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UPDATE 1-Indonesia Bank Rakyat invites Cardif, Ageas to bid for insurance unit-sources
June 8, 2015 / 3:11 AM / 2 years ago

UPDATE 1-Indonesia Bank Rakyat invites Cardif, Ageas to bid for insurance unit-sources

* The deal could fetch up to $600mln for BRI -sources

* Cardif seen as a strong bidder - sources

* Indonesia is one of the world’s most under-insured markets (Adds details of Indonesia insurance market, previous M&A)

By Denny Thomas and Fransiska Nangoy

HONG KONG/JAKARTA, June 8 (Reuters) - Bank Rakyat Indonesia (BRI) has invited about six companies including BNP Paribas Cardif to bid for a 40 percent stake in its insurance unit, in a deal worth up to $600 million, sources familiar with the matter said.

The sale by the country’s second-largest lender comes amid high foreign interest in Indonesia’s insurance market - one of the fastest growing and most under-insured markets in Asia - at a time when many global insurers are battling sluggish growth in their home markets.

Other firms invited to bid include Japan’s Tokio Marine Holdings Inc, Belgian insurer Ageas SA and South Korea’s Hanwha Life Insurance Co, the sources said, declining to be identified as the discussions were confidential.

State-run BRI, BNP Paribas Cardif, Ageas and Tokio Marine declined to comment on the bidding process. A spokesman for Hanwha said it does not yet have a concrete plan concerning the asset.

BRI said last month that it hired JPMorgan to manage the sale of the stake in its unit, BRIngi Life, adding the official bidding process would start in July. It expects to conclude the deal before year-end.

French insurer Cardif is seen as a strong bidder after it lost out to Japan’s Sumitomo Life Insurance Co for a 40 percent stake in the life insurance unit of PT Bank Negara Indonesia two years ago, the sources said.

Cardif also has a successful venture with State Bank of India and Bank Rakyat Indonesia (BRI) has a similar profile to SBI, they added.

While BRIngi Life is small, earning 1.83 trillion rupiah ($140 million) in premium income last year, compared with market leader Prudential’s 26.18 trillion rupiah, a foreign insurer would be able to quickly ramp up the business leveraging the parent bank’s 50 million customers.

“The BRIngi Life deal will be benchmarked to BNI Life,” said a banker familiar with the sale process. “These businesses are not very big on their own but people are looking at what they can achieve.”

In addition to Prudential, Allianz and Manulife Financial are among global insurers that have a large presence in Indonesia.

Indonesia was Asia’s 10th biggest insurance market in 2013 with a total premium income of $18.6 billion, according to data compiled by Credit Suisse. Life insurance, which accounted for 80 percent of the total, is forecast to grow 13 percent in 2015.

The ratio of life insurance premium to GDP in Indonesia was just 1.6 percent in 2013, Sigma Re data shows, compared with 11.7 percent in Hong Kong and 8.8 percent in the United Kingdom.

$1 = 13,271 rupiah) (Additional reporting by Cindy Silviana in JAKARTA, Leigh Thomas in PARIS,; Anshuman Daga in SINGAPORE, Taiga Uranaka in TOKYO, and Joyce Lee in SEOUL; Editing by Miral Fahmy and Edwina Gibbs)

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