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HSBC sells insurance businesses to AXA, QBE

by Laura Board in London  |  Published March 7, 2012 at 12:00 PM
HSBC-sells-Central-American-operations227.jpgHSBC Holdings plc has sold general insurance businesses in Hong Kong, Singapore, Argentina and Mexico to France's AXA SA and Australia's QBE Insurance Ltd.

AXA takes businesses in Hong Kong, Singapore and Mexico, while QBE acquires units in Argentina and Hong Kong. Both deals include a 10-year bancassurance agreement, under which HSBC will distribute the buyers' insurance products to retail and commercial banking customers in Hong Kong and Mainland China, Singapore, India, Indonesia, Mexico and Argentina.

HSBC chief executive Stuart Gulliver last May began pulling out of peripheral and noncomplementary businesses and markets to cut costs by up to $3.5 billion by 2013.

"This is a further step in the execution of our strategy. 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," he said in a statement.

The value of gross assets being sold was $1.23 billion as of Dec. 31.

AXA, which is paying $494 million for its share, said the purchase will make it the leading property and casualty insurer in Hong Kong and strengthen its leadership in Mexico and Singapore.

AXA chairman and chief executive Henri de Castries said: "Providing a combination of strong growth perspectives and high levels of profitability, this transaction marks another milestone in our strategy of accelerating profitable growth in Asia and Latin America, where our footprint in Property & Casualty will be significantly expanded."

QBE, which is paying $420 million, expects the businesses it is buying in Argentina and Hong Kong will boost earnings per share in the first full year and produce net profit of $40 million before synergies.

QBE chief executive Frank O'Halloran said the businesses "fit well with our strategic objectives of profitable growth in the fast-growing economies of Asia and Latin America. They will also provide opportunities for synergies".

HSBC said completion is expected in the second half, with the Argentine sale possibly closing earlier.

Other recent HSBC disposals include its January agreement to sell businesses in three Central American countries to Colombia's Banco Davivienda SA for $801 million; the pending sale of its U.S. credit cards business to Capital One Financial Corp. for $2.6 billion; and its divestment of 195 branches mainly in upstate New York to First Niagara Financial Group Inc. for $1 billion.

HSBC used internal advisers and took additional advice from Goldman, Sachs & Co. in South America. Citigroup Inc.'s Charles-Henri Filippi, Gilles Graham, Kevin McLoughlin and Vincent Mischler advised AXA.
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Tags: AXA SA | HSBC Holdings plc | QBE Insurance Ltd.

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