April 15, 2024

DealBook: A.I.A. to Pay $1.7 Billion for ING’s Malaysia Business

HONG KONG–A.I.A. Group, the Asian insurance giant partly owned by American International Group, said on Thursday it would pay 1.34 billion euros to acquire the Malaysian insurance business of the Dutch insurer ING.

A.I.A., listed in Hong Kong, said the $1.73 billion deal will catapult it to the No. 1 position in Malaysia’s lucrative life insurance market, up from No. 4 previously, with the addition of 1.6 million new customers and 9,200 new agents to its network in the Southeast Asian nation.

For ING, the transaction marks the first successful deal towards a plan it announced last year to sell off assets in Asia as part of a broader corporate restructuring. Analysts have estimated those assets could command between $6 billion and $8 billion in total, and ING’s operations in Malaysia have been seen as one of its more attractive businesses in the region.

‘‘Today’s announcement is the first major step in the divestment of our Asian insurance and investment management businesses and shows that ING continues to make steady progress in the restructuring of our company,’’ ING’s chief executive, Jan Hommen, said Thursday in a statement.

The Dutch insurer said its expects to book a net gain of 780 million euros, or $1 billion, from the sale.

A.I.A. has been seeking to build its footprint in Asia and grow profitability even as A.I.G. has been selling down its stake in the Asian unit, which was spun out of the New York-based company via a Hong Kong listing two years ago as part of A.I.G.’s efforts to repay its 2008 bailout by the United States government.

A.I.G. has since further sold down its stake in the Asian unit in order to raise funds to repay the government. It retains a 13.7 percent stake, following a sale last month of A.I.A. shares worth $2 billion. At the same time, the U.S. Treasury has been selling down its shares in A.I.G., and last month raised $20.7 billion by reducing its stake in the insurer to 15.9 percent from 53.4 percent.

A.I.A. said the deal for ING’s Malaysian business would be funded through existing cash and external debt financing, and completion is targeted for the first quarter of 2013, subject to regulatory approvals in Malaysia and the Netherlands.

Article source: http://dealbook.nytimes.com/2012/10/11/a-i-a-to-pay-1-7-billion-for-ings-malaysia-business/?partner=rss&emc=rss