April 20, 2024

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[THE INVESTOR] Two Korean life insurance companies are being put on the block as their major shareholder China-based Anbang Insurance Group is set to divest its overseas assets, industry sources said on May 9.

The Chinese government, which has been controlling the troubled firm since February, is now in the process of selecting advisers to manage the sale of such assets that include Tongyang Life and ABL Life. 

Tongyang said in a regulatory filing on May 8 that the government is reviewing and analyzing the overseas assets held by the biggest shareholder Anbang but nothing has been decided yet.

The two insurers could be sold in a package deal or separately. If sold together, the companies can become fifth-largest player, with combined assets of 50 trillion won (US$46.25 billion).

The reports come less than three years after Anbang bought a 63 percent stake in Tongyang in September 2015 and 100 percent of ABL in December 2016 via its subsidiaries. The move is expected to trigger mergers and acquisitions in the related industry.

The local media cited unnamed industry sources to say that Anbang’s Interim Management Working Group is interviewing 11 global investment banks to select an adviser and is looking for potential buyers.

The China Insurance Regulatory Commission in April approached major Korean financial entities including Shinhan Financial Group and KB Financial Group to gauge potential interest, according to local media outlet The Bell on May 8.

The sale process is expected to kick off as early as July and pick up speed to solve Anbang’s liquidity issues. Chairman Anbang’s Wu Xiaohui was arrested in June last year over allegations of US$10.4 billion fraud and embezzlement.

Despite the enthusiasm for snapping up lucrative insurance firms, industry sources say it might not be easy to sell Tongyang and ABL ahead of the adoption of new standards for governing insurance contracts -- the International Financial Reporting Standards 17 -- by 2021. The new standards will force insurers to bolster their capital to maintain financial health.

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