MS&AD Insurance Group Holdings, Inc. subsidiary, Mitsui Sumitomo Insurance Company (MSI), Limited, has signed an agreement to acquire Colonial Mutual Life Assurance Society Limited’s (CMLA) 37.5% stake in Chinese life insurer, BoCommLife Insurance Company Limited.
CMLA, a subsidiary of the Commonwealth Bank of Australia, is to sell its 37.5% stake in BoCommLife, a subsidiary of China’s Bank of Communications Co., Ltd., to MSI for RMB 4.325 billion (roughly JPY74.7bn or US$680mn), after the latter completed a capital increase to the existing BoCommLife shareholders totalling RMB 3 billion.
The transaction provides MSI with a presence in the Chinese life insurance market, which is the third largest in the world after the U.S. and Japan. The firm expects to improve its growth potential and profitability by entering the Chinese life market, while securing further risk diversification of its group-wide business portfolio.
Furthermore, securing BoCommLife as a joint venture partner, will enable MSI to develop a solid business platform in the country’s life insurance sector.
BoCommLife was established in the year 2000 and mostly sells insurance solutions through banks, taking advantage of the bancassurance channel of its parent, which has a strong client base.
An announcement on the deal notes the growing importance of bancassurance channels in China and elsewhere across Asia, with the ratio of revenue through bancassurance to the total premium revenue in China increasing by more than 7% in three years.
The transaction will be completed with cash on hand, and remains subject to approval from the relevant authorities.