objectives but how they go about attaining them can differ
radically from one company to another. This is no better
illustrated than by a deal that will see Netherlands bancassurer
ING sell significant parts of its Mexican business, Seguros ING, to
French insurer Axa for €1 billion ($1.48 billion).
Viewed as non-core by ING, the parts of Seguros ING to be
acquired by Axa include its life and health insurance lines, its
health maintenance organisation and property, casualty and vehicle
general insurance lines. The divestment will leave ING focused on
its Afore (pensions) and annuities businesses in Mexico, two market
segments that are central to its strategy in Latin America.
Go deeper with GlobalData
“This divestment is part of ING’s strategy to focus its activities
on its core expertise of banking, investments, life insurance and
retirement services,” said Michel Tilmant, chairman of the
executive board of ING Group. “ING continues to accelerate the
redeployment of its capital in line with this strategy.”
ING, which acquired ING Seguros (then Seguros Comercial América) in
2001, expects to realise a capital gain on the sale of between €150
and €200 million, depending upon the final balance sheet and
closing adjustments.
Axa, naturally, views the Mexican deal from a completely different
perspective. “This acquisition gives us a leading position in a
large growth market on attractive conditions,” said Henri de
Castries, chairman of Axa’s management board, adding pertinently:
“We believe we can leverage our know-how to restore ING Seguros’
growth and profitability.”
de Castries was alluding to what has been a far from optimum
performance from ING Seguros. Indicative of its untapped potential,
ING Seguros is a key player in the Mexican insurance sectors it
competes in yet, according to Axa, is expected to have broken even
only in 2007 at the net income level on total revenue of $1.9
billion. Total revenue in 2006 was $1.86 billion.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataOverall, ING Seguros is the third-largest Mexican insurer and
boasts a market share of 12 percent, 5.5 million customers and
7,500 sales agents located in 54 cities and towns. In specific
areas, ING Seguros holds even larger market shares. These include
health insurance, where it has a 19 percent market share and is the
second-largest player, and vehicle insurance, where it has a 17
percent market share and is also the second-largest player. In the
life insurance sector, ING Seguros holds a 5.3 percent market share
(based on 2006 results) with distribution allocated to 1,500 of its
sales agents.
In an insurance market that has displayed solid growth over the
past several years, ING Seguros has also lost ground. For example,
according to reinsurer Swiss Re, between 2003 and 2006 total
premium income in Mexico’s life insurance sector increased from
$4.28 billion to $6.81 billion, a CAGR of 16.8 percent. During the
same period ING Seguros’ life insurance premium income increased
from $282 million to $358 million, a CAGR of 8.3 percent.
Similarly, ING Seguros has under-performed in the general insurance
sector which, including health insurance, increased total premium
income from $6.74 billion in 2003 to $8.26 billion in 2006, a CAGR
of 7 percent. During the same period, ING Seguros’ general and
health insurance premium income fell from $1.82 billion to $1.5
billion, an average annual decline of 6.2 percent. Axa noted that
ING Seguros has been gradually withdrawing from some
non-profitable, large property and casualty business lines and has
also encountered softening conditions in the vehicle insurance
business.
The task of putting ING Seguros on the road to profitable growth
has been assigned to Axa’s Mediterranean Region division which,
said Axa, would bring to bear seasoned management capabilities
backed by Axa’a global IT and reinsurance expertise.
In Axa’s sights is what it believes is an insurance market that
offers among the world’s strongest long-term growth opportunities.
Backing this view is a low insurance penetration rate that in 2006,
according to Swiss Re, stood at 1 percent of GDP for general
insurance (premiums of $62.90 per capita) and 0.8 percent of GDP
for life insurance (premiums of $76.20 per capita). Mexico has a
population of about 110 million.
“Together with our recent transactions in Asia, Eastern Europe and
the Mediterranean region, ING Seguros’ franchise on the Mexican
market strengthens Axa’s growth profile, contributing to our
Ambition 2012 plan and beyond,” said de Castries. The goal of Axa’a
Ambition 2012 plan is to double revenue and triple underlying
earnings per share between 2004 and 2012.
ING for its part is equally optimistic about its prospects in Latin
America. “We see a great potential to grow ING’s pension and wealth
management businesses in Mexico and in the rest of Latin America,”
said ING Insurance Americas’ CEO, Tom McInerney. “ING will focus on
boosting existing businesses and further invest in the region
through organic growth, strategic bolt-on acquisitions and
distribution relationships.”
Indeed, ING’s Mexican divestment follows close on the heels of two
significant acquisitions undertaken by ING in the Latin American
pension and annuity markets in the second half of 2007. In the
first deal, ING acquired Spanish banking group Santander’s pension
fund management companies in Chile, Colombia, Mexico and Uruguay
for €960 million. In the second deal, Santander’s pension fund and
annuity joint venture with Argentine bank Grupo Bapro was acquired
for €1.1 billion.
The acquisitions doubled ING’s pension assets under management in
Latin America to more than €35 billion, a level it is targeting to
double again by 2011.
