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AIA Explores Buying ING's Asian Operations

Source: WSJ - Nisha Gopalan & Prudence Ho


Posted on 17 Jan 2012

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AIA Group Ltd., the Asian life insurer 32.89%-owned by American International Group Inc., is considering buying the Asian insurance operation of Dutch financial-services company ING Groep NV, two people familiar with the situation said Tuesday, in a deal that could be worth around 5 billion euros ($6.3 billion).

The people said AIA has asked four banks to conduct a feasibility study, but it hasn't yet appointed advisers or made a final decision.
Amsterdam-based ING last week put its Asian business up for sale after scrapping plans for an initial public offering of its combined Asian and European insurance operations, citing the tough market climate.

It said it will continue to pursue a listing of its European assets.

AIA declined to comment.

Analysts say that an acquisition by AIA would make sense because the life insurer—which raised US$20 billion from a Hong Kong initial public offering in late 2010—has the cash, as well as ambitions to grow in Asia.

"AIA has a strong footprint in growing markets, while it lacks the firepower in mature markets such as Japan and Korea," Dutch brokerage SNS

Securities wrote in a note. "ING, on the other hand, has a strong franchise in Japan and Korea and some very interesting operations in growing markets like Malaysia, India and China."

SNS values ING's Asian-Pacific insurance business, including its asset-management unit, at €5 billion, based on a price-earnings multiple of 13 times to 15 times forecasted 2011 earnings.

ING Chief Executive Jan Hommen said last week that there is a lot of interest in the company's Asian unit but that there hadn't yet been any detailed talks.

The European Commission ordered ING to sell its global insurance arm in order to win approval for state aid received during the 2008 financial crisis.

Last week, ING said it needed more time to repay the state aid because it has to protect its capital base amid market turmoil and, in another sign of worsening conditions, scale down financial targets for its banking unit.

ING received €10 billion in aid during the 2008 financial crisis. It still owes the Dutch state €3 billion, plus a €1.5 billion repayment premium, and it aims to return the money by the end of 2013.


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