ACE to Buy Stake in Thai Insurer
Recently, ACE Limited (NYSE:ACE) and its local partners inked a deal to acquire 60.9% stake in The Siam Commercial Samaggi Insurance PCL, a general insurance company in Thailand, from Siam Commercial Bank. The transaction is expected to close in the second quarter of 2014. ACE Limited and its local partners will make a mandatory tender offer for rest of the 39.1% stake on closure of the deal. The total transaction is valued at around $185 million.
Founded in 1947, The Siam Commercial Samaggi Insurance is listed in the Thailand Stock Exchange. It writes small commercial, auto and personal accident insurance and distributes its products through the branches of Siam Commercial bank and as well as its own extensive branch network. This company reported gross written premium of $138 million in 2012. We expect such numbers to enrich the top line of ACE Limited.
With the acquisition, ACE Limited will consolidate its foothold in Thailand, the second-largest economy in Southeast Asia. ACE Limited has been operating in this region for many years now and has built a strong local insurance business specializing in industrial commercial property and casualty, life and accident and health insurance. The company is expecting to strengthen its grip on commercial, auto and personal accident insurance, capitalizing on The Siam Commercial Samaggi Insurance’s strong presence across Thailand.
The acquisition by Ace Limited is cushioned by its solid cash position. Its total cash balance significantly improved during the first nine months of 2013.
Among others in the property and casualty insurance industry, a wholly-owned subsidiary of White Mountains Insurance Group Ltd. (NYSE:WTM) announced in Dec 2013, that it will take over Star & Shield Risk Management LLC for an undisclosed amount.
Also, in Nov 2013, The Travelers Companies, Inc. (NYSE:TRV) closed its acquisition of Dominion of Canada General Insurance.
ACE Limited presently caries a Zacks Rank #2 (Buy). Besides ACE Limited, investors interested in the industry may also consider property and casualty insurer Aspen Insurance Holdings Ltd. (NYSE:AHL) with a Zacks Rank #1 (Strong Buy).
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