US-based insurer ACE Group announced it will spend US$425 million (HK$3.29 billion) in cash to buy the Hong Kong and South Korean operations of New York Life.
ACE chairman and chief executive Evan Greenberg said yesterday the transaction would benefit shareholders and help ACE to expand in Asia.
'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,' Greenberg said.
'This transaction is financially attractive to our shareholders.'
Louis Tse Ming-kwong, director of VC Brokerage, said the acquisitions showed the Hong Kong insurance market was attractive. 'If new players want to enter the Hong Kong market, it would be very difficult for them to start from scratch. Acquisition is a quicker way to get a toehold in the market,' Tse said.
'ACE may want to use the Hong Kong operation as a springboard to expand in the mainland, which is the world's fastest growing market,' Tse said.