Insurance Australia Group (IAG) will buy a 20 per cent stake in a Chinese insurer for $107 million in a foray into the world’s second-largest economy, marking a key step in meeting its targets of earning 10 per cent of gross written premium from Asia by 2016.
IAG has agreed to buy the stake in Bohai Property Insurance (BPI) for RMB 687.5 million and expects the deal to be completed in early 2012.
Australia’s top car and home insurer, whose largest overseas presence is in Britain and New Zealand, has earmarked Asia for growth as it struggles with writedowns in the UK.
“We have begun preparatory work in looking at the Indonesian and Vietnam Markets. But from a primary perspective, we will be concentrating in making sure our operations in India and China start to fulfill their potential,” Chief Executive Mike Wilkins told a conference call.
“Once the partnership (China) is complete, IAG will have a foothold in the two fastest growing economies in Asia and most populous countries in the world -China and India,” Wilkins, who has repeatedly voiced interest in entering China.
Bohai was set up in 2005 and boasts annual gross written premium of over A$200 million and was on track to turn operational profit in financial year 2014, IAG said.
It is based in Tianjin, near Beijing, in the Bohai economic region, which generates around a third of China’s GDP and also a third of China’s insurance premium pool of $60 billion, IAG said. Bohai is predominantly a motor insurer, a sector which is set to grow 10-15 per cent per annum over the next decade.
From / Gulf Today