UPDATE 1-Japan insurers shortlisted for Indonesia Panin Life stake-sources

Thu Dec 6, 2012 12:35am EST

Related Topics

* Sale of 40 pct stake expected to fetch around $200 mln

* Indonesia life insurance market f'cast to grow 9.8 pct next year

* Binding bids for Panin due by end of this month

* Japanese insurers have spent $14.3 bln in insurance deals since 2008 (Adds details on Southeast Asia insurance market)

By Taiga Uranaka and Janeman Latul

TOKYO/JAKARTA, Dec 6 (Reuters) - Japan's Dai-ichi Life Insurance Co Ltd and Fukoku Mutual Life Insurance Co are among the companies shortlisted to buy a minority stake in Indonesia's Panin Life for about $200 million, sources said.

Controlled by Indonesia's powerful Gunawan family, PT Panin Financial is planning to sell an up to 40 percent stake in its life insurance unit. The shortlisted firms have been asked to submit binding bids by the end of this month, said the sources, who had direct knowledge of the deal.

The Japanese interest in the auction underscores the desire among corporates to bulk up insurance assets in the fast-growing Southeast Asia region, home to some of the world's most underdeveloped insurance markets.

Japan's insurers have been keenly interested in acquiring overseas insurance assets to beat slower growth in the home market, spending $14.3 billion on insurance deals since 2008, according to Thomson Reuters data.

The auction has also generated interest from South Korean insurers, the sources added.

Life insurance premiums in Indonesia are forecast to grow 9.8 percent next year, compared with Japan's 2 percent growth, according to Swiss Re estimates.

Southeast Asia has become a hotbed of insurance dealmaking. British insurer Prudential plc, AIA Group Ltd and ACE have inked a combined $2.5 billion worth of insurance deals in the region this year and bankers expect at least four more auctions to kick off next year.

Global insurers are attracted to Indonesia as the rapid economic growth in Southeast Asia's biggest nation is making insurance products more affordable for its 240 million population.

Insurance coverage in Indonesia is just 1.7 percent, compared with 11 percent in Japan, according to Swiss Re estimates. The Asia average is 5.8 percent, while the United States' is 8.1 percent.

HIGH VALUATIONS

As a result, Japanese companies have been aggressive bidders in Southeast Asian insurance auctions. Last year, Japan's largest property and casualty insurer MS&AD Insurance Group Holdings paid about $850 million for a 50 percent stake in the life insurance unit of Indonesian conglomerate Sinar Mas.

That transaction, done at nearly three times price-to-book, has set the bar high for other Indonesian insurance deals, bankers say. The mean price-to-book ratio for Asian insurers is 1.92, according to Thomson Reuters data.

Pressure to secure new growth drivers is especially heavy on Dai-ichi Life, the only listed company among Japan's big four life insurance companies. It was one of the bidders for ING's insurance operations in Southeast Asia but did not succeed in bagging the assets.

Nippon Life, Japan's largest life insurer, seriously considered a bid for the Panin Life stake but decided not to participate at the last minute, one of the sources said.

Panin Life, Dai-ichi Life and Fukoku declined to comment.

Bank of America Merrill Lynch, which is advising Panin on the sale, also declined to comment.

The sources declined to be identified as the sale process is confidential. (Reporting by Taiga Uranaka and Janeman Latul; Writing by Denny Thomas; Editing by Michael Flaherty and Muralikumar Anantharaman)

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