SEOUL Korea Life Insurance Co Ltd (088350.KS) is unlikely to pursue its planned purchase of Dutch insurer ING's (ING.AS) Southeast Asian life insurance operations, a spokesman for the Korean firm's parent Hanwha Group said on Monday.
The decision could deal a blow to the Dutch financial group's Asian divestment process, in which it is selling Asian life insurance and asset management operations in two separate transactions.
The Dutch bank and insurer, which expects to bring in a total of $7 billion in what could be Asia's biggest insurance M&A deals, plans to use the proceeds to help repay a bailout it received from the Dutch government during the 2008 financial crisis.
Korea Life had competed fiercely to acquire ING's Southeast Asian life insurance business, but Hanwha Group appeared to be in a disadvantageous position, said Chang Il-hyung, a spokesman for Hanwha Group, without giving details.
Korea Life was "likely to drop the bid", the spokesman said.
Hanwha Group's chairman Kim Seung-youn was jailed last week after receiving a four-year sentence for breach of trust.
Apart from Korea Life, pan-Asian insurer AIA Group Ltd (1299.HK), Canada's Manulife Financial Corp (MFC.TO) and Japan's largest listed life insurer Dai-ichi Life Insurance (8750.T) are among the companies which have expressed interest in buying ING's Southeast Asian operations.
ING's Hong Kong, Malaysia and Thailand operations, with an estimated value of about $2.5 billion, have attracted the greatest interest. Potential deals, however, could be hampered by foreign ownership rules in Malaysia and Thailand which ban foreign insurers from owning 100 percent of domestic insurers.
Hanwha Group, South Korea's tenth largest conglomerate, has appointed the group's head of management and planning Choi Kum-am to coordinate business management in Kim's absence.
Hanwha remains committed to finalized or nearly-finalized deals such as Hanwha Chemical's (009830.KS) possible acquisition of German solar group Q-Cells QCEG.DE, the spokesman said.
Hanwha's bids in deals further from completion, however, could suffer setbacks without Kim's leadership, a source within the group told Reuters, speaking on condition of anonymity.
(Reporting by Joyce Lee; Writing by Denny Thomas; Editing by Daniel Magnowski)