HONG KONG — Global banking giant HSBC Holdings PLC said Wednesday that it has agreed to sell its general insurance businesses in Hong Kong, Singapore, Argentina and Mexico to AXA Group and Australia's QBE Insurance Group Ltd. in separate deals valued at around US$914 million in cash.
The move is part of HSBC's efforts to diversify away from non-core businesses, while focusing on its core banking operations. Last year, the company said it would sell its global general insurance operations as part of cost-cutting initiatives. The deals, which are subject to regulatory approvals, are expected to be completed in the second half of 2012, while the deal in Argentina may be completed earlier, HSBC said a statement.
Following the completion of the deals, AXA and QBE will become the exclusive providers of general insurance products distributed by HSBC and its Hang Seng Bank unit to retail and commercial banking customers in Hong Kong, China, Singapore, India, Indonesia, Mexico and Argentina under 10-year bancassurance agreements, HSBC said.
It "will enable us to focus our capital and resources on the growth of our core businesses, including the building of our broader wealth-management capabilities," HSBC Group Chief Executive Stuart Gulliver said in the statement.
HSBC said that its units, HSBC Insurance (Asia) Ltd., HSBC Insurance (Singapore) Pte. and HSBC Seguros SA de CV Grupo Financiero HSBC, have agreed to sell their general insurance portfolios in Hong Kong, Singapore and Mexico to AXA Group for a combined US$494 million in cash.
At a press briefing in Hong Kong, AXA Group said it will fund the acquisition through internal resources. The deal, once completed, is expected to make AXA the number one player in general insurance in Hong Kong with a 13% market share, said AXA regional chief financial officer in Asia, François-Valéry Lecomte.
The purchase would mark AXA's goal of becoming the top general insurance player in Asia by 2015, Lecomte said. He added that the group targets to be the top three life insurer as well in the next three years.
In addition, HSBC said it has also agreed to sell its general-insurance business in Argentina to Australia's QBE Insurance Group. Under the agreement, QBE Insurance will buy Hong-Kong-based Hang Seng Bank Ltd.'s general-insurance manufacturing unit Hang Seng General Insurance (Hong Kong) Co. Hang Seng Bank is 62%-owned by HSBC Group. The total cash consideration for both businesses and the bancassurance agreements is around US$420 million and will be funded from existing internal resources, QBE Insurance said in a separate statement.
QBE, which operates in 49 countries, has grown through a steady string of acquisitions in Asia, the U.S. and Latin America in recent years. The Australian insurer reported gross written premiums of $18.3 billion in 2011.