(Adds background on Chinese lender)
TAIPEI Aug 29 (Reuters) - Taiwan’s CTBC Financial Holding Co Ltd, one of the island’s largest financial groups, said on Friday its insurance arm would take a stake in the insurance unit of China’s Agricultural Bank of China in a deal worth 1.71 billion yuan ($278 million).
CTBC Life will take a 19.99 percent stake in ABC Life Insurance Co, the parent financial holding company said in a statement.
The planned tie-up would be the second between insurance companies in Taiwan and China, marking another step in cross-strait investments in the insurance sector.
In 2010, Taiwan’s China Life Insurance Co purchased a 19.9 percent stake in Pacific Antai Life Insurance Co, in which China Construction Bank Corp ultimately held a 51 percent ownership after the deal.
CTBC Financial said the deal would allow the Taiwanese financial group to access insurance channels in China. In the future, the cooperation between the insurers could deepen in line with regulations that govern Taiwan and China investments.
CTBC Life will have one board member seat, and appoint an independent board member at the Chinese insurance company. It will also have a supervisor seat, CTBC Financial said.
ABC Life Insurance is 51 percent owned by Agricultural Bank of China, one of the mainland’s largest state-controlled lenders.
The deal is pending regulatory approval from Taiwanese and Chinese regulatory authorities, CTBC Financial said.
1 US dollar = 6.1430 Chinese yuan Reporting by J.R. Wu; Editing by Mark Potter