Chubb (CB) To Acquire An Additional 15.3% Stake In Huatai
Zacks Investment Research | Nov 25, 2019 09:43PM ET
Chubb Limited (NYSE:CB) recently announced an agreement to acquire an additional 15.3% of Huatai Insurance Group Company Limited. Following the share purchase completion, Chubb will own 46.2% stake in the Huatai Insurance Group. The deal is subject to regulatory approvals and other important conditions.
Notably, Chubb had increased its ownership in Huatai Insurance Group from 20% to 26.2% in March 2019. Recently, the China Banking and Insurance Regulatory Commission (CBIRC) approved other unrelated share purchases, which upon closing increased Chubb’s stake to 30.9%.
Huatai Insurance Group Company Limited, founded in 1996, is the first nationwide joint-stock property insurance company in China. It provides a range of insurances including health, personal accident, motor, cargo and directors’ and officers’ liability. The company's 53 shareholders engage in 24 industries including petroleum, power, metallurgy, chemicals, aviation, shipping, most of which are powerful and profitable enterprises or enterprise groups, with total assets are exceeding RMB 2 trillion. Currently, the company has formed a nationwide network by establishing branches in 35 cities. It is the holding company of Huatai P&C Insurance Company, Huatai Life Insurance Company, and Huatai Asset Management Company, among other subsidiaries.
Chubb is set to purchase the 15.3% share from the Inner Mongolia Junzheng Energy and Chemical Group Co., Ltd. and one of its wholly owned subsidiaries. Further, the parties have agreed upon a subsequent purchase of 7.1% of the latter on successful completion this deal. Together the deals are valued at around $1.53 billion.
This move of Chubb is in line with its strategy of penetrating the vast Chinese insurance market. With the increased ownership, the company intends to provide support to Huatai and cater to the growing protection needs of Chinese consumers and businesses. The ownership provides them with the opportunity to build a great Chinese insurance company.
Shares of this Zacks Rank #3 (Hold) property and casualty insurer have outperformed the Zacks Investment Research
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