HSBC closes in on $1 bln gen insurance sale - sources

The HSBC building is seen on Canary Wharf in London May 11, 2011.

REUTERS - British bank HSBC Holdings Plc is nearing a deal to sell its general insurance business for about $1 billion, sources familiar with the matter told Reuters, with French insurer AXA SA and Australia's QBE Insurance Group Ltd expected to split the business, a separate report said.

The deal is part of efforts by new HSBC Chief Executive Stuart Gulliver to trim annual costs by $3.5 billion and scale back in non-core regions and businesses. Europe's biggest bank has struck 18 deals in the past year releasing a combined $48 billion of risk-weighted assets.

Sky News reported that AXA was expected to buy HSBC's general insurance business in Asia outside Hong Kong, while QBE would buy HSBC's Hang Seng insurance operation in Hong Kong and take over its presence in Argentina.

The report, which cited people close to the situation, said the deal could be announced early next week.

QBE's Sydney spokeswoman declined comment. The company, which has grown through acquisitions, said at its earnings presentation this week that it was considering "several bolt-on acquisitions" with estimated annualised growth written premiums of about $750 million to be funded with internal resources.

QBE shares were up 4.2 percent at A$12.14 at 0217 GMT, bucking a 0.65 percent fall in the benchmark Australian share index. The company has completed more than 75 acquisitions in 10 years, expanding its reach to 50 countries.

The Sky News report said AXA would also take the Mexican business.

HSBC makes and distributes general insurance products in Panama, Honduras, El Salvador, Argentina, France and Mexico.

An HSBC spokesman in London declined to comment on the report, while AXA and a London-based official for QBE also declined to comment.

Sources familiar with the matter told Reuters last month that AXA and U.S. insurer ACE Ltd (ACE.N) were in the running to buy HSBC's general insurance arm.

HSBC generated $1.3 billion in non-life insurance premiums in 2010, while the business recorded a profit before tax of about $250 million, according to data from HSBC's website.

(Reporting by Sudip Kar-Gupta in LONDON, Amy Pyett in SYDNEY, Clare Baldwin and Denny Thomas in HONG KONG; Editing by Elaine Hardcastle and Chris Lewis)