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Archive for the ‘Insurance’ Category

Haze over, Indons start two-timing again

In Indonesia, Insurance on 20/07/2013 at 5:15 am

Asean round-up

Indonesia

This two-timing was predicted:

Despite Indonesia committing to ratify the regional pact on transboundary haze pollution by early next year, at the latest, and agreeing to share digitised concession maps with other governments, Singapore’s Minister for the Environment and Water Resources Vivian Balakrishnan left yesterday’s regional meeting on the haze problem “disappointed (but) not surprised”, in his own words …

Only two of the four outcomes that Singapore had sought were fully met after the four-hour meeting: Getting the participating countries — Singapore, Malaysia, Indonesia, Brunei and Thailand — to involve high-level officials from all relevant ministries and agencies from each country in the MSC process, and getting a commitment from Indonesia to ratify the ASEAN Transboundary Haze Pollution Agreement “expeditiously”.

Singapore was unable to get an agreement from Indonesia to renew their collaboration to reduce forest fires at Jambi and other provinces if possible, with Indonesia issuing a noncommittal response to offers of bilateral collaborations from Malaysia and Singapore.

While it welcomed the offers, Indonesia is “currently identifying the areas of cooperation which will maximise and bring mutual benefits for all parties concerned”, a press released issued after the meeting said.

Singapore had also hoped to get the participating countries to submit their concession maps and agree a date for the public launch of the ASEAN Sub-Regional Haze Monitoring System (HMS) platform to enable identification errant companies engaging in slash-and-burn practices.

Maps from the Indonesian govt are the only way S’pore can establish whether S’pore-based companies are telling the truth about where the fires are burning. If the accounts of the S’porean (mostly controlled by Indonesians) are taken at their face value, the fires are almost always anywhere except on their land. Note that despite the allegations by Indon officials that S’pore companies started fires , only one co, a M’sian co,has been charged.

Related post: http://atans1.wordpress.com/2013/06/26/why-plan-suffocate-sporeans-failed/

Thailand/ Insurance

Meiji Yasuda Life Insurance Co is expected to acquire a 15% stake in Thai Life Insurance Co. in what would be one of the biggest investments ever in Asia by a Japanese life insurer With the planned investment worth about ¥70 bn (US%700bn), Meiji Yasuda wants to make the major Thai insurer into an equity-method affiliate and dispatch executives, the sources said.

Like other Japanese insurers, Meiji Yasuda is looking to expand overseas earnings, especially in Asia, amid sluggish business at home due to the aging of society.

Sumitomo Life Insurance Co. has made a ¥28 bn investment in Vietnam’s top insurance group, while Dai-ichi Life Insurance Co. in June announced a ¥34.3 bn investment in Indonesia.

Sumitimo which lost out to Yasuda is now looking to Indonesia where Bank Negara is looking to sell up to 40% of its life business for up to $800m, according to the FT.

Japanese banks have been active too. http://atans1.wordpress.com/?s=Mitsubishi

18.6% of AIA for sale

In Insurance on 03/09/2012 at 7:08 am

American International Group becomes free after September 4 to sell a US$7.6 bn stake in former unit AIA. If AIG does decide to sell the entire18.6% , the deal would be Asia’s biggest-ever block offering ever.

AIG could decide not to sell anything or it could sell off a small chunk. But expectations are that it wants to sell everything and soon.

AIG spun off two-thirds of AIA in 2010, raising US$20.5bn in the world’s third-largest IPO ever at the time. AIG agreed not to sell its remaining stake until this yr. In March it sold some, raising US$6bn.

AIA’s shares are up 9.5% so far in 2012  (the Hong Kong financial services sub-index finance/market is up 4.7% in 201)  and are up by 35% since its IPO. It is seen as a proxy to Asia’s growing wealth and booming demand for insurance and other financial products.

But AIA is not expensive compared to its peers. It trades at 16.3 times its 12-month forward earnings, according to Thomson Reuters data, while Asia-Pacific insurers on average trade at forward price-to-earnings ratio of 15.3.

AIA shares have remained resilient despite the stock overhang issue and just a week before the March selldown, the stock came within striking distance of its all-time high. AIG sold the AIA shares at HK$27.15 in the March selldown and on Friday the stock traded flat at HK$26.55.

As usual the underwriters are expected to line up a large investor or strategic buyer to take up a big chunk of the deal. GIC or Temasek? Temask is a cornerstone investor, I think.

Selling an insurance biz is not easy

In Insurance on 08/08/2012 at 6:16 am

In fact sounds harder than flogging life insurance. ING’s attempts is case in point.

ING may break up its Asian life insurance operations and is holding talks with buyers interested in the business in different countries.

The company is currently in discussions with Manulife Financial and AIA Group Ltd or the Southeast Asian operations, and with both firms as well as KB Financial Group Inc for those in South Korea.

ING is also in talks with a consortium led by Mark Wilson, the former head of AIA. Backed by Blackstone and Swiss Re. Wilson bid for the entire Asia business. m Richard Li, son of Hong Kong’s richest man, bid for ING’s operations in Southeast Asia and Japan.

Two private equity funds have bid for the Japanese operations.

Meanwhile UOB, among many others, are interested in ING’s fund mgt unit.

http://www.bloomberg.com/news/2012-07-31/ing-said-to-plan-breakup-of-asian-insurance-unit-in-sale.html

Protection against Black Swan events

In Insurance, Investments on 28/03/2011 at 7:07 am

Financial institutions that were peddling subprime loans and derivatives thereof have moved on. They are now peddling products that will lose you money each yr (say 15%), but which they claim will make it up and more when a Black Swan happens.  And BTW, they use derivatives.

But there are people in this business that have gd track records. Nassim Taleb, author of “The Black Swan”, has a fund which has grown from uS$300m in 2007 to around US$6 billion today.

And, bond funds, PIMCO and BlackRock (who largely avoided subprimes) have similar funds. They also advise clients on this issue.

AIA/PRU Update at 700 hrs GMT

In Insurance on 01/06/2010 at 10:51 am

[Update: AIG tells Pru, "Bugger off on yr new price" ]

Reducing the price to 1.3 times its own estimate of AIA’s embedded value of $22bn (from 1.69 times) would be US$29bn, down from US$35.5bn*. Even at this new price there are UK investors unhappy with the deal.They say execution is difficult, or why risk it? But according to press reports, the Pru’s largest investor, Los Angeles-based Capital Group, indicated it will vote in favour of the deal if the price drops to US$31bn-US$32bn. Prudential declined to comment.

FT’s Lex reports Whispers among underwriters suggest AIG could sell just under half of AIA at 1.6 times its disclosed embedded value**, netting the group about $15bn.

*BTW GE Life is trading at 1.23X 2009 embedded value at its current price of $ 16.20.

**AIA’s 2009 EV is US$18.75bn but Pru has a higher number US$21.01 — 12% higher. No wonder shareholders are upset even though AIA is more traditionally more conservative than Pru. BTW at 1.6x GE is worth $21.

AIA takeover is nuts, PRU shareholders advised

In GIC, Insurance, Temasek on 26/05/2010 at 6:45 am

RiskMetrics, an international share proxy advisory service, issued a critical assessment of the AIA takeover bid, saying while a deal had “a sensible strategic rationale”, Prudential was paying a heavy price.

FT reported that RiskMetrics said Prudential was paying US$35.5bn for a company with US$1.6bn in post-tax operating profits.

“For this to work, profits have to grow substantially beyond the expected cost synergies. Our analysis indicates that Prudential needs very high growth rates at AIA to only meet a reasonable return on invested capital, something that seems a stretch when managing a difficult integration process.”

Let me know when our local media report this story.

BTW GIC’s interest in this stock shows that its analysis is different: it is willing to forgo jam today for  jam tomorrow (maybe).  Hmm must be MM’s 30-yr view at work. Wonder who is right.  Remember shortly after he last said this , Temasek sold its BOA stock, just before the market recovered. GIC held on to its UBS and Citi investments.

AIA deal: Why big Pru shareholders upset

In China, Insurance on 14/05/2010 at 5:16 am

“You sell billions of cheap stuff to buy billions of expensive stuff,” James Clunie, manager of the 1.5 billion- pound Scottish Widows fund, said in an interview in Edinburgh on May 7. “It’s a bad deal. It doesn’t look sensible,” reported the FT.

He was referring to fact that Pru is trading at around 1 x Embedded Value* and in return Pru is buying AIA for 1.69 X EV, when AIA’s two major markets S’pore and HK are not inmature insurance markets .  The Pru is paying in their view for blue skies in China, where AIA has a presence but nothing to shout about unlike the big Chinese insurers who are trading at 2 X EV.

He is not the only one upset. The largest single shareholder with 12%, Capital Mgt is upset. One of its fund mgrs has set up a site advocating that someone pls bid for Pru and split it up.

Warren Buffett if he had been a Pru shareholder would agree with them.  “You simply can’t exchange an undervalued stock for a fully-valued one without hurting your shareholders,” he recently said. And he had earlier criticised Kraft for placing out its shares at lower prices than it had earlier bot back shares, in order to finance the Cadbury takeover, illustrating the problem companies face when buying back in what in retrospect is a bear market. http://atans1.wordpress.com/2010/03/03/buybacks-problematic-in-bear-markets/

*“Embedded value” (the sum of net assets plus the current value of future profits from existing policies) assumes that an insurer will write no more new business, nor make any gains on its investments. That is why most recent deals in mature markets have been completed at about 1.2 times – a small premium for control, for cost synergies, and for growth potential. The 1.69 times that the UK insurer is proposing to pay seems bullish, given that AIA’s two biggest markets by gross written premiums are Hong Kong and Singapore, already overrun by agents. FT

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