China’s Anbang buys Dutch financial major SNS Reaal’s insurance arm

Leading Chinese insurance group Anbang has agreed to acquire state-owned Dutch banking and insurance major SNS Reaal NV's insurance business, Vivat Verzekeringen, for approximately €150 million ($171 million), aiming to expand its insurance business globally.

Under the terms of the deal, Anbang will also inject €770 million to €1 billion to improve Vivat's solvency and assume €552 million of Vivat's debt, according to NL Financial Investments, which manages the state's investments in companies nationalised during and after the euro zone crisis.

In December, the Chinese company had acquired Belgium's Delta Lloyd Bank for €219 million and two months earlier its local insurance peer Fidea Assurances, fostering its global ambitions.

Anbang is a major Chinese insurance provider with assets of over 700 billion Chinese yuan ($112 billion) covering property and casualty insurance, life insurance, health insurance, pensions, asset management, financial leasing and banking. It has around 30,000 employees and has around 3,000 business establishments in China serving more than 20 million customers.

''This transaction fits Anbang's strategy of international diversification and development. We have the capacity to strengthen Vivat's solvency and further build on the company's already strong position in the Netherlands,'' Anbang said.

''We believe that Anbang can benefit from the ongoing consolidation in the Dutch insurance sector,'' it further stated.

Netherlands-based SNS was the fourth-largest financial group in the country prior to its nationalisation in 2013, when it suffered losses on its property portfolio.

In December, global credit rating agency Moody's Investors Service downgraded the insurance operations of the Dutch company on the back of declining profitability and deteriorating capitalisation. SNS Reaal's insurance operations reported a net loss of €337 million for the first three quarters of 2014.

Welcoming the Chinese investment in the Dutch insurance sector, SNB's chairman Gerard van Olphen said: ''Through the sale, Vivat will fulfil an important role in further expanding the insurance activities of Anbang in the Netherlands.''

''With the separation of Propertize on 30 December 2013, the current sale of Vivat and the forthcoming transfer of SNS Bank to the Dutch State, we are moving on to the final stage of the restructuring process of SNS Reaal,'' he further stated.

The transaction is expected to close in the third quarter of 2015, subject to customary conditions, regulatory approvals and certain other conditions. The capital injection will depend on the equity price of Vivat between 31 December 2014 and 30 June 2015, the prospective date of the sale.

On successful completion of the sale, SNS Reaal will function as a standalone bank.

SNS said that it would not resume interest payments on about €500 million worth of subordinated bonds till the time the transaction is completed.