On June 10, the Financial Services Commission (FSC) announced that it had granted approval to Anbang Insurance for the acquisition of 68 million shares or 63 percent of Tongyang Life. (image: Yonhap)
SEOUL, June 11 (Korea Bizwire) – With financial regulators’ nod to the Chinese Anbang Insurance Group’ acquisition of Tongyang Life Insurance, Korean financial firms now have to compete with a Chinese player on their home turf.
On June 10, the Financial Services Commission (FSC) announced that it had granted approval to Anbang Insurance for the acquisition of 68 million shares or 63 percent of Tongyang Life. In February, the Chinese insurance company entered into an agreement with Vogo Fund, a private equity fund, to buy a controlling stake for 1.13 trillion won (US$1.01 billion).
It was the first time that a South Korean financial institution was sold to a company based in mainland China. Last year, Yuanta Group purchased Tongyang Securities, a cash-strapped brokerage firm, for 120 billion won, but Yuanta is based in Taiwan.
Established in 2004, Anbang Insurance Group is one of the leading Chinese insurers with assets of 700 billion yuan (US$112.7 billion). It has made efforts to move aggressively into the South Korean financial market. Last year, it offered to buy state-run Woori Bank but failed due to a lack of competing bids.
With Anbang’s aggressive moves in the global financial market, including the acquisitions of Waldorf Astoria, Belgian insurer Fidea and bank Delta Lloyd, and its attempt to buy out Woori Bank, Korean insurers are paying close attention to its business strategy in Korea, which has yet to be revealed.
An official at Tongyang Life said, “So far, we have not communicated with Anbang, so we don’t have much to say about it. As the Korean life insurance market is stagnant, Chinese stimulus will help it revitalize.”
An insurance industry official said, “As it is the first time for a Chinese player to join the Korean financial market, it is tough to guess. However, it is expected that Anbang, with its huge capital, can expand its presence in the market by installing a branch network, holding various events to attract customers, scouting financial consultants and so on.”
Meanwhile, another official expected that Anbang’s influential power in the market would be limited. “There are already many foreign players in the market, and as Anbang is not a well-known brand for Koreans, it cannot be a game changer in the market.”
Tongyang Life, the eighth-largest life insurance company in Korea with assets of 20.4 trillion won, posted a record 164.4 billion won in net profit for 2014.
By John Choi (johnchoi@koreabizwire.com)
