French Insurer Axa acquires the remaining 50 percent stake of the domestic sharholders of Axa Tianping Property & Casualty Insurance in China.
Paris-based Axa is the first foreign insurer to own 100 percent of a top 20 P&C or life insurance company in China. Full management control will allow the firm to accelerate its strategy in the largest growing market in Asia, the french insurer said on Tuesday.
Total consideration for the acquisition of the 50 percent stake of Axa Tianping Property & Casualty (P&C) amounts to 4.6 billion RMB (or 584 million euros), representing an implied 2.4x FY17 BV4 multiple, of which, subject to regulatory approvals, RMB 1.5 billion (or 190 million euros) will be financed through a capital reduction of Axa Tianping to buy back shares from the current domestic shareholders.
Leading Company in Direct Motor Insurance
In 2017, Axa Tianping ranked 15th amongst China’s P&C insurers with 1 billion euros of Gross Written Premiums (GWP), and is the only foreign invested company in the top 20 P&C insurers in China. It is a leading company in Direct Motor insurance (6th in the market5), with Motor insurance contributing 91 percent of GWP, of which 41 percent is distributed through direct channels. It also sells short-term health insurance products.
Axa Tianping has developed a national footprint with 25 branches and 93 sub-branches, covering 20 provinces which together generate over 85 percent of China’s Gross Domestic Product (GDP).
Low Penetration
The Chinese P&C insurance and health insurance markets have been growing rapidly at 13 percent per year and 39 percent per year respectively, over the past five years.
Despite continuous growth, P&C insurance penetration remains low at 1.3 percent. Motor insurance has been the dominant product, representing 74 percent of the market, with new passenger car sales in China growing to 25 million, representing 8 percent CAGR between 2014 to 2017. Agency and Direct are the main distribution channels in the Chinese P&C insurance market.
