­cent high­pro­file plays have come in the en­ter­tain­ment and real es­tate sec­tors.

Fo­sun in­vested in Stu­dio 8 in June, a film company founded by Jeff Robi­nov, a for­mer pres­i­dent of Warner Bros En­ter­tain­ment Inc. The Wall Street Jour­nal re­ported in Septem­ber that the ini­tial in­put would ap­proach $200 mil­lion.

The company also signed an agree­ment with the Lat­sis Group in June re­gard­ing a $200 mil­lion in­vest­ment to help re­de­velop an out-of-date air­port in Athens. The work on Hel­lenikon In­ter­na­tional Air­port is ex­pected to cre­ate 50,000 job op­por­tu­ni­ties over the next 10 years.

In May, Fo­sun an­nounced the company’s first move in Ja­pan with its pur­chase of Tokyo-based real es­tate company Idera Cap­i­tal Man­age­ment. No fi­nan­cial de­tails ac­com­pa­nied the news.

Fo­sun’s lat­est bat­tle in­volves a takeover bid for French va­ca­tion re­sort op­er­a­tor Club Mediter­ra­nee SA.

On Dec 19, Guo, Fo­sun’s chair­man, raised his bid for the re­sort just ahead of an im­pend­ing dead­line. His bid now val­ues Club Med at $1.15 bil­lion. Guo has de­scribed Club Med as an ideal in­vest­ment to tap boom­ing Chi­nese travel de­mand.

Guo and Ital­ian ty­coon An­drea Bonom have been rais­ing their bids for the re­sort for months. The most re­cent of­fer is the eighth that Club Med has en­ter­tained from its two main suit­ors. The dead­line for a coun­ter­bid has been set for Jan 7.

Cub­bin, with Mead­ow­brook, said: “Com­bin­ing with Fo­sun … is the cul­mi­na­tion of a thor­ough, strate­gic re­view process. This is a pos­i­tive out­come for our share­hold­ers, who will re­ceive sig­nif­i­cant value; our em­ploy­ees, who will ben­e­fit from en­hanced op­por­tu­ni­ties; and our cus­tomers, part­ners and pol­i­cy­hold­ers, who will ben­e­fit from an even stronger spe­cialty risk, in­surance and ser­vice provider.”

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