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Apr
07
ACE Group Completes Acquisition of New York Life's Hong Kong and Korean Holdings
Posted on Apr 07, 2011 by Sergio Ulloa (G+)
ACE Limited, the Swiss insurer operating in over 50 countries, has successfully completed the acquisition of all shares in both New York Life's Hong Kong and South Korean wholly-owned life insurance subsidiaries for a combined US$425 million in cash. The purchase agreement between the two conglomerates was initialized in October 2010 and further amended to permit separate closings for NY Life's Korea and Hong Kong operations. The Korean half of the transaction closed on February 1st for US$75 million and the sale of the Hong Kong operations was finalized April 1st for US$350 million. Purchase was funded exclusively through ACE Limited's available cash reserves, involving no financing contingency. ACE already had a strong presence in Hong Kong and South Korea through property and casualty insurance services (P&C) but has been looking for an entryway into the local life insurance markets and growth through the acquisition of established NY Life operations. ACE will incorporate the newly purchased businesses into their existing local infrastructure, which already involve US$2.15 billion in assets, more than 2,400 captive agents and earnings of US$330 million in incremental life insurance revenues. ACE's preexisting Asian life insurance businesses include operations in China, Indonesia, Thailand and Vietnam. In October the group entered the Malaysia life insurance market through the US$210 million acquisition of Jerneh Insurance. The Chairman and Chief Executive Officer of ACE Limited, Evan G. Greenberg commented on the deal: "We are pleased to complete this transaction, which adds the important and dynamic market of Hong Kong to our growing international life insurance franchise," adding that "Together with our recent acquisition of New York Life's business in Korea, the addition of a life company in Hong Kong expands our presence in Asia and complements the life insurance business we have been growing organically in the region for the last six years." ACE's success in managing international life insurance businesses coupled with their expertise and existing infrastructure within the Hong Kong and South Korean insurance markets will support the company's growth targets and maintain operational efficiencies through the transition period. Through 2009 New York Life's Hong Kong and South Korean branches had 2,448 insurance agents, and a combined 234,505 policyholders generating total revenues of US$327 million. The acquisition of NY Life's East-Asian holdings is projected to substantially boost sales in ACE's Asian life insurance business (excluding the joint venture with Huatai Insurance Group in China) and diversify their existing premium base. Speaking at the onset of the deal back in October, New York Life Chairman and Chief Executive Office Dick Mucci explained that the decision to leave the South Korean and Hong Kong markets was part of the company's operational strategy: "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." The chairman maintained that this transaction would not affect the quality of cover available in the region: "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." New York Life continues to maintain operations in India, Taiwan and Thailand. In January, the company announced that it was selling the remaining 25 percent stake it held in it's Shanghai-based joint venture, Haier New York Life, to Meiji Yasuda Life Insurance. The global life insurance industry still presents opportunities for growth. According to the most recent annual report, in 2009 New York Life derived 21 percent of its life insurance business from international markets. Insurance Companies Mentioned ACE Group
The ACE Group is one of the largest providers of commercial property and casualty insurance in the world. 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.