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May 26, 2017

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CTBC Life Insurance to acquire stake in China insurer

TAIPEI--CTBC Life Insurance Co., the insurance arm of Taiwan's CTBC Financial Holding Co., has decided to acquire an almost 20 percent stake in China's ABC Life Insurance Co.

Both CTBC Financial and CTBC Life have obtained approval from their boards of directors for the deal, in which CTBC Life will spend 1.71 billion Chinese yuan (US$279 million) or about NT$8.4 billion to acquire a 19.99 percent stake in ABC Life.

After the acquisition, CTBC Life is expected to take one seat on the board of directors at ABC Life. In addition, it will have an independent director's seat and a supervisor's seat on the board.

CTBC Financial said that the planned acquisition will represent a milestone for the financial holding company, which is gearing up to extend its reach in the booming Chinese insurance market.

Currently, the Agricultural Bank of China, one of the mainland's largest lenders, owns a 51 percent stake in ABC Life. The Chinese bank acquired a majority stake in the insurer in December 2012.

After the Agricultural Bank of China bought into ABC Life, the insurer has enjoyed significant growth in market share and income from insurance premiums, CTBC Financial said. In 2013, ABC Life's total income from premiums at 7.23 billion yuan rose 74 percent from a year earlier. The Chinese insurer also jumped to a ranking of 16th largest life insurance company in China in 2013, up from 23rd place in 2012.

In the first six months of this year, ABC Life's total premium income rose a whopping 53 percent over the same period of last year to 6.26 billion yuan.

CTBC Financial President Daniel Wu said there was still enormous room for growth in the Chinese insurance market, even though it has been developing for years. His company, he said, will take advantage of business ties with ABC Life and the Agricultural Bank of China to benefit from an uptrend in the mainland market.

This year, ABC Life opened three more major province-level branches, bringing the total number to 18. In addition, the Chinese insurer has a total of 279 sales offices in the China market and can also utilize 24,000 sales offices belonging to the Agricultural Bank of China, all of which will help the company post significant growth, CTBC Financial said.

CTBC Financial said it has NT$10 billion in funds available for raising investments in ABC Life over the next few years, as the Chinese firm aims to expand its operations in the huge China market.

The deal is pending approval from the Financial Supervisory Commission (FSC), Taiwan's top financial regulator. The FSC said that it will not take too long to review the acquisition application.

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