Ace Ltd., the Swiss insurer operating in more than 50 countries, agreed to buy New York Life Insurance Co.’s Hong Kong and South Korean life operations for about $425 million.
The transaction, which is subject to regulatory approvals, is expected to be completed in the first quarter next year, Ace said in a statement today. The purchase will help it expand into the two north Asian markets where it has property and casualty insurance operations and $2.15 billion of assets, it said.
The units are Ace’s third acquisition in Asia after agreeing to buy Malaysian general insurer Jerneh Insurance Bhd. for about $210 million last month. Chief Executive Officer Evan Greenberg is expanding after staying profitable through the credit crisis and has announced $1.75 billion of acquisitions this year.
“Within the first full year of ownership, the acquisition will be accretive to both earnings and book value per share and will achieve a return on capital that meets our targets,” Greenberg said in today’s statement.
Ace last month also agreed to pay $1.1 billion for a majority stake in Johnston, Iowa-based Rain & Hail Insurance Service Inc. It bought a 22 percent stake in Huatai Insurance Co., a Beijing-based property and casualty insurer, for $150 million in 2002, According to data compiled by Bloomberg.
New York Life was earlier in talks to sell its Hong Kong, Korea and Taiwan markets to Manulife Financial Corp., Canada’s largest insurer, and Primus Financial Holdings Ltd., which had bid for the Hong Kong business, two people familiar with the matter said in September.
“We have a new strategy in Taiwan that builds on our multi-distribution capabilities,” said Bill Werfelman, a New York Life spokesman. He declined to comment on whether the company will consider selling its Taiwan business.
New York Life, the biggest U.S. life insurer owned by policyholders, also has operations in India, China and Thailand. The company derived 21 percent of life insurance sales from international markets, according to its 2009 annual report.
Goldman Sachs Group Inc. advised Ace on the acquisition and New York Life was advised by Deutsche Bank AG.
Source : Bloomberg
