AIA sizes up bid for $6 billion ING Asia insurance unit: source

Tue Jan 17, 2012 4:49am EST
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By Denny Thomas and Clare Baldwin

HONG KONG (Reuters) - AIA Group Ltd (1299.HK: Quote), Asia's No.3 insurer and about one-third owned by American International Group Inc (AIG.N: Quote), may bid for the $6 billion Asian insurance operations of ING Groep ING.AS, sources said, with the prospective sale expected to draw heavy interest from rivals.

AIA, which was the crown jewel in bailed-out insurer AIG's global business, has invited four banks to pitch for advisory roles for a possible offer, two sources familiar with the process told Reuters. The sources declined to be identified as they were not authorized to speak to the media.

The swift move by AIA underscores the strong appetite for life insurance business in Asia-Pacific, where premiums are forecast to grow 4.4 percent in 2012, nearly double the estimated growth in industrialized economies, according to Swiss Re.

The auction is expected to draw interest from U.S., European Canadian and Japanese companies, sources familiar with the matter told Reuters.

AIA shares gained as much as 1.9 percent on Tuesday to their highest since January 6, while the benchmark Hang Seng share index .HSI was up 2.5 percent. The stock ended up 1.7 percent. ING shares were up 5.3 percent in early trade.

The process is in its early stages and suitors are exploring how best to place their bets. Some potential bidders are hampered by the European debt crises, while others see the need to explore consortium bidding as ING's Asian insurance business is heavily biased towards South Korea and Japan.

Making joint bids would later allow suitors to extract just the businesses complementary to their existing Asia operations.

"If you break it up, you potentially open yourself to a lot more potential buyers. It becomes a lot more onerous to sell it bit by bit, but you potentially open yourself to smaller local players," said Barclays insurance analyst Mark Kellock.   Continued...

<p>An advertisement for AIA (American International Assurance) is displayed on the outside of AIA Tower in Hong Kong July 13, 2010. REUTERS/Tyrone Siu</p>