DAI-ICHI, KOREA LIFE BID FOR ING'S SE ASIA BUSI­NESS

[ Source: Reuters, 16 July 2012 ]

Insurance - - COMPANY CORNER -

ING, the Dutch in­surer, is di­vest­ing its Asian op­er­a­tions. Ja­pan's Dai-ichi Life In­surance Co Ltd and Korea Life were the first to sub­mit sec­ond-round bids for ING's in­surance op­er­a­tions in South­east Asia. There are two other groups that are also vy­ing for this bid. One con­sor­tium is led by ex-AIA CEO and a former rugby player Mark Wil­son, backed by pri­vate eq­uity firm Black­stone Group LP and Swiss Re, while the other is headed by Richard Li, son of bil­lion­aire Li Kash­ing, which is likely to be in­ter­ested only in the Hong Kong, Malaysia and Thai­land busi­nesses. How­ever, there is some skep­ti­cism over ei­ther con­sor­tium hav­ing a chance of win­ning, ac­cord­ing to com­men­ta­tors. An in­dus­try source re­marked that ING's South­east Asian op­er­a­tions could be sold at nearly two times the em­bed­ded value. South Korea and Ja­pan ac­count for about twothirds of ING's Asian busi­ness, but Ja­pan may prove to be a stum­bling block in the auc­tion due to the 18 bil­lion eu­ros ($21.9 bil­lion) worth of high-guar­an­tee vari­able an­nu­ity poli­cies the lo­cal op­er­a­tion has on its books. ($1 = 0.8208 eu­ros) ING is sell­ing its busi­nesses in the re­gion be­cause it needs to re­pay a bailout from the Dutch government dur­ing the 2008 fi­nan­cial cri­sis. Since the bailout, ING has sold 15.2 bil­lion eu­ros ($18.6 bil­lion) worth of as­sets around the world. Ac­cord­ing to in­surance com­men­ta­tors, ING's South­east Asian busi­ness has been in de­mand and the busi­ness could fetch about $2 bil­lion. Life in­surance pre­mi­ums in South­east Asia are forecast to grow rapidly on the back of strong eco­nomic growth. Dai-ichi and other Ja­panese in­sur­ers are un­der grow­ing pres­sure to ex­pand overseas as they face weak growth prospects at home. About six months ago, ING chief ex­ec­u­tive Jan Hom­men scrapped a joint IPO of its Europe and Asia units in favour of an Asian sale. Since then, the wors­en­ing euro zone cri­sis has put some po­ten­tial buy­ers off big M&A bets. Metlife and Pru­den­tial Fi­nan­cial Inc., con­sid­ered strong con­tenders for ING's in­surance busi­ness, have dropped out of the process. ING's Asia op­er­a­tions of­fer a plat­form for in­sur­ers keen to ex­pand in a re­gion en­joy­ing rapid eco­nomic growth. Life in­surance pre­mi­ums in emerg­ing Asia are forecast to grow 8.7% next year, nearly dou­ble the world av­er­age, ac­cord­ing to Swiss Re es­ti­mates.

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