ACE Buys Share Of Chinese Insurer

NU Online News Service, May 28, 10:58 a.m.EST?ACE Limited of Hamilton, Bermuda announced today thatthe ACE Group had purchased a 22 percent stock interest in HuataiInsurance Company of China for approximately $150 million.

The company said the transaction was part of a strategicbusiness partnership with Huatai that would target China's rapidlygrowing property-casualty market.

The partnership, ACE said, will allow both companies to developjointly new products and services for delivery nationally in China,and establish a framework for expansion into other key financialservices areas.

ACE described Huatai as China's first nationally licensed jointstock p-c insurer and the fourth largest provider ofproperty-casualty products and services in China.

Under Chinese regulations, the ACE Group's investment inHuatai's outstanding shares will be made by three subsidiarycompanies: ACE INA, ACE Tempest Re and ACE US Holdings.

As part of the strategic partnership, three ACE nominees havebeen elected to Huatai's Board of Directors, including ACE LimitedChairman and Chief Executive Officer Brian Duperreault, ACE INAChairman Dominic Frederico, and ACE INA Executive Vice PresidentPeter O'Connor.

ACE said it will provide Huatai additional Chinese-speakingpersonnel to directly assist with senior level actuarial,financial, underwriting, and information technologydevelopment.

In addition to serving on the Huatai board, Mr. O'Connor willbecome a full-time senior advisor to Huatai based in Beijing. Mr.O'Connor has 39 years of international insurance experience andwill report to ACE Limited Vice Chairman Evan Greenberg, who ishead of ACE's international operations.

Mr. Duperreault said the business partnership with Huatai willallow ACE to offer global clients a local partner allied with theACE Group of Insurance and Reinsurance Companies and provide ACEwith nationwide access to China, "the largest and fastest growingmarket in the world.'

Huatai Chairman Wang Zi Mu, who has successfully guided thecompany since its inception, said: "This is the first example inthe history of China's property insurance industry that a foreigninsurer has taken such a large shareholding in a Chinese insurancecompany.

"I believe that Huatai will become a stronger and morediversified company because of our strategic cooperation with ACE,and we look forward to a fruitful and successful relationship."

Mr. Frederico said: "There are a number of important ways inwhich ACE and Huatai can leverage the complementary strengths ofboth businesses. ACE's extensive product range, access to globalinvestment capability, and sophisticated underwriting will worktogether with Huatai's extensive, high quality customer base andseasoned local management expertise to create a strong platform forgrowth across all our business lines."

Huatai was formed in 1996 by 63 sponsoring shareholders,representing some of China's premier companies, and operates in adiversified product line including commercial and personalproperty, automobile, liability, oil and gas, marine hull andcargo, and aviation.

The company currently has branches in Beijing, Tianjin,Shanghai, Nanjing, Shenzhen, Qingdao, Dalian, and Guangzhou, andhas been approved by the China Insurance Regulatory Commission toopen another 18 branches and 22 sub-branches.

At Dec. 31, 2001, Huatai had total assets of approximately $600million. For the year ended Dec. 31, 2001, Huatai had total premiumincome of $77 million, a 34 percent increase over the previousyear.

Salomon Smith Barney served as financial advisor to ACE on thetransaction.

ACE Group has operating subsidiaries in nearly 50 countries andas of March 31; ACE had total assets of U.S. $38.7 billion andtotal shareholders' equity of U.S. $6.2 billion.