ING Sells Its Share of Pacific Antai

Published: Thu 31 Dec 2009

Wendy Blair

Netherlands-based ING Groep has decided to limit itself to one Chinese insurance joint venture by selling its half of the Pacific Antai Life Insurance Co. to China Construction Bank.

The move lets ING comply with the China Insurance Regulatory Commission's decision that foreign investors focus on one business in China. It already has ING Capital Life Insurance, a 50/50 partnership with Beijing Capital Group.

No financial details of the deal were released. It will not become official until it is granted regulatory approval but there is an expectation the transaction should be completed in the last half of next year.

ING became involved in Shanghai-based Pacific Antai when it acquired the Asian operations of U.S.-based Aetna in 2000. Pacific Antai was founded in 1998 to issue individual and group life insurance. It has about 300,000 customers.

The "transaction enables us to focus our efforts on building a stronger insurance platform through ING Capital Life to capture the opportunities presented in China," said Frank Koster, ING Insurance's Asia Pacific chief executive.

ING says it is No. 6 in the world based on revenue for its insurance division.

The transaction is a part of the company's ongoing restructuring program. With the impact of the global credit crisis and obtaining state aid last year in 2008, its goal is to shed up to $11.51 billion in assets and reducing its risks.

ING made a deal with the European Commission to sell some of its assets. The group intends to pay back $7.19 billion in state aid through sales of its insurance unit and other assets. Earlier it returned about $7.12 billion.

It already has sold nearly $5.5 billion in assets. There are plans to sell some of its Dutch mortgage operations and the online savings bank ING Direct USA. It also wants to sell joint ventures and has already done so with insurer ING Canada and an Australia wealth management company.

In the Pacific Antai deal, the impact on the China Construction Bank should be minimal because of the relatively small size of the joint venture. Pacific Antai's assets were valued at $512 million at the end of June.

This is the second time since September that a company has ceased a joint venture in China. Canadian-based Manulife Financial Corp. pulled out from one of its two ventures there.

The Regulatory Commission's rules were created to prevent cross-sector risk transfers. Banks no longer can offer any type of credit to insurers in which they posses stakes unless the circumstances are extraordinary.