Tokio Marine seeks to sell SE Asia units to S.Korean companies

Japanese insurer Tokio Marine Holdings Inc. is seeking to sell its units in Southeast Asia for $1 billion to major South Korean companies looking for future growth engines in other countries amid the stagnant local market due to the aging population and falling birthrate.

Tokio Marine is approaching South Korea’s large insurers and financial holding companies to guage their interest in its insurance businesses in Singapore, Malaysia, Thailand and Indonesia, according to industry sources in Seoul on Aug. 9.

The Tokyo stock exchange-listed insurer plans to send information memoranda to potential buyers at home and abroad as early as later this month, the sources said. Goldman Sachs and Jefferies are managing the sale.

Tokio Marine has been trying to sell the Southeast Asian units, which generated about 120 billion won ($90.3 million) in net profit last year, to boost profitability through restructuring, according to industry sources in Seoul. Its premium income in 2022 totaled 800 billion won in Singapore, 500 billion won in Malaysia and 350 billion won in Thailand, the sources said. It reported a total premium income of 50 billion won in Indonesia last year.

Japan’s oldest insurer found in 1879 covers both life and non-life sectors through group companies such as Tokio Marine & Nichido Fire Insurance Co. and Nisshin Fire & Marine Insurance in Japan and 54 countries across the world.

GROWTH POTENTIAL

Multiple major South Korean insurers have shown interest in Tokio Marine’s Southeast Asian businesses as the region has strong growth potential with about a third of the population in the region aged between 15 and 34, according to industry sources in Seoul. The population is also growing.

The acquisition is expected to allow a buyer to immediately secure not only the relevant insurance licenses but also experts and networks in those countries, the sources added.

Hanwha Life Insurance Co. was touted as a strong candidate as the unit of South Kora’s chemicals-to-defense conglomerate is actively expanding its global business, especially in Southeast Asia. Global investment banks were known to have recommended the takeover of Tokio Marine’s units there.

The South Korean insurer remained cautious over the acquisition.

“We have received a takeover offer but we have yet to consider it internally,” said a company official.

The life insurer, where Hanwha Group chairman’s second son Kim Dong-won is president-cum-chief global officer (CGO), acquired a 62.6% stake in  Lippo General Insurance, a member of Indonesia's Lippo Group, for 98.2 billion won along with Hanwha General Insurance Co. in March.

Hanwha Life was the first South Korean life insurer to establish a Vietnamese unit in 2008 while setting up a unit in Indonesia after taking over Multicor Life Insurance Pt. in 2012.

Hanwha Investment & Securities Co. purchased an 80% stake in Ciptadana Securities and Ciptadana Asset Management of Lippo Group at 65.8 billion won in June.

“Hanwha Life emerged as a strong candidate for the acquisition of Tokio Marine’s Southeast Asian units as the company started focusing on an M&A after realizing that it needs considerable time and investment to establish a new unit,” said an investment banking industry source in Seoul.

“Various scenarios, such as separate sales or collaboration with private equity firms are in discussion, as it may be hard to raise $1 billion.”

Write to Seok-Cheol Choi and Jun-Ho Cha at dolsoi@hankyung.com
 

Jongwoo Cheon edited this article.