HSBC Holdings Plc , the European bank seeking buyers for its non-life insurance assets, will consider selling regional units of the business separately, three people familiar with the matter said.
HSBC may receive offers for its general insurance operations in Asia and Latin America separately, though potential buyers can also submit bids for the global business, said the people. The sale may value HSBC’s non-life insurance assets at $1 billion to $1.5 billion, they said, asking not to be identified because the sale process is private.
Selling the regional operations separately may help HSBC get a higher price for the assets, as some buyers are only interested in acquisitions in Asia and Latin America, the people said. MS&AD Insurance Group Holdings (8725) Inc. and Axa SA are among possible bidders for HSBC’s non-life insurance business, people with knowledge of the matter said.
“Profit margins have been under pressure” in general insurance, said Dominic Chan, an analyst at BNP Paribas SA in Hong Kong. “If HSBC finds this business not profitable in some markets, it’s logical for them to exit those markets.”
Gareth Hewett, a spokesman for HSBC in Hong Kong, declined to comment on the sale process. Spokespeople for MS&AD, Japan’s biggest non-life insurer, and Axa, Europe’s second-largest insurer, also declined to comment.
TOUGHER RULES
HSBC, Europe’s largest bank, reported $1 billion of “net written insurance premiums” for its non-life business last year, down from $1.1 billion in 2009, according to its annual report. Net premiums in Asia accounted for about a third of the total, while Latin America made up 42 per cent, the report showed.
Chief Executive Officer Stuart Gulliver is reversing HSBC’s expansion over the past two decades, selling assets and cutting jobs as the euro-area debt crisis saps profit and regulators demand thicker capital buffers.