Singapore-listed lender OCBC Bank is selling its entire stake in loss-making insurer Hong Kong Life for USD 74 million.
OCBC Bank is selling its 33.3% stake in Hong Kong Life for USD 74 million to Yue Xiu Enterprises, pending regulatory approval.
The insurer, founded in 2001 by five financial institutions, posted a 2023 net loss of USD 61.5 million, narrowing from the previous year’s loss.
Along with OCBC, the other four founding institutions are also selling their respective stakes to Yue Xiu Enterprises.
Details of the Sale and Stake Ownership
However, it reveals that it holds a stake of 33.3 percent through its Hong Kong unit in Hong Kong Life. On 27th December, the bank said that it had consented to selling the shares to Guangzhou-based Yue Xiu Businesses (Holdings); however, for the deal to go ahead, it still needs the approval of regulators.
Hong Kong Life’s Background and Founders
Dated 2001, a quintet of Hong Kong banks and insurance firms, Asia Insurance, Chong Hing Bank, CMB Wing Lung Bank, OCBC Bank, Hong Kong, and Shanghai Commercial Bank, established the locally run insurance organization. Each procures a constituent share of 16.67 per cent in the organization, while OCBC Bank is the sole exception. All these four initial investors are transferring shares to Yue Xiu Enterprises as of December 27, as asserted in the same regulatory filing.
Financial Performance and Losses
Hard times hit Hong Kong Life. The company went off the runway. In 2023, the company lost about USD 61.5 million, before extraordinary items and tax. This has been a slight improvement from its previous closing loss of USD 64.5 million in 2022.
Looking Ahead: Strategic Decision by OCBC
The sale of its stake in Hong Kong Life marks a strategic decision by OCBC to divest from a non-profitable business venture and refocus its efforts on more lucrative opportunities.