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Sizing Up ING’s Suitors in Asia

By Isabella Steger

AP Photo/Peter Dejong

A long list of potential bidders have their eyes on ING Groep NV’s Asian life-insurance business. According to Credit Suisse research, the business is most likely going to be divvied up among U.S. and Asian insurers.

As the WSJ previously reported , the Dutch insurer is putting its Asian life-insurance arm on the block as it raises funds to repay bailout money to the government. Among U.S. insurers who are interested are MetLife Inc. and Prudential Financial Inc. Canada’s Manulife Financial Corp. and Sun Life Financial Inc. are also taking a look.

Among Asian suitors, South Korea’s KB Financial Group and Samsung Life Insurance have expressed interest. American International Group Inc.’s AIA Group Ltd., another big insurer with a pan-Asian life platform, is also naturally looking at ING.

Credit Suisse thinks given the size of ING’s Asia business, it’s unlikely that any one company will snap it up in its entirety. It thinks the Japanese variable-annuity business, which contains guaranteed returns to investors, will receive the least interest, as the likely buyers have shied away from this business in the last few years.

Looking at the candidates individually, Credit Suisse says AIA would benefit from buying ING’s non-Japanese assets as it would strengthen its position in some of its weaker markets such as South Korea, where it currently ranks 10th in terms of premiums. AIA would also become the biggest in Hong Kong, and second in Malaysia.

Samsung Life, which already has a market leader position in Korea, would unlikely be interested in ING’s Korean assets. However, KB Financial, which already has a joint venture with ING and ranks 15th in Korea, would make a good fit with ING’s Korean business.

Credit Suisse says Prudential has traditionally adopted a strategy of depth rather than breadth, and wouldn’t necessarily be interested in some of ING’s smaller operations, such as Hong Kong and Malaysia. Instead, it may want to further deepen its footprint in markets where it already has considerable strength in, such as Japan, Korea and Taiwan.

MetLife already has a good business in Japan and Korea, according to Credit Suisse, but has limited opportunities for synergies elsewhere in Asia should it buy ING’s operations. As such, it could be interested in markets where ING has good market presence, such as Malaysia, rather than Hong Kong, but MetLife’s capital could be constrained by regulators as any material acquisitions require approval from the Federal Reserve.

Among the Canadians, Sun-Life has signaled a cautious approach to its M&A strategy, and Credit Suisse discounts it as a serious bidder for ING’s assets. Meanwhile Manulife, which generates over 90% of its Asian earnings from Hong Kong and Japan, could gain further scale from buying ING’s Hong Kong operations. As it already has a large variable-annuity business in Japan, acquiring ING’s assets there could be an issue for Canadian regulators.

European issuers are highly unlikely to go for ING’s Asia businesses as most are capital-constrained, and their weak share prices make equity issuance difficult.

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Isabella Steger

Gillian Tan

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