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Hong Kong: FTLife Acquired by New World Development

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Hong Kong-based property and infrastructure group New World Development (NWD) in January 2019 acquired FTLife Insurance, Hong Kong, from JD Group.

NWD, through its subsidiary NWS Holdings, paid HK$21.5 billion (US$2.75 billion) for FTLife. The deal is one of the top five insurance M&As ever in Hong Kong.

Beijing-based Chinese financial firm JD Group in November 2018 had put FTLife up for sale. It was reported to be looking for a price of between US$2 and $2.5 billion.

NWD – NWS – FTLife

With total assets of HK$481.5 billion (June 30, 2018), NWD is a member of Hong Kong’s Hang Seng index. Its core business areas include property development, property investment, infrastructure and services, department stores and hotels.

NWD owns 61% of NWS Holdings, which in turn owns infrastructure and services companies predominantly in Hong Kong and Mainland China. The portfolio includes toll roads, environmental management, commercial aircraft leasing, port and logistics facilities, rail container terminals, facilities management, healthcare services, construction and public transport. The acquisition of FTLife appears to be NWS’s first foray in insurance.

FTLife serves individual and institutional clients with a range of financial protection and wealth management products. In 2017, it was the 12th-largest individual life insurer in Hong Kong by premiums and had a 1.4% market share. It has about 2,800 financial consultants and staff.

An Attractive Market, High Barriers to Entry

Very few large Hong Kong insurance businesses ever come on the block and getting a new insurance license is a long and difficult process. Therefore, interest in FTLife was high and the price ultimately paid was above the top end of the bracket.

According to Swiss Re, Hong Kong has a life and health insurance premium to GDP ratio of almost 18% (2017), the second-highest in Asia after Taiwan.

Acquired in 2016, Sold in 2018

JD Group had acquired FTLife for HK$10.7 billion ($1.4 billion) in 2016 from Belgian insurer Agea.

JD Group, also known as Jiuding Group or Tongchuangjiuding Investment Management Group Co, owns brokerage, trust, mutual funds and private equity businesses. It had invested in more than 200 companies. It now is executing exits at a time when the Chinese government is cracking down on privately-owned financial holding firms, whose huge debts, sprawling businesses and foreign investments have raised serious concerns about their financial sustainability.

FTLife website www.ftlife.com.hk

(For conversion purposes, USD 1 = HKD 7.5 – 8.0)

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