AXA announced it has entered into an agreement with the current domestic shareholders of AXA Tianping Property & Casualty Insurance Co. Ltd. to acquire the remaining 50 percent stake of the company.
Total consideration for the acquisition of the 50 percent stake would amount to 4.6 billion renminbi (584 million euros or US$660.7 million).
Subject to regulatory approvals, RMB1.5 billion (190 million euros or US$215 million) will be financed through a capital reduction of AXA Tianping to buy back shares from the current domestic shareholders, said AXA in a statement.
“AXA Tianping represents a unique platform for AXA to capture fully the significant growth potential of the P/C and health markets in China,” said Thomas Buberl, Chief Executive Officer of AXA.
“This is a ‘first of its kind’ transaction in the Chinese insurance market whereby a leading P/C insurer, with a nationwide footprint, will be fully owned by a foreign company,” he added. “The acquisition further reaffirms our conviction that our operations in China will be a key growth engine of the Group and in its preferred segments.”
In 2017, AXA Tianping ranked 15th among China’s P/C insurers with 1 billion euros (US$1.1 billion) of gross written premiums (GWP), and is the only foreign invested company in the top 20 P/C insurers in China, said AXA.
It is the sixth largest company in direct motor insurance, said AXA, quoting figures from the China Banking and Insurance Regulatory Commission. Motor insurance in China contributes 91 percent of AXA’s GWP, of which 41 percent is distributed through direct channels. It also sells short-term health insurance products, the company continued.
AXA Tianping has developed a national footprint with 25 branches and 93 sub-branches, covering 20 provinces which together generate over 85 percent of China’s GDP, said AXA.
“The transaction marks another step towards consolidating our position as the #1 foreign insurer in China and strengthening of our leadership in the Asian region, said Gordon Watson, CEO of AXA Asia.
“With full ownership and management control of AXA Tianping, we will further accelerate the deployment of our strategy to create a leading insurer that champions healthcare and mobility solutions,” he added.
“Combining AXA Tianping’s high-quality infrastructure with AXA’s global expertise in health and digital, will enable us to target selectively our preferred customer segments to create more long term value in the motor business, while capturing the rapid expansion of the health market by developing a holistic wellbeing offer,” Watson went on to say.
Completion of the transaction is subject to customary closing conditions, including the receipt of regulatory approvals, most notably from the China Banking and Insurance Regulatory Commission. On the completion of the transaction, AXA Tianping will be fully consolidated into the AXA Group’s financial statements.
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