Pan-Asian life insurer AIA Group Limited has agreed to invest RMB12,033 million (US$1,860 million) through its wholly-owned subsidiary, AIA Company Limited, for a 24.99% equity stake in China Post Life Insurance.
The transaction will be subject to all regulatory approvals, and will be financed on an all-cash basis from internal resources.
The total value of the proposed investment represents a valuation of 1.34x China Post Life book value on a pre-money basis as of 31 December 2020.
The value of new business (VONB) for China Post Life was RMB1,866 million (US$269 million) for the full year 2020.
AIA China’s expansion strategy has captured numerous growth opportunities both within its existing footprint and by increasing its geographical reach.
Its investment in China Post Life increases the group’s exposure to the growth opportunities in the Chinese life insurance market and enables AIA to capture the significant value available from distribution channels and customer segments that are complementary to our existing strategy in China.
The group’s operations of AIA China will remain entirely independent of this investment.
China Post Life is a subsidiary of China Post Group (China Post) and is a life insurer focused on bringing financial protection to the mass and emerging mass-affluent market in China.
AIA and China Post have also entered into a Business Cooperation Framework Agreement to explore additional business opportunities.
Lee Yuan Siong, AIA’s group Chief Executive and President, said: “The Chinese insurance market is already the second-largest in the world with immense long-term growth opportunities given the protection gap of more than US$40 trillion6.
“This unique investment in China Post Life enables AIA to capture additional areas of growth and benefit from the substantial potential for value creation.
“The strong and aligned relationship between China Post Life and China Post is the right model at the right time for successful partnership distribution in China. AIA’s proven track record makes us the ideal investor to help China Post Life build on their success and deliver long-term, sustainable VONB growth.
“AIA’s investment in China Post Life is highly complementary to our strategy in China and enables the group to capture significant upside from additional distribution channels and customer segments, helping millions more Chinese families live Healthier, Longer, Better Lives.”
Dang Xiurong, Party Secretary and Chairwoman of China Post Life, said: “We are delighted to welcome AIA as a strategic investor in China Post Life. AIA is globally recognised as the leading pan-Asian life and health insurer with an outstanding track record of delivering value creation for shareholders since its IPO in 2010.
“China Post Life has a rare opportunity as one of the fastest growing life insurers in China. Our unique operating model and the largest retail financial distribution network are distinctive competitive advantages and the cornerstones of our strategic ambitions.
“We are confident that with the support of AIA’s unrivalled experience, we will advance our strategic priorities and bring financial protection to the under-penetrated mass and emerging mass-affluent market at pace, while capturing the significant potential for further growth and sustainable value creation.”
