Personal and Commercial insurer, Ageas, has announced that it has finalised an agreement with China Taiping Insurance Holdings (CTIH) in order to subscribe to a capital increase of its wholly owned subsidiary, Taiping Reinsurance Co (TPRe).
The result of this transaction will reinforce Ageas strategic partnership with CTIH, and sees Ageas acquire 25% of TPRe’s enlarged share capital for a total consideration of HKD 3,100 million (around €340 million), which corresponds to 1.03 times the company’s book value before the capital increase.
The participation in TPRe will enable growth potential and will further allow Ageas to expand in the fast-growing Asian reinsurance market from leading positions in Hong Kong and China.
Since 2013, TPRe’s gross written premiums have grown annually on average by 27% resulting in €1.7 billion in 2019. The company has recorded only one loss-making year in the past 40 years, while its P&C combined ratio averaged 95.2% from 2013 to 2019.
The company reported a solid solvency ratio of 272% (Hong Kong’s CAP 41 regime) at the end of 2019.
The agreed price will be evaluated based on the growth of net asset value from December 31st, 2019.
The transaction is subject to regulatory approval and is expected close in the last quarter of 2020. The corresponding amount will be paid in cash. The impact on the Group’s solvency position at the time of closing is estimated to be around 9 percentage points.
This transaction will replace the 2020 share buy-back programme which had been delayed following the recommendation of the National Bank of Belgium. However, it won’t impact the firm’s commitment to the 2021 share buy-back program.
Bart De Smet, Chief Executive Officer (CEO) of Ageas, said: “This transaction offers Ageas a unique opportunity to enter the Asian reinsurance market and to benefit from its strong potential. We are pleased to do so together with our long-standing partner China Taiping as this further strengthens our very successful partnership. For Taiping Re the capital increase will allow it to achieve its wider growth plans.”
Wang Sidong, CEO of CTIH, added: “We have a long-term strategic partnership with Ageas. This transaction further reinforces the collaboration between Taiping and Ageas, and we believe such collaboration will create synergies and support our ambition to grow our global reinsurance business especially in the European markets.”