Asian bourses are bracing for more insurance IPOs over the
next year, after AIA Group Ltd's expected record offer next
month, with regulatory changes and higher capital requirements
forcing companies to tap stock markets.
Asia will account for up to 40 per cent of the global life insurance
market's growth over the next five years, according to a
McKinsey study last year. China and India will represent about
70 per cent of that growth, the study says.
Even for mature markets such as Singapore, analysts expect
an 11 per cent annual growth rate in life insurance premiums,
while bigger markets such as India and China are likely to
grow at about 15 per cent annum.
"This is going to be the age of IPOs. There is more to come in
Korea, China and India as well," one banker said.
Korea's Kyobo Life Insurance Co and Mirae Asset Life, India's
ICICI-Prudential and Reliance Capital's insurance unit as well
as Dutch bancassurer ING's Asian life insurance business are
among the sector IPOs waiting in the wings, bankers say.
That apart, China's Taikang Life and China Reinsurance
Group plan to list on the Shanghai stock exchange, which
bankers say have an estimated value of about US$7 billion.
"People are keen to invest in the life insurance sector as they
get comfort from the fact that this is a regulated sector. Fundamentally,
it's play on the growth of middle class and spending
power," said another banker.
IPOs in India, the world's 10th biggest insurance market, will
be sparked by the proposed increase in foreign investment
limits to 49 per cent from 26 per cent.
Asian insurance IPOs have already raised about US$16 billion
this year and AIA Group's US$15 billion float is set to make
2010 a record year for insurance IPOs in Asia.
AIA -- the Asian life insurance arm of American International
Group Inc -- is expected to list in October, in what is likely to be
Hong Kong's stock exchange's biggest-ever IPO.
M&A Bubbling Too
Apart from IPOs, dealmakers are also betting on a busy period
for M&A in the Asian insurance industry, which accounts for
about 30 per cent of global life insurance premiums.
Total insurance premiums in Asia rose by about 17 per cent to
US$696 billion in 2008 from a year ago, according to research
One potential trigger is the recently announced Basel III regulations,
which makes it more onerous for banks to hold minority
stakes in other institutions.
"Banks holding minority stakes would have to decide whether
such investments are core or not. And you will see some M&A
activity based on that decision," said another banker.
British lender HSBC Holdings plc's 43 per cent stake in Ping
An Insurance Co of China is one such case which many bankers
Singapore lender Oversea-Chinese Banking Corp's majority
stake in insurer Great Eastern Holdings is another one, bankers
Another change set to reshape the Asian insurance landscape
is the redeployment of capital by foreign insurers, which will
result in foreign companies like New York Life Insurance
exiting certain markets to consolidate their position in others.