AXA to Buy 50% of China P&C Insurer Tian Ping for $631 Million

France’s AXA Group announced that it has entered into an agreement with Tian Ping Auto Insurance Company Limited shareholders to acquire 50 percent of the company.

Under the terms of the agreement, and subject to regulatory approval, “AXA will buy 33 percent of the company from Tian Ping’s current shareholders for RMB 1.9 billion (€237 million [$308.34 million]) and subscribe to a dedicated capital increase for RMB 2.0 billion (€248 million [$322.65 million) to support future growth.

“AXA and Tian Ping’s current shareholders will jointly control Tian Ping. AXA’s existing Chinese P&C operations are expected to be integrated within the new joint-venture.”

The announcement noted that “Tian Ping has Property & Casualty licenses covering most Chinese provinces as well as a direct distribution license covering all these provinces and is mainly focusing on motor insurance.

“AXA and Tian Ping will leverage this extensive geographical footprint to further develop their P&C presence in China, including in commercial lines, retail non-motor and health insurance.

“AXA should be able to benefit from the new regulation enacted in the second half of 2012 that allows foreign companies to underwrite motor third party liability insurance.

“Tian Ping has a successful growth and profitability track record in the Chinese motor insurance market. The direct distribution channel, which accounted for ca. 20 percent of Tian Ping’s premiums in 2011, is at the heart of the company’s growth strategy.”

AXA’s Chairman and CEO Henri de Castries said: “This acquisition provides AXA with unique direct distribution capabilities in the fast-growing P&C insurance market in China, thanks to Tian Ping’s extensive knowledge of the domestic market. It further strengthens the profile of AXA’s global P&C franchise and is another stepping stone towards our ambition to accelerate further in high growth markets.

“Combined with our successful life insurance joint-venture ICBC-AXA, this operation confirms our strategic focus and presence in one of the most dynamic markets in the industry. We are looking forward to serving Tian Ping’s customers, in particular by developing the direct distribution channel and offering value-for-money products as well as high-quality services.”

The transaction is subject to customary closing conditions, including the receipt of the approval of the China Insurance Regulatory Commission (CIRC).

Source: AXA Group