Hong Kong Life Insurance sale under consideration, may fetch US$600m: sources

[HONG KONG] 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 US$600 million, people familiar with the matter said.

The unlisted insurer's owners - five Hong Kong financial institutions - are working with adviser Nomura Holdings 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 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 per cent 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 per cent in 2016, making it attractive to new entrants.

Last week, China's Thaihot Group, a relatively new entrant to Hong Kong financial circles, bought Dah Sing Financial's life insurance unit for US$1.4 billion in Hong Kong's most expensive insurance M&A, paying seven times price to book.

The US$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' Hong Kong insurance unit for US$1.4 billion.

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 per cent stake while the others own about 16.7 per cent 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, 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, 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.

REUTERS