A Chinese high-tech operation said it plans to snatch up a group of reinsurance companies in a diversification move.
China Goldjoy Group Ltd., formerly known as World Wide Touch Technology Holdings Ltd., disclosed it signed a memorandum of understanding on March 23 to purchase a holding company that includes a number of reinsurance businesses.
China Goldjoy did not disclose the holding company’s name, or the name of the reinsurers it owns. It noted, however, that the group of companies it wishes to buy pursues global underwriting of energy, property, casualty, and other specialty risks. Before it pulls the trigger and makes a purchase, Hong Kong-based China Goldjoy said it will pursue due diligence, after which a further announcement will be made.
China Goldjoy said it has generally been focused on developing high technology products and providing related services; securities investment; development of and investment in biometric security technologies; high speed wireless data transformation and communications. It is also looking for investment opportunities in areas including integrated financial services, asset management, new energy and emerging industries. Group Chairman and CEO Yao Jianhui said that the proposed reinsurance acquisition fits with this strategy.
“The proposed acquisition provides a golden opportunity for the Group to enter the financial services market and is expected to boost our income and bring good returns for shareholders,” he said in prepared remarks.
Asian companies, particularly those from China and Japan, are increasingly looking at M&A opportunities in the insurance industry, Conning said in a recent report.
Global P/C insurance M&A activity hit $63 billion in 2015, of which $17 billion came from Asian buyers, Conning said.
Those deals last year included Fosun International’s $1.8 billion acquisition of Ironshore, Inc. shares it did not already own, and White Mountains Insurance Group’s sale of Sirius International Investment Group to an arm of Shanghai’s China Minsheng Investment.
Why are Chinese companies interested? Conning sees China investors as looking to snatch up financial assets and real estate internationally in order to put their assets into more stable markets. The Conning study also pointed to reinsurance as a sector ripe for continued consolidation due to a continued soft market.
Conning, as well as executives from Tiger Risk Partners, Gen Re, XL Catlin and Arch Capital, have said that they expect this trend to continue.
Source: China Goldjoy Group Ltd.