Posted on Oct 27, 2010 by Sergio Ulloa
New York Life Insurance Company has signed an agreement with ACE Group for the sale of two of New York Life's Asian life insurance operations for US$ 425 million.
The deal will see ACE purchase two of New Your Life's wholly owned life insurance subsidiaries in Hong Kong and South Korea, where ACE Group already has property and casualty insurance operations. ACE Group will incorporate the newly purchased businesses into their local operations which already have US$ 2.15 billion in assets, more than 2,400 agents and earn US$ 330 million in incremental life insurance revenues.
The deal is still subject to regulatory approval and other customary closing conditions, but is expected to close in the first quarter of 2011. ACE is expecting to fund the purchase from available cash, with no financing contingency.
Dick Mucci, the Chairman and Chief Executive Officer of New York Life International, said that "While these are well-established businesses, New York Life has made the decision, as part of a strategic shift, to concentrate on our operations in the U.S., where we have the leading market share in life insurance, and on our markets in Asia and Latin America where we have strong market positions. Consistent with our commitment to policyholder safety and security, ACE Group is a respected and well established global insurer with a strong balance sheet and robust ambitions for growth in Asia."
The Chairman and Chief Executive Officer of ACE Limited, Evan G. Greenberg, also commented, saying that "ACE has a good track record for building and managing insurance companies globally and a young but successful record with building de novo life companies in Asia, including China, Vietnam, Thailand and Indonesia. These two life insurance companies are small, solid agency operations that have been managed conservatively by New York Life, a venerable and highly professional company. They provide a good foundation on which to build our life operations in these two territories as part of our overall life insurance strategy in the region.
"This transaction is financially attractive to our shareholders. 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."
Insurance Companies Mentioned:
The ACE Group is one of the world's largest providers of commercial property and casualty insurance. With its core operating insurance companies rated A+ for financial strength by Standard & Poor's and A.M. Best, and with nearly US$78 billion in assets and more than US$19 billion of gross written premiums in 2009, the ACE Group is distinguished by its underwriting expertise, superior claims handling and global franchise, and has a physical presence in 53 countries and commercial and individual customers in more than 170 countries.
New York Life
The New York Life Insurance Company is one of the largest mutual life insurance companies in the United States, and also operates in India, Mexico, Thailand, China and Taiwan. The Fortune 100 Company was started in 1845, and is headquartered in New York, New York. New York Life sells life insurance, retirement income and investment products, as well as long-term care insurance.