Chinese group set to be 5th-largest insurer

Anbang Insurance Group’s headquarters located in Beijing, left, and Allianz SE’s headquarters in Munich. [ANBANG INSURANCE GROUP, ALLIANZ SE]

Chinese finance group Anbang Insurance is set to take over the Korean operation of Allianz Life Insurance in a multibillion won deal that will make it the fifth-largest insurance company in the country.

The move comes only six months after Anbang bought Tongyang Life Insurance, which was then the country’s ninth-largest player, for 1.13 trillion won ($979.7 million).

Anbang Insurance Group and Allianz Group said on Wednesday that they had signed a sale and purchase agreement to sell the Korean branch of the German insurer.

“We are very excited to make another investment in Korea through Allianz Life Insurance Korea and Allianz Global Investors Korea,” the Chinese insurance giant said in a statement.

“The acquisition is consistent with Anbang’s investment strategy, which is focused on globalization, and we are committed to being a strong partner and long-term contributor to the growth of the financial industry in Korea.”

Local insurance industry insiders speculate that the deal with Allianz Life Insurance Korea, which is an unlisted company, involved handing over 100 percent of the Korean branch’s shares for 250 billion won. However, the price may change after the Chinese insurer looks more into struggling Allianz’s financial background, industry insiders say.

IBK Investment & Securities, an arm of Industrial Bank of Korea that already has life insurer IBK Insurance, was known to be the largest rival of Anbang. It reportedly bid 400 billion won in early March by forming a consortium with a Chinese private equity fund (PEF).

Despite IBK’s larger bid, reports say the firm failed to win because financial regulators were reluctant to sell an insurer to a PEF, as it could simply put the firm on sale again to turn a profit.

The acquisition process is projected to be complete by October at the latest, after obtaining approval from the Financial Services Commission and Financial Supervisory Services on whether the Chinese firm qualifies to be the largest shareholder of the Korean insurer.

The Chinese insurer will become the local life insurance industry’s fifth-largest player by winning both Tongyang and Allianz Korea with total assets of 39.8 trillion won, following Samsung, Hanwha, Kyobo, NH Nonghyup Life Insurance, according to the Korea Life Insurance Association.

Both Tongyang and Allianz Korea currently are midsize insurers.

Allianz Insurance Korea launched after the German insurance company acquired the former Cheil Life Insurance in 1999, just after the 1998 Asian Financial Crisis.

At the time, Cheil was the industry’s fourth-largest player.

Han Seung-hee, a senior analyst at NH Investment & Securities, said, “The insurance business ... has to do with economy of scale, in which winning larger market share is crucial. “As the Chinese insurance industry is fairly young, the Chinese firm may have aimed to develop its insurance product development capabilities and other business strategies by absorbing the know-how of Korean firms,” Han added.

BY KIM JI-YOON [kim.jiyoon@joongang.co.kr]