Richard Li, the Hong Kong entrepreneur who is the son of one of Asia’s richest men, has struck a deal to buy AIG’s remaining life assurance assets in the region as he moves to build a challenger to Asia’s more established operators.
FWD, the insurance arm of Mr. Li’s Pacific Century Group, on Monday (11/14) agreed to acquire AIG’s Japan life business.
Mr. Li, the son of Hong Kong tycoon Li Ka-shing, has been expanding in the continent since buying ING’s units in Hong Kong, Macau and Thailand in 2013 in a $2.1bn deal. FWD has expanded its footprint in the Philippines, Singapore and Vietnam.
The entry of FWD into Japan, the world’s second-largest life insurance market, is subject to regulatory approval.
The disposal is small in the context of AIG, although it is symbolically significant for the New York-listed insurer, which has been under pressure to improve returns from the activist investors Carl Icahn and John Paulson.
Terms of the transaction were not disclosed. The business, AIG Fuji Life Insurance (AFLI), had assets of less than $5bn as of March, while AIG has total assets of about $515bn and a market capitalization of $66.3bn.
The insurer has been divesting its life assets in Asia in recent years as it has slimmed since the financial crisis, most notably shedding AIA by taking it public.
The latest disposal follows the sale of AIG’s mortgage insurance arm and a Lloyd’s of London business in recent months, but Peter Hancock, chief executive, has resisted calls from the activists to split into life and non-life companies.
The Japan announcement comes less than a week after Mr. Icahn — who has a representative on the insurer’s board — raised the prospect of AIG selling the business.
The billionaire investor said on Bloomberg television: “What you do is . . . [you] get out of those businesses that are in the legacy business, and to some extent what we talked about in Japan . . . life insurance.”
Referring to the possibility of more disposals, he added: “I would like to see it be done quicker, but it’s being done.”
In a memo to employees on Monday (11/14), Mr. Hancock said the Japan sale was “consistent with the way we are reshaping the AIG of the future by focusing our resources on markets, products and customers where we have critical mass and expertise”.
Huynh Thanh Phong, FWD’s chief executive, said the acquisition was a “strong foundation” for its entry into Japan. The business will maintain distribution agreements with AIG Japan.
AIG will continue to offer property and casualty insurance in Japan, where it is the largest foreign-based non-life insurer. Its history in the country goes back 70 years.
By Courtesy of FT