Fortis to acquire a majority stake in Pacific Century Insurance ("PCI")

Thursday, 01. March 2007 08:04



The acquisition will accelerate Fortis's growth in Asia

* Fortis to acquire over 50% in PCI for HKD 3.5 billion (EUR
341 million1)
* Purchase price of HKD 8.18 per share implies a multiple of
1.38 times 2006 embedded value
* This acquisition creates a strong platform combining PCI's
highly talented and motivated agency force with Fortis's insurance
product expertise, distribution skills, and international
experience
* PCI's highly regarded professionals to benefit from
Fortis's future Asian expansion
* Fortis to make an unconditional mandatory general offer to
acquire the remaining shares of the Company upon completion

Fortis and Pacific Century Insurance Holdings Limited (the "Company"
or "PCI") announce today that Fortis and Pacific Century Regional
Developments ("PCRD") have entered into an agreement whereby Fortis
will acquire a controlling interest of over 50% in PCI, a listed Hong
Kong life insurer (0065.HK), for a total cash consideration of HKD
3.5 billion (EUR 341 million[1]), or HKD 8.18 per share. Based on
the Company's reported 2006 results, the purchase price implies a
valuation of approximately 1.38 times embedded value. It also
represents a 58.2% premium to PCI's last closing price of HKD 5.17
per share as of 23 February 2007, or 59.1% premium to the average of
PCI's closing prices over the last ten full trading days prior to
this announcement. The controlling stake is being acquired from PCRD
and from certain other shareholders of PCI including Francis Yuen,
the Executive Chairman. PCRD directors have recommended the
transaction and PCRD's majority shareholders have given unconditional
undertakings to sell.

Fortis will make an unconditional mandatory general offer at the same
price upon the completion of the acquisition which is subject to
regulatory approvals and other closing conditions.

Mr. Peer van Harten, CEO Fortis Insurance comments: "This acquisition
fits perfectly with our strategy to develop selectively in Asia. We
are excited to build upon the PCI's successful track record driven by
its highly talented and motivated sales force. It offers a unique
opportunity for Fortis to establish a solid platform in Hong Kong,
and Fortis will leverage its product and distribution skills to
further grow the business. Hong Kong, the second highest growth
market in Asia, enjoyed significant growth over recent years with new
business sales increasing at an annual average rate of 30%. Fortis
has been operating in Asia for over a century and has built its
reputation through the years as a trustworthy and innovative
financial institution, dedicated to its customers and committed to
the development of the region."

Mr. Francis Yuen, PCI's Executive Chairman adds: "This transaction
will bring PCI together with one of the world's leading financial
institutions whose range of products, services and resources will
enable PCI to continue its growth path. Our colleagues and over
2,000 agents have every reason to be excited about joining hands with
such a quality international partner. This is a fair price for a
business I am proud to have spent so many years building, alongside
such a high quality team."

Mr. Dennis Ziengs, CEO Fortis Insurance International Asia continues:
"This transaction meets Fortis's financial criteria for acquisitions
in terms of accretion to earnings per share and cash return on
investment. Fortis has developed a solid insurance presence in the
region, through our partnerships in China, Malaysia, Thailand, and
more recently India, which will be ideally complemented by Hong
Kong. We see PCI as a strong base to build upon the Fortis model
which focuses on product development, risk management and
distribution management. The Company's local talent pool will be key
to our future Asian expansion and regional management. We look
forward to welcoming PCI's staff and agents to the Fortis family."


About Fortis
Fortis is an international financial services provider active in
banking and insurance, and is ranked among Europe's top 20 financial
institutions, with a market capitalisation of EUR 42.4 billion as at
28 March 2007. Fortis has offices in 50 countries and has a
dedicated workforce of 60,000. As of 1 March 2007, Fortis has
ratings of AA- by Fitch, A+ by Standard & Poor's and Aa3 by Moody's.

Fortis has been in Asia for over 105 years and has successfully
combined its banking and insurance expertise in key growth markets.
Its regional headquarters are based in Hong Kong; other offices
include Bangkok, Beijing, Guangzhou, Hanoi, Ho Chi Minh City,
Jakarta, Kuala Lumpur, Manila, Mumbai, Seoul, Shanghai, Singapore,
Sydney, Taipei and Tokyo.

Fortis Insurance International ("FII") is a wholly owned subsidiary
of Fortis. FII is a provider of insurance services to personal,
business and institutional customers outside Fortis's home markets of
the Netherlands and Belgium. FII has successfully established
insurance joint ventures in Spain, Portugal, China, Malaysia and
Thailand and is in the regulatory approval process for a life
insurance joint venture in India. FII delivers a total package of
financial products and services through its own high-performance
channels and via intermediaries and other partners.

About PCI
PCRD acquired its insurance business in 1994 and the Company was
listed on the Stock Exchange of Hong Kong in 1999. Subsidiaries of
PCI are primarily engaged in individual and group life insurance and
asset management. PCI has over 280 employees and over 2,000 tied
agents, the fifth largest agency sales force in Hong Kong. It is a
top ten player in terms of total life insurance premium. PCI
reported 59% growth in its new business volume to generate a total
premium of HKD 2.0 billion and a net profit of HKD 322 million for
2006. Embedded value increased 25% to HKD 5,076 million as of year
end 2006.


This press release appears for information purposes only and does not
constitute an intention or offer to acquire, purchase or subscribe
for securities of Pacific Century Insurance Holdings Limited. The
mandatory general offer is subject to a number of conditions and
therefore may or may not be made. Shareholders and potential
investors are advised to exercise extreme caution when dealing in the
shares of Pacific Century Insurance Holdings Limited


Contacts

PCRD
Hong Kong (Brunswick Group): +852 3512 5000

Fortis
Press Contacts Investor Relations
Belgium: +32 2 565 3584 Belgium: +32 2 565 5378
Netherlands: +31 30 226 3219 Netherlands: +31 30 226 3220





[1] Based on an EUR / HKD exchange rate of 10.35


View document
View document
View document
View document
Related Links: 
Author:
Hugin
Copyright GlobeNewswire, Inc. 2016. All rights reserved.
You can register yourself on the website to receive press releases directly via e-mail to your own e-mail account.