Axa, Ace Said in Advanced Talks to Buy HSBC Insurance Business

Axa SA CEO Henri de Castries
Henri de Castries, chief executive officer of Axa SA. Photographer: Antoine Antoniol/Bloomberg

Axa SA, Europe’s second-biggest insurer, and Zurich-based Ace Ltd. are among final bidders for HSBC Holdings Plc’s non-life insurance operations, three people with knowledge of the matter said.

Bupa Insurance Ltd., a U.K. health care group, is bidding for HSBC’s medical insurance business in Asia, said one of the people, who declined to be identified as talks are private. Axa and Ace are in discussions to buy the entire non-life unit, two people said. The business may be valued at about $1 billion in a sale, according to one of the people.

HSBC and ING Groep NV are among European banks selling assets as lenders try to adjust to stricter global capital rules and an economic recovery fizzles. That’s providing an opening for insurers like Axa and Ace to speed up expansion in Asia, where economic growth is outpacing Europe and the U.S.

Sydney-based QBE Insurance Group Ltd. is also considering a bid for the business, one person said.

Bidders are negotiating with HSBC on how profits will be distributed from policies that are sold through the London-based bank’s branch network, the people said. A buyer may be chosen in late February, according to one person.

Gareth Hewett, a spokesman for HSBC in Hong Kong, declined to comment on the sale process. Spokespeople at Axa, Ace and Bupa also declined to comment. An outside spokesman for QBE Insurance declined to say whether the company has made a bid.

HSBC, Europe’s largest bank, reported $1 billion of “net written insurance premiums” for its non-life business last year, down from $1.1 billion in 2009, according to its latest annual report. Net premiums in Asia accounted for about a third of the total, while Latin America made up 42 percent, the report showed.

Axa Profit Target

Axa, led by Chief Executive Officer Henri de Castries, is betting on Asia and scaling back in some developed markets as it aims for 10 percent annual growth in operating earnings per share through 2015. The Paris-based insurer is targeting annual operating profit of more than 6 billion euros ($7.7 billion) by 2015, up from 3.9 billion euros last year.

Ace last year bought Malaysia-based Jerneh Insurance Bhd. and New York Life Insurance Co.’s Hong Kong and South Korean life units. The company is “open to seeking additional acquisitions,” CEO Evan Greenberg said during an October conference call. He indicated that Ace may try to buy insurance operations that financial companies are seeking to sell.

ING, the Dutch company under European Union orders to divest its insurance operations, may draw bids from rivals including AIA Group Ltd. for the business, people with knowledge of the matter said this week.

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