Asia insurance IPOs to shape up industry

Asia expects to see a wave of insurance companies launching initial public offerings (IPOs) this year, which is tipped to affect the handling of capital and hedging in the region as practices come under investor scrutiny for the first time.

Insurance IPOs are a big change for Asia, which has traditionally had few listed local life insurance companies. One source described the year ahead as a "sector being formed from nothing". It is anticipated investors will demand higher investment returns in general and in particular on equity, encouraging firms to keep volatility on their assets under control to avoid adverse effects on share prices. This could lead to a big uptick in asset hedging, and raise questions about asset and liability mismatches and related hedging, as disparities in practices are compared across jurisdictions.

"When you add up the market cap [being listed] there will suddenly be a standalone sector in under a year, which is getting the attention of brokers and investment houses," said one market watcher who asked not to be named.

South Korea seems foremost in analysts' minds. Korea Life Insurance, the second largest life insurer in the country, is planning an issuance soon, expected to be for $2 billion, according to sources. The country's largest life insurer, Samsung Life Insurance, is also said to be preparing a deal. On top of this, American International Group last year unveiled plans for American International Assurance, its Asian subsidiary, to be listed this year in Hong Kong in an estimated $10 billion offering.

 

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