Anbang to buy S. Korean ops of Allianz

Chinese insurer's overseas push resumes in its own industry after quitting Starwood bid

BEIJING • China's Anbang Insurance Group yesterday said it has signed a deal to buy German insurer Allianz's South Korean units for an undisclosed sum.

The deal extends an overseas acquisition push that has made Anbang, sitting on US$253 billion (S$343 billion) in assets, one of the biggest corporate buyers from China in the past few years. After last year's headline-grabbing US$1.95 billion purchase of New York's Waldorf Astoria Hotel, it agreed last month to buy Strategic Hotels & Resorts from Blackstone Group for US$6.5 billion.

However, it pulled out of the US$14 billion bid for Starwood Hotels & Resorts Worldwide, raising questions about corporate China's appetite for Western assets amid jitters over the country's economy.

The Chinese insurer will purchase Allianz Life Insurance Korea and Allianz Global Investors Korea, according to a joint statement that did not disclose the value of the deal.

The sale by the Munich-based insurer comes after Allianz CEO Oliver Baete put the life insurance unit in South Korea under review as part of a push to focus on the most profitable businesses and release capital from less-profitable ones.

The deal is Anbang's second involving a South Korean insurer and marks a refocus on its core business after a string of high-profile real estate acquisitions.

It bought a controlling stake in South Korea's Tongyang Life Insurance for 1.13 trillion won (S$1.3 billion) last year. In November, it agreed to buy HRG Group's Fidelity & Guaranty Life for about US$1.6 billion to expand in the US and, earlier last year, it won approval to purchase Dutch insurer Vivat.

In 2014, it acquired Antwerp, Belgium-based insurer Fidea.

Allianz expects to book a "low two-digit million-euro to mid- three-digit million euro" charge once the deal closes following regulatory approval, spokesman Thomas Atkins said.

Allianz took a €244 million (S$376 million) loss on the South Korean life and health insurance unit last year on business written in the past. In the fourth quarter, Allianz wrote down €171 million, wiping out all of the life goodwill it had for its Asian operations. Most of that was for the South Korean life unit.

Insurance firms in Europe are grappling with stricter regulatory capital requirements, low interest rates that hurt their investment income and subdued prices in some of their markets.

Still, Allianz is seeking to achieve annual earnings per share growth of 5 per cent on average from 2016 to 2018. It is also targeting a return on equity of 13 per cent, adjusted to exclude unrealised capital gains on bonds and other items, by 2018.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on April 07, 2016, with the headline 'Anbang to buy S. Korean ops of Allianz'. Print Edition | Subscribe