AIA Group Ltd. (1299) rose to a seven-month high in Hong Kong after the third-largest Asia-based insurer was said to be close to buying ING Groep NV (INGA)’s Malaysian and Thai units.
The stock climbed 2.3 percent to HK$29.55, the highest since Feb. 28. The shares earlier advanced as much as 3.6 percent to HK$29.95 in premarket trading, a record since the Hong Kong-based insurer started trading on the city’s exchange on Oct. 29, 2010.
ING, which is selling assets to comply with European Union orders, is negotiating final terms to sell its businesses in Malaysia and Thailand to AIA for about 1.4 billion euros ($1.8 billion), two people familiar with the matter told Bloomberg News on Sept. 29. A deal could be announced by mid-October or could still fall apart, they added.
“The deal will increase weighting to higher-growth countries irrespective of price or if it is only Malaysia that they buy,” said Arjan van Veen, a Hong Kong-based analyst at Credit Suisse Group AG, on the potential purchases from ING.
He rates AIA “outperform” and expects the stock to reach HK$32.00 in 12 months from Aug. 29.
AIA Chief Executive Officer Mark Tucker, who had focused on existing businesses to rejuvenate the insurer, said in February he would consider acquisitions when they add value to investors and are financially viable. AIA announced on Sept. 27 it agreed to buy a controlling stake in Aviva NDB Insurance Plc (CTCE), Sri Lanka’s second-largest life insurer, to enter the country, its 16th market.
Thailand is already AIA’s second-largest market by value of new business in the six months to May, a measure of the profitability of new policies that Tucker, 54, has focused on, according to the insurer.
Malaysia, the smallest of AIA’s largest markets by that measure, posted growth in new-business value of 41 percent in the same period. That’s faster than other big markets including Singapore, China, Korea and Hong Kong, its largest, according to its first-half results announcement.
AIA lost market share and suffered declines in agent productivity and new policy sales because of troubles at its then parent American International Group Inc. (AIG:US) during the financial crisis and as a result of uncertainties during its own attempted takeover by Prudential Plc. (PRU) in 2010.
The Asian insurer in July posted a better-than-expected 10 percent rise in first-half profit after increasing value of new business by 28 percent to $512 million.
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