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Anbang Insurance Group spent US$934 million in February to acquire a 63.02% share in Tongyang Life Insurance.

South Korea’s insurance industry is becoming collectively uneasy over news that China’s Anbang Insurance plans to acquire Allianz Life Insurance’s South Korea operations.

The news comes after the Chinese company acquired Dongyang Life last year.

On Apr. 6 Anbang signed a stock purchase agreement with Germany’s Allianz Group that morning for the latter’s South Korean operations. The transaction concerns 100% of the group’s stake in the operations, sources said.

IBK Securities and others previously expressed an interest when the group first put Allianz Life on the market last month, but it was Anbang that finally ended up as purchaser. The Allianz Group and Anbang are now set to conduct an examination to set the price before signing the contract proper. The sales price was not disclosed, but industry insiders estimated the scale at around 200 to 300 billion won (US$173-260 million).

“Once Anbang finishes its assessment, it appears likely to apply for permits around August or September,” said one financial source. “An approval decision is usually made within three to four months of application, so the acquisition process could be finished by the end of the year.”

Last September, Anbang acquired Dongyang Life, South Korea‘s eighth-ranked life insurance company, for 1.13 trillion won (US$980 million). It was the first case of a Chinese buyer acquiring a South Korean financial company. The additional purchase of Allianz, which ranks eleventh in the industry with 16.651 trillion won (US$14.4 billion) in assets, would put Anbang’s total assets at over 40 trillion won (US$34.7 billion), placing it fifth among South Korean life insurance companies behind Samsung, Hanwha, Kyobo, and NH.

The domestic insurance industry has greeted the aggressive push of Chinese money with mixed emotions.

“The influx of China’s massive capital could help bring the insurance market out of its current slump,” suggested a source at one life insurance company.

“It seems like Chinese financial companies are going to be the ones doing the acquiring at a time when insurance companies are looking very likely to go on the market as they feel pressure acquiring capital ahead of the introduction of Phase 2 of the International Financial Reporting Standard,” the source added.

Industry insiders predicted that ING Life and PCA Life are likely to go on the mergers and acquisitions market in the near future.

“There are fears that if South Korea’s top insurance companies keep passing into Chinese corporate hands, the domestic insurance industry could end up being encroached upon by Chinese money,” said one industry source.

By Yu Sun-hui, staff reporter

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