AXA's Restructuring Continues

Posted on Mar 16, 2011 by Sergio Ulloa (G+)

The French multinational insurer AXA has announced that it has been given regulatory approval from the China Insurance Regulatory Commission ("CIRC") to sell its 15.6 percent share in China's Taikang Life. AXA is offloading its share in China's fourth largest life insurer for US$1.2 billion, which means that it exits the Taikang Life venture completely. AXA's 15.6 percent stake in Taikang will be absorbed by existing and new shareholders on finalisation of the deal. AXA is one of the largest global insurers, and is required to sell its minority share in Taikang Life due to local regulation policy restricting foreign investor's interests in multiple insurance ventures in China. The CIRC introduced the new multiple insurance venture guidelines to ensure the Chinese insurance market remains competitive and to encourage domestic Chinese insurers to maintain a presence in the insurance market. Taikang Life was originally acquired by AXA in 2006 through the Winterthur Life investment management vehicle - which has subsequently been re-branded to AXA Wealth Management. AXA will maintain a presence in the Chinese insurance market through its 27.5 percent share in the AXA-Minmetals venture, with local banking group Industrial & Commercial Bank of China (ICBC) - one of the world's largest financial institutions. AXA-Minmetals has become a prime international venture for AXA, primarily due to its position in one of the most important insurance markets in the world. The Chinese insurance industry has become increasingly important for global insurers aiming to generate new premiums, due to the huge market potential reflecting in the growing Chinese life and non-life insurance sectors. ICBC acquired a 60 percent share of AXA-Minmetals in 2010 for US$180 million in a deal which added to the banks portfolio. The move allowed ICBC to gain access to the Chinese domestic insurance sector and capitalize of AXA's expertise in the insurance market. The Chinese-French insurance venture is a major player in the insurance market in China, with new partners ICBC creating a massive distribution platform for AXA-Minmetals to broaden its reach and maximize its potential. AXA is also progressing the acquisition of AXA Asia Pacific Holdings in a joint bid with Australia's AMP in a deal worth approximately US$10 billion. The deal is set to be finalized later in 2011 and will involve AXA taking control of AXA Asia Pacific Holdings Asian asset base and distribution channels - while AMP will acquire AXA Asia Pacific Holding's Australian and New Zealand business; this development will result in AXA rapidly increasing its platform across the lucrative Asian insurance protection and savings market. AXA reported a steep decline in profitability from global operations in 2010, with net income falling from US$4.9 billion achieved in 2009 to US$3.7 billion in 2010 - representing a 24 percent fall in earnings. The large fall in profits was predominantly caused by the restructuring of AXA's international operations as the insurer implemented its strategic plan to streamline its business to meet the changing needs of emerging global insurance environment. This included a major disposal, with the sale of its UK life insurance business to Resolution. The news of the change in AXA's position in China comes after the devastating earthquake and tsunami which struck Japan on 11th of March 2011, where AXA write a significant amount of Japanese life insurance. Insurance Companies Mentioned: AXA AXA Group is a worldwide leader in Financial Services. Headquartered in Paris, the AXA Group companies are engaged in life insurance, health insurance and asset management services among others. AXA's operations are diverse geographically, with major operations in Europe, North America and the Asia/Pacific area. Taikang Life Taikang Life Insurance was founded in Beijing in 1996 and offers life, annuity and health insurance through 120 offices throughout China, AXA-Minmetals AXA-Minmetals is the first Sino-French insurance company in China and also the first life insurer approved by China Insurance Regulatory Commission. Established in Shanghai in May 1999, the company has boasted stable and sustainable development with its ambition of Becoming the Preferred Company. In September 2010, AXA-Minmetals has achieved a total premium income of RMB 830 million, increased by 54% compared to the same period of last year and its new business volumes have also increased by 75%. AAP AXA Asia Pacific Holdings Ltd. (AAP) is responsible for the Global AXA Group's life insurance and wealth management businesses in the Asia-Pacific region. We have operations in Hong Kong SAR, China, Singapore, Indonesia, Philippines, Thailand, India, Malaysia, Australia and New Zealand. Established as National Mutual in Australia in 1869, AXA Asia Pacific has grown significantly over time. In 1995, the company demutualised and AXA SA acquired 51% of the company. National Mutual listed on the Australian and New Zealand stock exchanges in October 1996 and adopted the AXA brand in 1999. ICBC By the end of 2008, ICBC had altogether 385,609 employees and 16,386 domestic and overseas branches, providing extensive and high-quality financial products and services to 190 million personal clients and 3.1 million corporate clients.