DAI-ICHI, KOREA LIFE BID FOR ING'S SE ASIA BUSINESS
[ Source: Reuters, 16 July 2012 ]
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.