Axa raises bar on Asian operations
Axa Asia Pacific has increased its Asian growth targets for 2008, and the diversified group is looking to build its Hong Kong assets to more than $47.9 billion by the end of next year.
CEO Andrew Penn says the group has increased its “aspirational” targets for 2008 on the successful acquisition of Winterthur Hong Kong.
The Melbourne-based insurer is paying $HK1.9 billion ($302 million) for the Winterthur business. However, it could pay up to $HK2.4 billion ($382 million) if Swiss Privilege – an assurance plan linked to the money market – exceeds a certain growth rate.
Swiss Privilege is the largest line at Winterthur Hong Kong, with $HK4.2 billion ($668 million) under management.
Alternatively, Axa could receive a $HK700 million ($111 million) refund if the line shows sluggish growth.
“If Swiss Privilege continues to grow strongly, above 10%, then the pricing will move towards the upper end of the price range, with the maximum (price) set at 25% growth,” Mr Penn said.
“We would be pleased to pay this additional amount, as it means the performance will be exceeding our expectation.”
Mr Penn says the Winterthur purchase is expected to have only a small effect on Axa’s bottom line during the integration process but it will be earnings accretive in 2008.
“We have a strong capital position, with sufficient excess capital over regulatory requirements to fund the acquisition, and the capacity to add debt if we choose. We are not committing to a particular form of funding at this stage.”
Axa has increased its “Hong Kong 6” enterprise value goals by more than $HK2.5 billion ($398 million). Its premium income target is $HK20 billion ($3.18 billion) compared with the previous goal of $HK18.3 billion ($2.91 billion).
CEO Andrew Penn says the group has increased its “aspirational” targets for 2008 on the successful acquisition of Winterthur Hong Kong.
The Melbourne-based insurer is paying $HK1.9 billion ($302 million) for the Winterthur business. However, it could pay up to $HK2.4 billion ($382 million) if Swiss Privilege – an assurance plan linked to the money market – exceeds a certain growth rate.
Swiss Privilege is the largest line at Winterthur Hong Kong, with $HK4.2 billion ($668 million) under management.
Alternatively, Axa could receive a $HK700 million ($111 million) refund if the line shows sluggish growth.
“If Swiss Privilege continues to grow strongly, above 10%, then the pricing will move towards the upper end of the price range, with the maximum (price) set at 25% growth,” Mr Penn said.
“We would be pleased to pay this additional amount, as it means the performance will be exceeding our expectation.”
Mr Penn says the Winterthur purchase is expected to have only a small effect on Axa’s bottom line during the integration process but it will be earnings accretive in 2008.
“We have a strong capital position, with sufficient excess capital over regulatory requirements to fund the acquisition, and the capacity to add debt if we choose. We are not committing to a particular form of funding at this stage.”
Axa has increased its “Hong Kong 6” enterprise value goals by more than $HK2.5 billion ($398 million). Its premium income target is $HK20 billion ($3.18 billion) compared with the previous goal of $HK18.3 billion ($2.91 billion).