Chinese insurers vie to acquire ING Life

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Chinese insurers vie to acquire ING Life

Chinese financiers are again moving aggressively to acquire the Korean operations of ING Life Insurance, beating local firms mainly with their deep pockets.

According to industry insiders on Wednesday, private equity firm MBK Partners, owner of the Korean office of ING Life, selected six Chinese insurers on Tuesday during the preliminary sell-off bid as final bidding competitors, while rejecting Kyobo Life, one of Korea’s big three life insurers.

Eight insurance companies from inside and outside Korea joined the preliminary bidding session that began May 23 and lasted a week.

Participants included Anbang Insurance Group, which recently became Korea’s fifth-largest life insurer by purchasing Allianz Life Korea in April and a stake in Tongyang Life last year; China Life; Ping An Insurance Group; China Taiping Insurance Group; JD Capital, a Chinese private equity firm; two local firms, including Kyobo Life; and a European firm.

Over the last two years, there have been several large bids to acquire Korean firms, and Chinese financial titans have participated in all the deals.

MBK Partners is looking to sell 100 percent of the shares of ING Life Korea for at least at 3 trillion won ($2.5 billion). MBK acquired the Korean operation from the Dutch insurer ING Group for 1.8 trillion won in 2013.

Kyobo Life’s bid was significantly smaller than that of its Chinese competitors, based on local industry insiders’ view that 3 trillion won is an excessively high price for ING.

ING is the nation’s sixth-largest life insurer, with 29.8 billion won in assets as of January, according to the Korea Life Insurance Association.

Analysts say that ING Life’s healthy business structure makes it an attractive product.

“In particular, ING Korea’s financial status is forecast to be relatively more sound than other industry members in terms of insurance payouts it promised in the past,” said Jeon Yong-sik, a senior researcher at Korea Insurance Research Institute.

Allianz Life’s Korea operation was sold for only 3.5 billion won to Anbang Insurance Group in March due to a heavy insurance payout burden. The company sold insurance products that promised fixed interest rates of 7 percent to 8 percent in the 1990s.

Some industry insiders worry that the financial watchdog’s recent decision to grant additional payouts to the families of clients who committed suicide may shave off ING’s selling price, causing bidders worry about potential financial risks.

ING Life had the largest volume of unpaid insurance payouts among 17 life insurers operating in Seoul, with a worth of 81.5 billion won, according to the Financial Supervisory Service.

However, Jeon said payouts won’t be factor in the acquisition price, considering they’re not the sole problem of ING but rather are an industry-wide issue.


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