Worldwide: Asia Pacific Overview - Mergers And Acquisitions 2009-2012

Last Updated: 15 November 2012
Article by Andrew Holderness

Mr Andrew Holderness of Clyde & Co says that mergers and acquisitions activity has been trending down over the last three years, adding that Asia Pacific has also seen its share of global M&A activity drop from a high of 24% in the first half of 2011 to 8% in the first six months of 2012. He shares details from a report released recently by the Corporate Insurance Group at Clyde & Co.

Asia Pacific Overview –

Mergers and Acquisitions 2009-2012


The Australian market has seen a strong mix of both inbound and outbound activity. While Australia is very much on the radar of Asian companies with international ambitions, the market remains highly concentrated, dominated by the two biggest players: Insurance Australia Group (IAG) with around 40% of the market, and Suncorp with 34%.

The only international insurer involved in inbound M&A activity in Australia over the last 12 months was Beazley Group, which expanded its presence in the group disability market through the purchase of two managing general agencies, Australian Income Protection and Blue-GUM Special Risks, both based in Sydney. These acquisitions demonstrate the desire of international insurers to access established books of business as a way of growing their presence in the Australian market.


The highest-profile inbound deal over the period July 2011 to June 2012 was IAG's acquisition of a 20% stake in China's Bohai Property Insurance Ltd, completed in April. Bohai is focused primarily on motor insurance, a product line in which IAG traditionally has had competitive strength. It is likely that there will be more transaction activity in this sector as the regulator has opened up the motor insurance market to foreign companies, removing minimum premiums in order to increase competition.

Also in April, German insurance group ERGO, a subsidiary of global reinsurance giant Munich Re, announced that it had received the necessary start-up permissions from local regulators to launch a joint venture operation with Shandong's state-owned Assets Investment Holding Company (SSAIH).

In terms of outbound activity the only transaction of note was the announcement in November 2011 of state-owned reinsurance giant China Re's partnership with the UK's Catlin, marking the first time a Chinese company has made a direct investment in the Lloyd's market.

Hong Kong

Hong Kong remains a key insurance hub in the region, although the relatively low number of targets will always limit transaction activity. However, the territory has seen some significant deals recently.

In March 2012, AXA strengthened its presence in the region when it paid US$494 million for HSBC's general insurance businesses in Hong Kong, Singapore and Mexico. The deal will help fulfil the French insurer's goal of becoming the top general insurance player in Asia by 2015. HSBC also sold Hang Seng General Insurance, based in Hong Kong, and a similar business in Argentina to Australia's QBE Insurance for $420 million.


The insurance M&A market in India has been relatively static through 2011 and the first half of 2012. The most significant domestic deals saw Future Generali India Life Insurance acquire the Industrial Investment Trust, and the acquisition of GS Mace Holdings Ltd by Max India Ltd.

International acquisitions were limited to two Japanese companies – Nippon Life Insurance Company and Mitsui Sumitomo Insurance – acquiring Reliance Life Insurance Company Ltd and Max New York Life respectively in the aftermath of heavy catastrophe losses in recent years.


Despite the fact that a number of insurers are looking for opportunities in Indonesia, there is a lack of attractive targets. Many local businesses are seen as weak, with insufficient business controls, and this deters potential entrants, particularly in light of growing anti-corruption legislation in developed markets in particular the UK and US.

However, the second half of 2011 and the first six months of 2012 did see a number of new entrants into the Indonesian market, with Japanese insurers Mitsui Sumitomo Insurance, Hitachi Capital Corp and Meiji Yasuda Life Insurance Co all making acquisitions.

In June 2012, ACE announced that it was continuing its Indonesian expansion with the agreement to acquire Jakarta

based PT Asuransi Jaya Proteksi (JaPro) in a cash transaction worth approximately $130 million, which is expected to be completed within the third quarter of 2012.


The domestic Japanese insurance market was static in terms of M&A in the 12 months up to July 2012, a trend that is set to continue as the country's three main insurers, Sompo Japan Insurance Inc, Mitsui Sumitomo Insurance Group Holdings and Tokio Marine, control 70% of the market between them. It was a similar story for inbound M&A since all major international insurers already have a presence in the market.

There has also been considerable fallout from the earthquake and tsunami in 2011 as insurers seek to diversify their risk portfolios. The result is that outbound activity by Japanese companies has picked up over the last 12 months. Among a spate of deals, the most notable were Mitsui Sumitomo's acquisitions of Indonesia's Asuransi Jiwa Sinarmas PT and the Indian operations of Max New York Life Insurance, while Nippon Life Insurance Co purchased a stake in Reliance Life Insurance Co Ltd of India.


Malaysia continues to attract interest from foreign investors with a number of significant deals in the second half of 2011 and the first six months of 2012. The attractive nature of the Malaysian market is further heightened by the relatively lax foreign ownership regulations; foreign owners are allowed to buy up to 70% of a domestic insurer.

In September 2011 Switzerland's Zurich Insurance Company Ltd acquired composite insurer Malaysian Assurance Alliance Berhad (MAAB). In April 2012 Australian insurer IAG's Malaysian joint venture business, AmG Insurance Bhd, entered into a conditional agreement to buy Kurnia Insurans (Malaysia) Bhd in a transaction worth $509.1 million, which is expected to close by the end of 2012. Kurnia is the largest motor insurer in the country and in the top four overall.

South Korea

South Korea is one of the world's most saturated and competitive insurance markets. The result is that many are considering expanding into new markets through M&A abroad.

Evidence of this trend was seen in November 2011 when Korea Life Insurance announced a 50-50 joint venture insurance operation in China with Zheijiang International Business Group. The insurer, South Korea's second largest life insurance company, has also expressed an interest in ING Group's Asia Pacific insurance operations and in May 2012 was shortlisted in the bidding process for a deal that could eventually be valued above $7 billion.

This has been followed by plans made by their chief rival, Samsung Life, to develop operations in Thailand, India and Indonesian insurance markets in 2012.

Despite the difficulties of entering the South Korean market, many of the leading foreign insurers believe that the opportunities are too good to ignore and in May 2012 Canada's Tiger Holdings LP completed a deal to acquire Kyobo Life Insurance Co Ltd. In the same month French insurance giant AXA SA made a move to strengthen its position in South Korea's direct insurance market through the acquisition of general insurer Ergo Daum Direct in a deal that should be completed later in 2012.


Taiwan is also a highly saturated market, and the deal trend has been for domestic mergers to create better capitalised carriers.

The largest deal last year was the sale by AIG of Nan Shan Life Insurance Co Ltd to Ruen Chen Invest Holding Co Ltd for $2.2 billion, one of the year's biggest transactions. Although the acquisition was driven in part by the conditions of AIG's bailout by the US government, this is the latest example of a long line of foreign insurers exiting Taiwan's insurance market, due to the high level of product guarantees and the downward pressure this places on margins.


The insurance market in Thailand is still getting to grips with the losses sustained during the floods of 2011, the costliest natural disaster event in south-east Asia's history, with a large number of carriers calculating their own exposures based on a total industry loss of around $15 billion.

This is a clear opportunity for international insurers to move into, or strengthen their presence in, the Thai market. In March 2012 Canadian insurer Fairfax closed a deal to acquire a 25% interest in Thai Re for around $70 million in what is likely to be the first of a number of deals in the country's embattled insurance sector.


In May 2012 IAG completed its acquisition of a 30% stake in Vietnam-based AAA Assurance Corporation (AAA). IAG managing director and CEO, Mike Wilkins, described the investment as a strategic stake that will deliver an exposure to the rapidly growing Vietnamese insurance market via an established participant.

In another significant move into Vietnam, driven by similar motives, Sun Life Financial Inc, a subsidiary of Sun Life Assurance Co of Canada, signed a joint venture agreement with PVI Holdings to form PVI Sun Life Insurance Co Ltd.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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