Pacific Century sells FWD stake to reinsurer

Swiss Re paying US$425 million for minority holding in Richard Li's insurance company amid an expansion push across the region

PUBLISHED : Thursday, 17 October, 2013, 12:00am
UPDATED : Thursday, 17 October, 2013, 4:06am

Reinsurance company Swiss Re is investing up to US$425 million to acquire a minority stake in FWD Group, the insurance business that Richard Li Tzar-kai's Pacific Century Group bought from ING last year.

Zurich-based Swiss Re, the world's second-largest reinsurance provider, will initially own 12.3 per cent of FWD, and make additional investments to fund the Hong Kong company's planned expansion across Asia.

Li, the chairman of Pacific Century, said yesterday: "As we look to build FWD for the long term, Swiss Re's commitment to Asia is entirely consistent with our aspirations to create a leading life insurer across the region."

The deal with Swiss Re represented more good news for Li this week. On Tuesday, the government approved the application of PCCW affiliate HK Television Entertainment for a free-to-air television programme service licence. Li is also the chairman of PCCW.

In 2007, Li sold his stake in Pacific Century Insurance to Fortis but re-entered the business through Pacific Century Group's US$2.14 billion purchase of ING's insurance operations in Hong Kong, Macau and Thailand in an acquisition that was completed in February. The name of that business was changed to FWD in August as part of the takeover deal because ING kept its brand for its own banking operation.

Julian Lipman, FWD's chief operating officer, said Swiss Re's participation as a long-term investor would help the company "in its quest to build a pan-Asian life insurance platform".

Last month, FWD Hong Kong and Macau chief executive David Wong Tai-wai said the firm aimed to be a top five insurer in the city in five years. It is currently ninth.

FWD also planned to double its sales agents to 3,000 in five years and double banking sales partners to six.

In a statement, Swiss Re group chief executive Michel Liès said: "FWD is an exciting new regional player which will bring attractive insurance products to help address the rapidly growing needs of consumers and significant protection gaps across Asia."

A Swiss Re spokeswoman said yesterday that the size of the firm's initial investment in FWD was confidential. The ultimate ownership stake in FWD will be based on the total capital eventually deployed. Its initial investment is expected to close in the first quarter of next year, subject to regulatory approvals.

"The company has spent a lot of time with the management teams of Pacific Century Group and FWD to ensure a shared view of strategic priorities and operational plans," she said.

A recent Swiss Re study forecast global life insurance premiums would grow 3 per cent this year, fuelled by a strong rebound in emerging Asian markets.