Prudential Financial Weighs Buying Stake in China's ABC Life, Sources Say

  • In Business
  • 2022-09-23 01:19:18Z
  • By Bloomberg

(Bloomberg) -- Prudential Financial Inc. is considering buying a minority stake in ABC Life Insurance Co., the insurer controlled by Chinese state-owned Agricultural Bank of China Ltd., according to people familiar with the matter.

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The US insurer is working with a financial adviser as it evaluates making an offer for the stake, the people said, asking not to be identified because the matter is private. The stake sale in Beijing-based ABC Life has also drawn interest from other financial institutions, the people said.

The investors who own about 49% of closely-held ABC Life are exploring a sale of a minority stake, Bloomberg News has reported. A transaction could value the whole life insurance business at about $3 billion to $4 billion, people familiar with the matter said at the time.

The size of the stake that may be sold could range from 20% to 49%, and could also include a so-called bancassurance deal, the people have said. In a bancassurance partnership, an insurer such as ABC Life is permitted to sell its products in a bank's branches and other retail channels for a set period.

A transaction would help Newark, New Jersey-based Prudential Financial expand in the world's second-largest economy, the people said. Its activities there include a joint venture with a subsidiary of state-owned China Everbright Group and a venture with Chinese investment firm Fosun Group, according to its website.

Prudential Financial shares fell nearly 1% on Thursday in New York, closing at their lowest level in more than two months. They have dropped about 16% this year, valuing the company at around $34 billion.

Talks are ongoing and could still fall apart, the people said. Other bidders could also emerge, the people said. A representative for Prudential Financial declined to comment, while a representative for ABC Life didn't immediately respond to a request for comment.

ABC Life offers services including life, health and accident insurance, according to AgBank's latest annual report. Its total assets as of the end of last year reached 125.6 billion yuan ($17.8 billion). Its total premium income last year climbed to 30.1 billion yuan, an 11.3% increase over 2020. ABC Life was known as Jiahe Life Insurance Co. before AgBank acquired a 51% stake in 2012.

Its minority shareholders include Beijing Zhongguancun Science City Construction Holdings Co., Tibet Tengyun Investment Management Inc. and China New Era Co., ABC Life's website shows.

(Updates with share performance in sixth paragaph.)

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