As China’s Anbang Insurance has completed the acquisition of Allianz Global Investors Korea Limited on September 26, all eyes are on whether it can become the largest foreign banking investment firm in South Korea.
According to investment banking industry sources on September 27, the Financial Services Commission (FSC) of Korea finally approved China-based Anbang Insurance to change a major shareholder for the acquisition of Allianz Global Investors Korea on September 25. Accordingly, Anbang Insurance has become the major shareholder of Allianz Global Investors Korea with a 100 percent stake. No purchase price was disclosed.
Anbang Insurance signed a stock purchase agreement with Germany’s Allianz Group in April last year to take over Allianz’s South Korean businesses – Allianz Life Insurance Korea and asset management firm Allianz Global Investors Korea. Allianz Life changed its name to ABL Life in August. However, the acquisition of Allianz Global Investors Korea had been delayed for over a year unlike Allianz Life.
As China continues its economic retaliation over the deployment of the U.S. THAAD missile defense system in South Korea and Anbang Insurance Chairman Wu Xiaohui was arrested, China’s financial authorities are expected to postpone approval. Recently, some foreign media said there are rumors that the Chinese government ordered companies which make a massive investment overseas to sell their overseas assets and Anbang Insurance is expected to be affected.
In a given situation, Anbang Insurance obtained approval from China and South Korea for the acquisition of Allianz Global Investors Korea, removing the rumors and concerns. However, some say that the delayed acquisition lowered the competitiveness of Allianz Global Investors Korea and Anbang Insurance bought the company at a bargain price.
Meanwhile, Anbang Insurance has been aggressively expanding its size by taking over Allianz Global Investors Korea this year after Tongyang Life Insurance and Tongyang Asset Managementin 2015 and Allianz Life (ABL Life) in 2016.
According to the Korea Life Insurance Association, the sales of the initial premium of Bancasurance run by 25 life insurance firms amounted to 3.87 trillion won (US$3.38 billion) as of the end of June this year. The sales of the initial premium of ABL Life and Tongyang Life reached 907.4 billion won (US$792.84 million), or 23.48 percent, and 811.9 billion won (US$709.39 million), or 20.01 percent, respectively. The combined sales of the two companies accounted for 44.49 percent of the total.
Anbang Insurance expects that its experiences of investing in ABL Life and Tongyang Life will be an advantage for Allianz Global Investors Korea in the future. A South Korean official of Anbang Insurance said, “We will operate two life insurance companies and two asset management companies in the South Korean market and contribute to the growth of the domestic financial industry in the future.”