IAG backs away from China play
A push by IAG into the Chinese insurance market has been scuppered after concerns were raised over the coming float of its Shanghai-based partner.
IAG, Australia’s largest motor insurer, yesterday announced the suspension of a planned 24.9% buyout of China Pacific Property Insurance (CPPI) and says the plan is unlikely to proceed.
After months of negotiation, IAG informed the Australian Stock Exchange the deal has been delayed due to uncertainty about the forthcoming initial public offering (IPO) of CPPI parent company China Pacific Insurance Group and restraints imposed by US private equity shareholders.
In February last year IAG signed a memorandum of understanding to acquire nearly a quarter of CPPI for a reported $US312 million ($374.9 million). A draft agreement was prepared about five months later.
CPPI controls about 12% of China's property and casualty insurance market.
IAG CEO Michael Hawker says his company is exploring other options in China, where the local insurance market is growing by 10% a year.
“The partnership vision which we had developed with CPIC and CPPI over a three-year period would have allowed IAG to transfer its underwriting, risk and claims management expertise to CPPI,” he said.
“However, shorter-term considerations by CPIC around its proposed IPO and particularly US private equity participation in that IPO, now appear to dominate CPIC’s strategy.
“We remain committed to the Chinese general insurance market and continue to pursue various opportunities with the goal of creating shareholder value through participating in this market as a long-term strategic investor.”
IAG has been involved in the Chinese general insurance market since 1999 through its investment in the China Automobile Association (CAA), a road service operation that also distributes insurance products for the top three national insurers.
IAG, Australia’s largest motor insurer, yesterday announced the suspension of a planned 24.9% buyout of China Pacific Property Insurance (CPPI) and says the plan is unlikely to proceed.
After months of negotiation, IAG informed the Australian Stock Exchange the deal has been delayed due to uncertainty about the forthcoming initial public offering (IPO) of CPPI parent company China Pacific Insurance Group and restraints imposed by US private equity shareholders.
In February last year IAG signed a memorandum of understanding to acquire nearly a quarter of CPPI for a reported $US312 million ($374.9 million). A draft agreement was prepared about five months later.
CPPI controls about 12% of China's property and casualty insurance market.
IAG CEO Michael Hawker says his company is exploring other options in China, where the local insurance market is growing by 10% a year.
“The partnership vision which we had developed with CPIC and CPPI over a three-year period would have allowed IAG to transfer its underwriting, risk and claims management expertise to CPPI,” he said.
“However, shorter-term considerations by CPIC around its proposed IPO and particularly US private equity participation in that IPO, now appear to dominate CPIC’s strategy.
“We remain committed to the Chinese general insurance market and continue to pursue various opportunities with the goal of creating shareholder value through participating in this market as a long-term strategic investor.”
IAG has been involved in the Chinese general insurance market since 1999 through its investment in the China Automobile Association (CAA), a road service operation that also distributes insurance products for the top three national insurers.