LONDON/AMSTERDAM European insurers looking for a bigger slice of Asia's high-growth markets could consider unsolicited bids for ING's ING.AS Asian business, as a growing number of trade buyers hijack plans for IPOs.
Allianz (ALVG.DE), Axa (AXAF.PA) and Zurich Financial Services Group ZURN.VX, among the winners of the financial crisis in insurance, are potential suitors for the insurance unit, investment bankers said.
"There is interest in ING's Asia-Pacific assets and I could imagine some unsolicited bids," said a senior London banker who covers the financial services industry.
"There is industrial logic for Allianz, Axa and Zurich to consider such a move and these companies see themselves as consolidators in their industry," the banker said, adding that Generali (GASI.MI) was a less likely suitor because of uncertainty surrounding the tenure of its veteran chairman Antoine Bernheim.
Analysts say the AIG sale supports the valuation of ING's businesses and that ING will be able to exit insurance at book value of around 16 billion euros ($21.73 billion) or more before the end of 2013, by when it must sell the business.
UBS research analysts put proceeds of a divestment of the Asian business at 5.6 billion euros.
"ING's Asian business is not the likes of AIA, but it is good. I thought we could see some unsolicited bids even before the Prudential deal was announced," said a second investment banker who asked not to be named.
Insurance M&A accelerated spectacularly this week when Britain's top firm Prudential (PRU.L) unveiled a $35.5 billion deal to buy AIG (AIG.N)'s Asian life insurance assets.
The purchase, orchestrated by Prudential's charismatic CEO Tidjane Thiam, would be the biggest acquisition by a European company since Roche's $47 billion offer for Genentech in July 2008, according to Thomson Reuters data.
Zurich Financial, AXA and Allianz all declined to comment.
Prudential's swoop on American International Assurance, or AIA, was the latest and biggest example of a trade buyer interrupting a flotation in a so-called dual-track process, normally associated with private equity exits.
ING, splitting off its global insurance operations as part of a restructuring deal mandated by the European Union, has made clear since late October that it preferred an IPO rather than a trade sale for the insurance unit.
Yet at the same time, ING has also made no secret of the intense trade interest in the business, with Chief Executive Jan Hommen famously saying he had to use "hands and feet" to count all the suitors who had called him.
"The route we're working on is an IPO ... and while working on that we're keeping our eyes open for other options as they might come along," a spokesman for ING said on Friday.
Any buyer would face challenges in taking on the business and its 6,500 employees, among them ongoing difficulties with the book in Japan.
ING's Asian insurance unit booked a loss in the fourth quarter because of a 190 million euro charge in its Japanese business, which stemmed from changed assumptions about the surrender rate for variable annuities. ING has decided to stop selling them in Japan.
The Asian unit also saw a sales decline of 22 percent in the fourth quarter, albeit with significant improvement in December.
An appeal ING filed in January against the way the European Commission calculated its 2008 and 2009 state aid also clouds the eventual disposal.
If ING wins, it would avoid a deep restructuring. However, it is expected to sell the insurance business regardless of the outcome of the appeal.
(Additional reporting by Douwe Miedema; Editing by David Cowell)