A major Chinese investment company has made a move to take over US insurance company
Ironshore this week.
Fosun International, which is controlled by Chinese billionaire Guo Guangchang, already owns a 20% stake in the property/casualty insurer – bought for $464 million last August – and hopes to buy the remaining 80% for $1.8 billion.
According to a Reuters report, Ironshore had total assets of $6.7 billion at the end of 2014.
“This acquisition will bring synergies for both parties in the prevention of currency risks, expansion of assets allocation and cooperation in reinsurance business,” Fosun said in a statement to the Hong Kong stock exchange Sunday.
The company is one of China’s largest and most aggressive private-sector acquirers. It announced just last month that the US insurance sector is a primary piece of its growth strategy.
“Insurance is the most important business segment for us—the build-out of insurance gives us a cheap and sustainable source of funding,” Chief executive Liang Xinjun told the Wall Street Journal last month. “The persistent low interest rate environment in the U.S. and Europe has made the acquisition targets there look more attractive.”
Fosun already made headlines last year when it bought the insurance arm of Portuguese state bank Caixa Geral de Depositos SSA for $1.1 billion.
In a recent press release on the Fosun website, the company boasts that it follows the Buffett strategy of taking an “insurance + investment” approach to business growth, allowing it to earn profit in both financials and assets.
“In 2014, the operating revenue from the insurance segment hit RMB 7.868 billion, up 2,742.3% year-on-year, and contributed to 12.7% of the Group’s total revenue,” said the statement.
The company has also launched roughly $6 billion worth of deals in 2014 and 2015, largely funded with debt.
The Ironshore deal will be subject to regulatory approval and both parties can call off the transaction if it is not completed by March 31, 2016.
