Fosun International rides high after $1.8bn Bermuda insurer deal

Shares in Fosun International hit a record high on Monday after the acquisitive Chinese conglomerate's listed unit agreed to pay $1.8bn to buy a Bermuda-based insurer.

The purchase of the 80 per cent of Ironshore that it does not already own, from private equity groups, will help further Fosun's insurance ambitions and is the company's eighth deal in 2015 to date.

Fosun's other investments this year include Club Mediterranee; a stake in Cirque du Soleil; a holding in UK Tour operator Thomas Cook; and the purchase of a Chinese construction machinery rental operator.

Fosun International - the unit through which the group does most of its deals - was the leading Chinese large-cap gainer in Hong Kong on Monday, with its shares rising 10.8 per cent to HK$21.50.

Its shares have risen 111 per cent this year, ranking it third among big mainland groups behind Hanergy Thin Film Power and Evergrande, which have gained 159 per cent and 152 per cent respectively.

Guo Guangchang, Fosun's founder and chairman, has previously said that he admires the model pursued by Warren Buffett, where an insurance group provides a foundation and the funding for other deals. Last year Fosun bought Fidelidade, Portugal's largest insurer, for $1.5bn and later agreed to buy US insurer Meadowbrook for $433m.

So far this year, Fosun has been involved in deals worth almost $4bn on top of the $25.7bn it spent in 2014 on 28 transactions, according to Dealogic data. In addition to insurance, last year's deals included a stake in the spin-off of the retail arm of Sinopec, the Chinese oil group, a Portuguese hospital group, and an investment in Huarong, one of China's four big "bad bank" asset managers.

Fosun, which is China's largest privately owned conglomerate, has more than a third of its assets invested in insurance.

"The acquisition of the remaining interest in Ironshore will further expand Fosun's insurance business and strengthen the Group's capability to access long-term high-quality capital," Mr Guo said.

The company said that Ironshore, a speciality commercial property and casualty insurer, would help Fosun expand its product range beyond the property & casualty insurance, life insurance and reinsurance business it already writes.

The deal would also help it diversify its currency holdings and build its presence in the US and Europe.

Kevin Kelley, chief executive of Ironshore, said Fosun would provide a long-term strategic partner and investor in the group.

"The transition of ownership from private equity to a strategic permanent capital provider with Fosun is a positive milestone for Ironshore," he added.

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