April 24, 2024

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[THE INVESTOR] The growing risks from Anbang Insurance Group, China’s aggressive buyer of foreign assets that is facing government scrutiny, are weighing down on its Korean life insurers, analysts here said on June 19.

“With the chairman’s arrest, there are concerns that Anbang’s investment plans in Korea’s insurance market including Tongyang Life and Allianz Life Insurance Korea will face setbacks,” Yoon Tae-ho, an analyst at Korea Investment and Securities wrote in a report on June 19. “If Anbang’s overseas investment drive hits a snag, expectations would fade for its purchase of Tongyang Life shares in an open tender. A private placement of shares to Tongyang Life is also unrealistic without additional investment by Anbang.”

Anbang Chiarman Wu Xiaohui stepped down from his position due to personal reasons, the insurance group said June 13 in a statement, following media reports that he was arrested by Chinese authorities. 

The Korean government has tried to play down the impact, saying that Wu is not Anbang’s largest shareholder.

“We confirm that Wu is not the largest shareholder of Anbang Insurance Group,” an official at the Financial Supervisory Service said, without revealing the identity of the largest shareholder. “Therefore, if he gets any sentence in China, it would not have any impact on the shareholder eligibility screening by the authorities.”

The shareholder eligibility screen only applies to a parent company and its largest shareholder.

The FSS also said no specific risks have been identified that could impact the two insurers or their financial health.

However, the on-going investigation could delay Anbang’s investment plans in Korea.

Local media reported last month that Anbang is considering more investment in Tongyang and Allianz ahead of the Korean government’s planned adoption of more tightened regulations for the insurance industry.

“This kind of investigation (against Wu) that might be due to political reasons could take a long time to conclude and this will hinder decision making process at Anbang and investment plans of Tongyang and Allianz,” Park In-geum, an analyst at NH Investment and Securities said.

Anbang Life Insurance took over a 63 percent stake in Tongyang for 1.13 trillion won (US$997 million) in 2015, while Anbang Group Holdings acquired the entire stake in Allianz for 3.5 billion won last year. The holding company, 100 percent owned by the insurance unit, also owns a 33.33 percent stake in Tongyang.

By Park Ga-young (gypark@heraldcorp.com)