MERGERS & ACQUISITIONS

Charoen Pokphand Group is confident the acquisition of Ping An Insurance Co would pave the way for new business ventures with China's second-largest insurer.

The Thai group, owned by tycoon Dhanin Chearavanont, last week agreed to pay $9.39 million (288 billion baht) to acquire a 15.57% stake in Ping An from HSBC Holdings Plc, the major shareholder.

The deal, advised by Siam Commercial Bank, will get financial support from China Development Bank's Hong Kong branch, the group said in a statement released yesterday.

However, the deal would be subjected to approval by China's insurance regulators, it said.

Ping An provides casualty, property and life insurance, as well as financial services.

Bloomberg also reported yesterday Ping An's growth in new-business value recovered in the second half of this year after a decline in the first six months.

"The embedded value of new individual life policies has resumed growth and the most profitable, protection-type, 10-year or longer contracts sold through agents have returned to the path of growth after some volatility in the first half," chief insurance officer Li Yuanxiang told reporters in Guilin of southern Guangxi province on Dec 5.

Ping An's new-business value, which gauges the estimated profit from new policies sold, may rise 13% in the second half as agent sales shift back to long-term risk-protection products, improving from a 9% drop in the first half, Barclays Plc said last week.

Ping An enjoys the highest individual agent productivity among Chinese insurers and the highest new-business profitability thanks to its strong presence in bigger cities and effective management of its agent forces, according to Core Pacific Yamaichi International Ltd.

Chinas insurance market expanded an average 19% a year in the past decade to become the world's sixth biggest, while insurers assets jumped tenfold, according to the China Insurance Regulatory Commission.