Belgium-based insurer Ageas said on Thursday that it has agreed to acquire a 25% stake in Taiping Reinsurance, a wholly controlled subsidiary of China Taiping Insurance Holdings, for HKD 3.1 billion ($400 million) to enter the Asian reinsurance market.
By acquiring a stake in the Asian reinsurance company, Ageas will be able to expand into the “fast-growing” reinsurance market in Asia from “leading positions” in Hong Kong and China, the company said.
The cooperation between the Belgian insurer and CTIH will also increase the share of non-life activities in Ageas’ business portfolio. Ageas had an annual inflow of more than EUR 36 billion ($42.6 billion) in 2019 and has over 45,000 employees.
“This transaction offers Ageas a unique opportunity to enter the Asian reinsurance market and to benefit from its strong potential,” Bart De Smet, CEO of Ageas said. “For Taiping Re the capital increase will allow it to achieve its wider growth plans.”
The transaction will be paid for in cash, and the deal is expected to close in the fourth quarter of this year, subject to regulatory approvals
“We have a long-term strategic partnership with Ageas,” Wang Sidong, CEO of CTIH said. “This transaction further reinforces the collaboration between Taiping and Ageas, and we believe such collaboration will create synergies and support our ambition to grow our global reinsurance business especially in the European markets.”
TPRe’s gross written premiums have been growing annually on average by 27% since 2013, reaching EUR 1.7 billion ($2 billion) last year, Ageas said. The insurer added that in the last four decades, TPRe only had one “loss-making” year, and that between 2013 and 2019, the company’s P&C combined ratio averaged at 95.2%.
In addition, TPRe had a “solid” solvency ratio of 272%, which “reflects its strong financial position,” Ageas said.
The transaction value corresponds to 1.03 times TPRe’s book value before the capital increase, Ageas said, adding that the agreed price is “subject to a compensation mechanism based on the evolution of net asset value” of the company since December.
Ageas has a presence in nine regions in Asia, namely China, Malaysia, Thailand, India, the Philippines, Vietnam, Laos, Cambodia and Singapore, according to its website. The company offers a range of life and non-life insurance products, and in 2019, the bulk of Ageas’ net profit came from its Asia business. It has 31,017 staff members in Asia.