China's Thaihot Group has struck a deal with Hong Kong's Dah Sing Financial to buy the latter's insurance business for a total of HK$10.6 billion (US$1.36 billion). It is seen as the most expensive insurance deal ever in Hong Kong.
Dah Sing said in a statement it would sell its Hong Kong and Macau life insurance sales and underwriting business to Thai Hot for HK$8 billion. It is getting an additional HK$2.6 billion for a bancassurance tie-up. The deal allows the business to continue selling products through Dah Sing Banking Group and Banco Comercial de Macau for 15 years.
Fujian-headquartered Thaihot, whose business interests include real estate and financial services, is paying nearly three times Dah Sing insurance's 2015 embedded value. In comparison, Belgian insurer Ageas last year sold its Hong Kong insurance unit to China-based asset manager JD Capital in a deal that was valued at 1.3 times the embedded value. The Ageas unit, moreover, is almost double the size of Dah Sing Life: HK$927 million in new premiums last year, versus HK$494 million, according to Bloomberg Intelligence analyst Steven Lam.
Dah Sing’s insurance unit attracted initial interest from over 20 companies mainly from mainland China, reported Reuters.
Mainland Chinese companies are keen to buy overseas insurance companies and gain access to foreign currencies at a time when capital outflows are coming under tighter control as the government struggles to limit the depreciation of the yuan against the dollar. In addition, the insurance market in Hong Kong and Macau is buoyed by thousands of mainland Chinese who travel to these cities to buy life insurance policies.