HSBC Raises Nearly $1 Billion in Insurance Sale

The Cheat Sheet

HSBC has sold its general insurance business portfolio to French insurance company AXA Group and Australian insurer QBE Insurance Group for a cash consideration of $914 million.

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AXA pays $494 million for the assets in Hong Kong, Singapore, and Mexico and will become the sole provider of general insurance products distributed by HSBC in Hong Kong, mainland China, Singapore, India, and Indonesia, and of property and casualty products distributed by HSBC in Mexico.

QBE will pay $420 million for assets located in Argentina. The deal gives QBE the right to be the exclusive provider of general insurance products distributed by HSBC to customers in Argentina and by Hang Seng Bank to customers in Hong Kong and mainland China.

HSBC was driven to make the sale by the imperative to reduce non-core assets on its books. “We expect rising capitalization requirements across the banking and insurance sectors to continue to drive portfolio re-balancing, with some banks in particular reflecting on the value of manufacturing and/or distributing non-life insurance going forward,” said Ron Kozlowski, director of Towers Watson’s general insurance consulting business in Asia Pacific.

The deal may help AXA to enhance its presence in the emerging markets and a leg up in achieving its 2015 goals. It also advances to pole position in Hong Kong and Mexico and to the second position in Singapore.

QBE will benefit by adding Argentina as another country to the list of 50 countries where it operates. It also expects the transaction will, at least in part, add to its earnings in the first full year.

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To contact the reporter on this story: Alex Capel at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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