December 28, 2018 / 4:01 AM / 2 months ago

Hong Kong's NWS Holdings to buy FTLife Insurance for $2.8 billion

HONG KONG (Reuters) - Hong Kong’s NWS Holdings Ltd (0659.HK) has agreed to buy FTLife Insurance Co Ltd for HK$21.5 billion ($2.8 billion) from Chinese financial holding firm JD Group, in the biggest-ever insurance acquisition deal in the Asian financial hub.

NWS, the infrastructure, logistics and transport services unit of conglomerate New World Development Co Ltd (0017.HK), expects the deal to help diversify its business and generate recurring income, it said in a statement late on Thursday.

The acquisition highlights the attractiveness of Hong Kong’s insurance businesses, which are receiving a boost from growing wealth in the city and Chinese visitors snapping up foreign currency-denominated products.

Hong Kong’s life insurance market is well-developed, with a life and health insurance premium to GDP ratio of 17.94 percent in 2017, Asia’s second-highest after Taiwan, according to insurer Swiss Re.

NWS said it will fund its acquisition of FTLife with a combination of internal resources and “committed” financing from global banks. It did not identify the lenders or disclose how much it plans to raise in debt.

“This transaction is a significant step towards our goal of building an immersive ecosystem of premium quality offerings to our customers and community,” said Adrian Cheng, executive vice-chairman and general manager of New World Development.

Unlisted Chow Tai Fook Enterprises, a family-held conglomerate best known for retail chain Chow Tai Fook Jewellery Group Ltd (1929.HK), is the biggest shareholder of New World Development.

Reuters reported last month that Chow Tai Fook was among potential bidders for the FTLife equity holding of JD Group, also known by its Chinese name of Jiuding Group.

Shares in NWS were down 1.2 percent in morning trade, whereas those of New World Development had fallen as much as 2.3 percent in a slightly positive Hong Kong market .HSI.

DELEVERAGING

Beijing-based JD Group bought FTLife for HK$10.7 billion in 2016 from Belgian insurer Ageas NV (AGES.BR) as it sought growth through acquisitions in Hong Kong’s financial sector.

The group has brokerage, mutual funds and private equity businesses, and was once the most valuable firm on the Chinese National Equities Exchange and Quotations, China’s most active over-the-counter equity exchange.

It has invested in over 200 companies, of which about 60 are either listed or in the process of going public, its website showed.

JD Group’s exit from FTLife comes as China increases scrutiny of privately owned financial holding groups, whose sprawling business shareholding and overseas investments have raised concerns which in turn have prompted deleveraging action.

FTLife was the 12th-largest individual life insurer in Hong Kong by annualized premium equivalent, with a 1.4 percent market share at the end of 2017, according to a September Fitch Ratings report on the company.

The insurer has over 2,800 financial consultants and staff, its website showed.

Acquirer NWS said HSBC Holdings PLC (HSBA.L) and Morgan Stanley (MS.N) were its joint financial advisers.

($1 = 7.8320 Hong Kong dollars)

Reporting by Meg Shen; Editing by Keith Weir and Christopher Cushing

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