Anbang will purchase US insurer

Will pay $26.80 a share for Fidelity & Guaranty Life

Anbang Insurance Group will buy US life insurer Fidelity & Guaranty Life for $1.57 billion, the companies announced on Monday.

The Chinese insurance company will pay $26.80 a share, and the acquisition will make Anbang one of the largest insurers by market share in fixed annuity products in the US, according to the company.

"This transaction will bring value to the customers of both Anbang and FGL," Anbang said in a statement. It said that the acquisition of Fidelity & Guaranty Life is consistent with Anbang's investment strategy, "which is focused on globalization".

The deal is pending regulatory approval and is expected to close in the second quarter of 2016.

Chris Littlefield, president and CEO at Fidelity & Guaranty Life, said the deal sets the company on a "good path for continued success".

"Our expertise and ongoing commitment to independent agents and the indexed life and indexed annuity insurance markets, coupled with Anbang's resources, will allow us to continue to grow our business and serve our customers."

Maurice Greenberg, CEO of CV Starr & Co Inc and former CEO of insurance giant AIG, said that the acquisition could give Anbang more of a US presence.

"There are a lot of reasons that a company buys another company - they want to have a footprint in the United States, and it wasn't a big price - about $1 billion, that's not a big price for an insurance company, but it's a small company - and it's up to them to make it work," he told China Daily in an interview on Monday.

Robert Hartwig, president and economist of the Insurance Information Institute, said that the insurance business is becoming "even more global in nature", with a large number of cross-border deals occurring in life insurance and reinsurance.

"This is part of a larger trend that we're seeing around the world," he said, "and particularly in respect to Asian investors, we're seeing investments and insurers as part of a larger effort to diversify portfolios among the Chinese investors. Many of the investment entities in China that are purchasing insurers are also purchasing such things like real estate."

Chinese companies are making a bigger play in US insurance. In May, Fosun International Ltd bought the remaining 80 percent of Ironshore Inc that it did not own for close to $2 billion.

Anbang is known in the US for its purchase of the Waldorf Astoria New York hotel, which it bought for $2 billion, but it has been acquiring more insurance companies in Europe.

Anbang entered the Dutch insurance market earlier this year with an acquisition of VIVAT following its purchase of Belgium's Fidea Assurances last year.

Hartwig said that there is a great deal of capital in the US insurance industry, and for many Chinese investors, they see the returns as "reasonably good."

It's a diversification opportunity, and there is an interest in having an increasing amount of money outside of China, he said.

"Historically, many larger Chinese investors have been concentrated more on the Chinese market, and I think as they look around the world and look at their peers, they understand that diversification is a good thing, particularly as China's economy continues to grow," he said.

amyhe@chinadailyusa.com

(China Daily USA 11/11/2015 page1)