ACE, a global insurance firm, plans to build its business in Thailand through a conditional agreement to purchase a 60.9-per-cent stake in Siam Commercial Samaggi Insurance for Bt6.15 billion.
"Thailand is the second-largest economy in Southeast Asia and at the heart of Indochina – a region that includes Vietnam and Myanmar. ACE has been operating there for many years and has built a strong local insurance business focused on industrial commercial property and casualty, accident and health, and life," said Evan Greenberg, chairman and chief executive officer of ACE Ltd.
Established in 1947 and listed on the Stock Exchange of Thailand, Siam Commercial Samaggi is a major writer of auto, small commercial, and personal accident insurance and distributes its products through both Siam Commercial Bank’s branches and independent agents via the insurer’s own extensive branch network. In 2012, the insurer had about Bt4.3 billion in gross premiums written.
In a statement, the seller, SCB, said the transaction was expected to be completed in the second quarter. The selling price was agreed at Bt27.60 per share, representing a premium of about 17.9 per cent on the closing market price of SCSMG shares on January 10.
Greenberg said Siam Commercial Samaggi Insurance was a well-established and trusted insurer in Thailand.
"This transaction presents an excellent opportunity for ACE to further build our business in this fast-growing market by expanding our presence in personal and small commercial insurance," he said. We look forward to forging a relationship with Siam Commercial Bank, one of the country’s largest and most venerable financial institutions, and we intend to grow the number of products and services offered through Siam Commercial Samaggi Insurance by leveraging our global product expertise.
"We are confident that over the medium and long terms this business will provide outstanding value to our customers and business partners and generate superior returns for our shareholders, and we expect this transaction will be immediately accretive to our earnings."
The transaction is subject to due diligence by ACE and customary closing conditions, including approval by SCB shareholders. On closing of this transaction, in compliance with Thai regulations, ACE and its local Thai partner will make a mandatory tender offer for the remaining 39.1 per cent of Siam Commercial Samaggi Insurance.
ACE Group is one of the world’s largest multi-line property and casualty insurers. With operations in 54 countries, it provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. ACE Ltd, the parent company of ACE Group, is listed on the New York Stock Exchange and is a component of the S&P 500 index.
"SCSMG is a highly regarded general insurer in Thailand," said SCB executive chairman Vichit Suraphongchai. "For the next level of business growth at SCSMG, we believe that an experienced global non-life insurer is better positioned to enhance the competitiveness and market positioning of SCSMG, while SCB will continue to distribute SCSMG’s products.
"The divestment to ACE was the result of an extensive search to find an appropriate buyer that would enhance the competitiveness of SCSMG and serve as an effective partner to SCB as it builds up its non-life bancassurance business."
The share price of SCSMG yesterday closed at Bt26.25, up by 12.18 per cent from last Friday.