AIA buys Malaysian business of ING Groep
Source: Bloomberg News |
October 12, 2012, Friday
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Print Edition
Print Edition
AIA Group Ltd, the third-largest Asia-based insurer, has agreed to buy ING Groep NV's insurance business in Malaysia for about 1.3 billion euros (US$1.7 billion) in its largest acquisition as a listed company.
The purchase will boost the percentage of profit AIA gets from Malaysia to 13 percent from 8 percent, it said in a statement. Separately, AIA said its value of new business rose 22 percent in the third quarter to a record US$300 million.
"The deal may add around 5 percent to AIA's earnings per share and shift its business to a higher-growth region," said Arjan van Veen, a Hong Kong-based analyst at Credit Suisse Group AG. AIA's value of new business growth in the third quarter well exceeded the consensus analyst estimate of 12 percent, according to van Veen.
AIA Chief Executive Officer Mark Tucker has sought to revive new business growth after the Hong Kong-based insurer was hurt during the financial crisis because of woes at its bailed-out former parent American International Group Inc. Tucker yesterday said the strength of AIA's balance sheet means it can grow its existing business as well as buy new assets.
"This is a rare opportunity to acquire a high-quality company," Tucker said in a conference call yesterday. "It's an excellent strategic fit for AIA."
The acquisition will combine ING's operations, the third-largest in Malaysia, and AIA's existing business, the fourth-biggest, to create the No. 1 life insurer in the country, according to the statement.
AIA has the capability of paying for the acquisition with any combination of internal cash and debt with the specific mix to be decided closer to the completion date, Tucker said. AIA, which has no debt before the acquisition, will remain financially strong afterwards, he added.
The Malaysian acquisition was both rare in size and quality, Tucker said, adding that AIA will continue to look at acquisitions that are both strategically and financially compelling.
The purchase includes ING's life-insurance and employee-benefits businesses in Malaysia, as well as its 60 percent stake in ING Public Takaful Ehsan Berhad.
The purchase will boost the percentage of profit AIA gets from Malaysia to 13 percent from 8 percent, it said in a statement. Separately, AIA said its value of new business rose 22 percent in the third quarter to a record US$300 million.
"The deal may add around 5 percent to AIA's earnings per share and shift its business to a higher-growth region," said Arjan van Veen, a Hong Kong-based analyst at Credit Suisse Group AG. AIA's value of new business growth in the third quarter well exceeded the consensus analyst estimate of 12 percent, according to van Veen.
AIA Chief Executive Officer Mark Tucker has sought to revive new business growth after the Hong Kong-based insurer was hurt during the financial crisis because of woes at its bailed-out former parent American International Group Inc. Tucker yesterday said the strength of AIA's balance sheet means it can grow its existing business as well as buy new assets.
"This is a rare opportunity to acquire a high-quality company," Tucker said in a conference call yesterday. "It's an excellent strategic fit for AIA."
The acquisition will combine ING's operations, the third-largest in Malaysia, and AIA's existing business, the fourth-biggest, to create the No. 1 life insurer in the country, according to the statement.
AIA has the capability of paying for the acquisition with any combination of internal cash and debt with the specific mix to be decided closer to the completion date, Tucker said. AIA, which has no debt before the acquisition, will remain financially strong afterwards, he added.
The Malaysian acquisition was both rare in size and quality, Tucker said, adding that AIA will continue to look at acquisitions that are both strategically and financially compelling.
The purchase includes ING's life-insurance and employee-benefits businesses in Malaysia, as well as its 60 percent stake in ING Public Takaful Ehsan Berhad.
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