ING Life extends sales offer to find buyer

ING Life Insurance will be extending its sales offer by the end of this week to fuel more potential bids for the insurer owned by Korean private equity MBK Partners following lower-than-expected buyout interests, according to news media citing investment banking sources.

MBK and ING could not be reached for comments. Morgan Stanley is the sales manager of MBK’s ING Life Insurance.

Only about three companies at home and abroad submitted their letters of intent for the insurer on Monday. MBK seeks to sell for about 3 trillion-4 trillion won ($2.5-$3.4 billion).

News reported that big financial companies such as KB Financial Group, Hanwha Life Insurance and Kyobo Life Insurance did not show interest in acquiring ING, with no other private equities eyeing to buy MBK’s insurer.

This leaves a very few local strategic players in the market with the financial clout to take over ING.

Industry sources and analysts say overseas players may end up mostly competing for the insurer under the regulatory and market circumstances.

“Korean financial companies will need to abide by a new accounting measure that require them to increase their capital, which could burden them should they seek to acquire assets,” an industry source said.

“Looks like companies from China could again seek to buy the Korean insurer, even though the market has to see where the deal leads to at the end.”

Already, word has it that Chinese companies such as China Life and Ping An Insurance will be competing to buy ING.

However, some sources cited by news media say that Anbang Insurance, a China-based automotive and property insurance company that has been on a global buying spree, may not be interested in ING. Anbang has purchased Waldorf Astoria Hotel, Strategic Hotels & Resorts and Fidelity & Guaranty Life overseas, while bought Tongyang Life Insurance, Allianz Life Insurance and Allianz Global Investors in Korea.

The market speculation of a Chinese company buying ING is further warranted as only a company with sufficient capital base could purchase ING facing increasing costs following regulatory obligations to pay out unpaid casualty insurance covering suicides.

ING is expected to incur costs over suicide insurance payouts after the Financial Supervisory Service noted the life insurer had the highest unpaid suicide insurance of 81.5 billion won, with the regulator warning the industry of the consequences should insurers fail to carry out payments to policyholders.

MBK Partners acquired ING for 1.8 trillion won through a special-purpose company with funds raised via syndicate loans from Hana Financial Investment, NH Investment & Securities and KB Kookmin Bank in 2013.

By Park Hyong-ki (hkp@heraldcorp.com)