- Four potential buyers, including Prudential Plc and Manulife, have made it through to a second stage of bidding for Aviva's insurance business in Malaysia in a deal worth about $500 million, sources said.
The hunt for the Aviva stake underscores the industry's focus on growth opportunities in emerging Asian markets, where life insurance premiums are forecast to double the world average next year, according to a Swiss Re forecast.
AIA Group Ltd and Sun Life Financial Inc have also been short-listed in an auction process that attracted about 10 suitors in the first round, the sources added, who declined to be identified as the discussions were private.
Britain's second-ranked insurer is selling its 49 percent stake in an insurance joint venture with Malaysia's second-biggest lender CIMB Group Holdings Ltd as part of a global retreat.
The joint venture has struggled against rivals such as Great Eastern and Prudential, and a new partnership could re-shape the competitive landscape in Malaysia.
Potential buyers are attracted by CIMB's 320 branches across the country and the ability to sell insurance products to the bank's customers. Also, CIMB could sell a significant portion of its 51 percent stake, allowing a new owner to control the business.
AIA, Manulife, Prudential and Sun Life declined to comment. Aviva did not reply to an email seeking response.
Some analysts estimate between 45 and 50 percent of all new insurance products in Asia are sold through the so-called bancassurance agreements, co mpared to between 70 and 80 percent in France and Spain. Bancassurance deals are expected to drive insurance sales in Asia, which is encouraging global insurers to tap into bank distribution deals in the region.
SOUTHEAST ASIAN APPEAL
Global insurance companies are lured to Southeast Asia due to the region's rapid economic growth and low insurance penetration. Earlier this month, Prudential and Manulife opened offices in Cambodia.
Aviva's planned sale is among a slew of insurance deals keeping bankers in the Asia-Pacific region busy in an otherwise slack year for M&A.
Final bids for ING's $7 billion Asia life insurance and asset management business are due by the middle of this month, and Thailand's Thanachart Bank is selling its life insurance business, which has drawn interest from suitors including Prudential.
While insurers with sub-scale operations are finding it hard to gain market share and improve profitability, those with strong capital are jostling to bolster their position.
CIMB formed the joint venture with Aviva in June 2007, but the business has failed to perform to its potential, analysts say. They cite the example of Maybank's joint venture with Allianz, which has fared better in terms of premium income compared to the CIMB-Aviva joint venture.
Binding bids for the Aviva sale are due by the end of this month, and management presentations are set to start next week, the sources said.
Aviva paid 500 million ringgit ($164 million) for its 49 percent stake in the venture, which made a net profit of 31.8 million ringgit last year. Net premiums that it underwrote dropped about 30 percent to 230 million ringgit.
(Additional reporting by Yantoultra Ngui; Reporting by Denny Thomas and Saeed Azhar; Editing by Michael Flaherty, Ian Geoghegan and Ryan Woo) Keywords: AVIVA ASIA/SHORTLIST
COPYRIGHT Copyright Thomson Reuters 2012. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Datafeed and UK data supplied by NETbuilder and Interactive Data.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk!
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.