| HONG KONG
HONG KONG Asian bourses are bracing for more insurance IPOs over the next year, after AIA Group Ltd's expected record offer next month, with regulatory changes and higher capital requirements forcing companies to tap stock markets.
Asia will account for up to 40 percent of the global life insurance market's growth over the next five years, according to a McKinsey study last year. China and India will represent about 70 percent of that growth, the study says.
Even for mature markets such as Singapore, analysts expect an 11 percent annual growth rate in life insurance premiums, while bigger markets such as India and China are likely to grow at about 15 percent annum.
"This is going to be the age of IPOs. There is more to come in Korea, China and India as well," one banker said.
Korea's Kyobo Life Insurance Co and Mirae Asset Life, India's ICICI-Prudential and Reliance Capital's (RLCP.BO) insurance unit as well as Dutch bancassurer ING's ING.AS Asian life insurance business are among the sector IPOs waiting in the wings, bankers say.
That apart, China's Taikang Life and China Reinsurance Group plan to list on the Shanghai stock exchange, which bankers say have an estimated value of about $7 billion.
"People are keen to invest in the life insurance sector as they get comfort from the fact that this is a regulated sector. Fundamentally, it's play on the growth of middle class and spending power," said another banker.
The sources declined to be identified as they were not authorized to speak to the media.
IPOs in India, the world's 10th biggest insurance market, will be sparked by the proposed increase in foreign investment limits to 49 percent from 26 percent.
Asian insurance IPOs have already raised about $16 billion this year and AIA Group's $15 billion float is set to make 2010 a record year for insurance IPOs in Asia.
AIA -- the Asian life insurance arm of American International Group Inc (AIG.N) -- is expected to list in October, in what is likely to be Hong Kong's stock exchange's biggest-ever IPO.
M&A BUBBLING TOO
Apart from IPOs, dealmakers are also betting on a busy period for M&A in the Asian insurance industry, which accounts for about 30 percent of global life insurance premiums.
Total insurance premiums in Asia rose by about 17 percent to $696 billion in 2008 from a year ago, according to research firm Celent.
One potential trigger is the recently announced Basel III regulations, which makes it more onerous for banks to hold minority stakes in other institutions.
"Banks holding minority stakes would have to decide whether such investments are core or not. And you will see some M&A activity based on that decision," said another banker.
British lender HSBC Holdings plc's (HSBA.L) 43 percent stake in Ping An Insurance Co of China (2318.HK) is one such case which many bankers point out.
Singapore lender Oversea-Chinese Banking Corp's (OCBC.SI) majority stake in insurer Great Eastern Holdings (GELA.SI) is another one, bankers say.
China, the world's sixth-biggest life insurance market, generated about $96 billion in premiums in 2008. But with more than 60 life insurers competing for business with little product differentiation, consolidation is the name of game.
"In China, banks are increasingly getting into insurance and that is set to drive M&A," one banker said. "Some of the international insurers are looking to restructure their presence, which will lead to some deals," the banker added.
Another change set to reshape the Asian insurance landscape is the redeployment of capital by foreign insurers, which will result in foreign companies like New York Life Insurance exiting certain markets to consolidate their position in others.
(Editing by Muralikumar Anantharaman)