Hong Kong Life Insurance sale under consideration, may fetch $600 mln-sources

Dah Sing Financial Holdings

10/06/2016 08:02

By Denny Thomas 
    HONG KONG, June 10 (Reuters) - Hong Kong Life Insurance Ltd, 
one of the last remaining independent life businesses in the 
financial centre, could be put up for sale in a deal that may 
fetch about $600 million, people familiar with the matter said. 
    The unlisted insurer's owners - five Hong Kong financial 
institutions - are working with adviser Nomura Holdings  8604.T  
about the future of the company, which may lead to a sale, the 
people told Reuters. It was not clear by when a decision would 
be reached. 
    Singapore-listed Great Eastern Holdings  GELA.SI  is 
considering bidding for the company, they said. 
    Hong Kong Life Insurance is the latest insurance asset 
likely to be put on the block in the territory at a time of  
strong interest in such businesses, especially from Chinese 
suitors, who are drawn to the steady cash flow in a stable 
foreign currency that they provide. 
    Hong Kong is a developed life insurance market, with a life 
and health insurance premium-to-GDP ratio of 13.4 percent in 
2015, the second-highest in Asia, according to Swiss Re. Still, 
the market offers strong growth, with Swiss Re forecasting 
premiums to grow 9.2 percent in 2016, making it attractive to 
new entrants. 
    Last week, China's Thaihot Group  000732.SZ , a relatively 
new entrant to Hong Kong financial circles, bought Dah Sing 
Financial's  0440.HK  life insurance unit for $1.4 billion in 
Hong Kong's most expensive insurance M&A, paying 7 times price 
to book.  urn:newsml:reuters.com:*:nL4N18U3M2 
    The $600 million deal value for Hong Kong Life is based on 
similar deal multiples, the people said.  
    And in a deal that closed last month, China's JD Capital 
bought Ageas'  AGES.BR  Hong Kong insurance unit for $1.4 
billion.  urn:newsml:reuters.com:*:nL4N11507H 
    Hong Kong Life Insurance was founded in 2001 by OCBC Wing 
Hang Bank, Asia Insurance Co, Shanghai Commercial Bank, Chong 
Hing Bank and Wing Lung Bank. OCBC Wing Hang Bank owns a 33 
percent stake while the others own about 16.7 percent each. 
    Hong Kong Life was previously put up for sale four years 
ago, but the shareholders couldn't agree on a price and the sale 
was pulled. But the rich valuation secured by Dah Sing's life 
business could motivate the sellers to set aside any differences 
and launch the sale once again, the people said. 
    OCBC Wing Hang, Chong Hing and Nomura declined to comment.   
 Asia Financial Holdings  0662.HK , which owns Asia Insurance 
Co, was not available for comment, while Wing Lung Bank did not 
offer an immediate response. Shanghai Commercial Bank said it 
does not have any information on the matter. 
    A spokeswoman for Great Eastern, which is controlled by 
Singapore's Oversea-Chinese Banking Corp  OCBC.SI , declined to 
comment. The sources declined to be identified as the 
information is not public. 
    Hong Kong Life sells insurance through 180 outlets using 
branch networks of Chong Hing Bank, OCBC Wing Hang, Shanghai 
Commercial and Wing Lung Bank. 
 
 (Additional reporting by Tris Pan and Saeed Azhar; Reporting by 
Denny Thomas; Editing by Muralikumar Anantharaman) 
 ((denny.thomas@thomsonreuters.com; +852 2843 6358; Reuters 
Messaging: denny.thomas.thomsonreuters.com@reuters.net)) 
 
Keywords: HONGKONGLIFE M&A/