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SCMP Reporter

FRENCH insurer AXA Group will spend US$110 million to acquire Wing On Life Assurance from Wing On International, taking the usual express route to enter the local insurance market.

  The transaction will reap a profit of about HK$385 million for Wing On International.

  Wing On Life is primarily in the writing of life insurance policies in Hong Kong, Singapore and Malaysia. Its profit before tax was $39.6 million last year and $43.6 million in 1992.

   In a separate agreement, AXA agreed to sell Wing On Life's Malaysian branch to a joint venture formed by Edaran Otomobil Nasional and the Colonial Mutual Life Assurance Society.

   This divestment is intended to avoid overlapping with AXA's existing life business in Malaysia which is conducted through its joint venture with Sime Darby.

   Wardley's Singapore branch is acting as the financial adviser to AXA for the acquisition and the divestment of the Malaysian branch of Wing On Life.

   'The acquisition of Wing On Life is yet another step towards AXA's objective of becoming a major player in the life and general insurance markets in Asia,' said Patrick Dutrey, AXA's senior regional vice-president for Asia.

   Buying existing life insurance companies in Hong Kong is generally considered as the short-cut to entering the increasingly competitive local market as well as the potentially lucrative China market.

  Because applying for new licences is both time-consuming and difficult, foreign companies craving for a share of the burgeoning insurance market have resorted to buying existing licences from dormant insurers or companies with extra insurance licences.

  The most publicised one was the purchase by Seapower Asia of New Zealand Life which was subsequently renamed Top Glory Insurance at the beginning of this year.

   A more recent example was the sale of an insurance licence by Aetna to a company formed by a consortium comprising Cheung Kong (Holdings), Shougang, Wing Lung Bank and some Singapore parties.

  Ranked among the top 12 insurance groups in the world, AXA provides both life and non-life insurance, reinsurance and related financial services and asset management activities.

  It is also one of the world's largest asset managers, with more than US$220 billion in insurance and other funds under management.

  Starting from its French home base, the group has a stronghold in Britain, a 49 per cent interest in the US life insurer and financial services group Equitable, and an increasing presence in continental Europe and Asia.

  The group had a market capitalisation of US$8.7 billion at the end of December last year.

   Asia has become the group's third strategic development after Europe and North America. Acquiring Wing On Life will give it the much-needed gateway to Hong Kong and Singapore.

  AXA first established a presence in Asia in 1992 when it entered into a joint-venture agreement with Sime Darby to form an insurance alliance.

   The alliance allowed AXA to start operation in Hong Kong and Singapore in general insurance and in general and life insurance in Malaysia.

  Total premiums reported by these operations amounted to more than US$88 million last year.

  'Since the formation of its joint venture with Sime Darby, AXA has been looking to accelerate its expansion into Asia through acquisitions or joint ventures,' Mr Dutrey said.

  The purchase agreement is conditional on the approval of the Insurance Commissioner in Hong Kong, the Monetary Authority of Singapore and the Director-General of Insurance and the Foreign Investment Committee of Malaysia.



AXA buys Wing On Life in US$110m deal