Axa SA, Europe’s second-largest insurer, agreed to acquire a 50 percent stake in Chinese auto insurer Tian Ping in a deal valued at 485 million euros ($631 million) as it expands in Asia.
Axa will buy 33 percent of Shanghai-based Tian Ping from its existing shareholders for 237 million euros, and it will also invest 248 million euros in a capital increase “to support future growth,” the Paris-based insurer said in an e-mailed statement today. Axa’s other Chinese property and casualty businesses will be integrated into the new joint venture.
The deal “is another stepping stone towards our ambition to accelerate further in high-growth markets,” Chief Executive Officer Henri de Castries said in the statement.
Axa rose 3.3 percent to 14.10 euros in Paris trading, reaching a market value of about 33.7 billion euros. The shares have risen 5.6 percent this year, trailing the 8.1 percent increase of the 28-member Bloomberg Europe 500 Insurance Index.
In July, Axa won approval from regulators to start a life-insurance venture with Industrial & Commercial Bank of China Ltd. Since 2010, Axa has freed up billions of euros in capital in countries such as the U.S., Canada and the U.K. while expanding in Asia and other emerging markets.
Tian Ping, created in 2004, has more than 5,000 employees at 62 offices in 18 Chinese provinces. It also has a license to sell insurance over the Internet, which represented about 20 percent of its premiums in 2011, according to the statement.
“They have a track record of very strong growth and lots of potential, but they don’t have all the skills that can be developed inside a global group” in reinsurance, marketing, actuary, Internet and risk management, Stephane Guinet, head of Axa Global Direct, said in a telephone interview. For instance, the Tian Ping’s joint-venture reinsurance costs can be lowered by using the scope of Axa’s portfolios, he said.
Tian Ping’s total premiums in 2011 rose to 447 million euros, up 28 percent from a year earlier, according to the statement. The company’s premiums represent 0.8 percent of China’s property and casualty market. Tian Ping had a 2011 profit of 28 million euros.