AXA to buy out remainder of China joint venture

Yet another major industry player indicates interest in expanding holdings in the world’s second largest economy

AXA to buy out remainder of China joint venture

Insurance News

By Gabriel Olano

AXA has entered an agreement with the domestic shareholders of AXA Tianping Property & Casualty Insurance Company to purchase the remaining 50% of the joint venture’s shares.

According to a statement by the France-based insurance heavyweight, the acquisition is estimated to cost around RMB4.6 billion (US$662 million). Of the amount, RMB1.5 billion will be financed through a capital reduction of AXA Tianping to buy back shares from the current domestic shareholders, subject to regulatory approval.

The move follows fellow global insurer Allianz’s announcement that it has received approval from the China Banking and Insurance Regulatory Commission (CBIRC) to establish a fully foreign-owned insurance company in China.

Beijing is currently opening up its financial markets to foreign investment to boost the growth of these industries. While the trade tensions between the US and China cast doubt on its plan, the insurers’ recent announcements indicate that it is still pushing ahead.

In 2017, AXA Tianping ranked 15th among P&C insurers in China, with US$1.13 billion in gross written premiums (GWP). Motor insurance is its main source of income, bringing in 91% of GWP. It also sells health insurance products. The insurer has 25 branches and 93 sub-branches, covering 20 provinces which together generate over 85% of China’s GDP.

“With full ownership and management control of AXA Tianping, we will further accelerate the deployment of our strategy to create a leading insurer that champions healthcare and mobility solutions,” said Gordon Watson, chief executive of AXA Asia. “Combining AXA Tianping’s high-quality infrastructure with AXA’s global expertise in health and digital, will enable us to target selectively our preferred customer segments to create more long-term value in the motor business, while capturing the rapid expansion of the health market by developing a holistic wellbeing offer.”

AXA Tianping will be headed by Xavier Veyry, who will assume his roles as executive chairman and interim CEO upon completion of the transaction and receipt of regulatory approvals.

“We will leverage and strengthen our current sizable portfolio, capitalise on our geographical reach and our international expertise, and diversify our business lines and distribution networks to bring greater value to our Chinese customers,” said Veyry, who is currently chief executive of AXA China.

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