News Life and Health13 Mar 2018

South Korea:Financial groups in takeover battle for insurer

13 Mar 2018

KB Financial Group has joined a takeover battle for ING Life Insurance Korea while Shinhan Financial Group recently started due diligence on the firm for a possible acquisition.

Some market watchers said that the rankings of leading financial groups can change depending on who is the new owner of ING Life Korea, which ranks sixth in terms of assets, reported Business Korea.

In February, Shinhan Financial started conducting due diligence on ING Life Insurance Korea. Shinhan Financial believes that it needs to strengthen its competitiveness in the insurance industry and has sought M&A deals with other insurance firms since last year. When the group acquires ING Life Korea and merges the latter with its subsidiary Shinhan Life Insurance, the merged insurer's capital can increase to KRW60 trillion (US$56 billion) and challenge NH Nonghyup Life Insurance, which is the fourth largest insurer with a capital of KRW63 trillion. The top three insurers currently are Samsung Life Insurance with KRW254 trillion, Hanwha Life Insurance with KRW109 trillion and Kyobo Life Insurance with KRW95 trillion.

Recently, Mirae Asset Life Insurance became the fifth biggest insurer in the nation as it completed its acquisition and integration with PCA Life Insurance.

KB Financial had negotiated with MBK Partners, the nation’s largest private equity firm and the shareholder with the largest stake in ING Life Korea, to acquire the insurer last year. However, the two failed to reach an agreement as the group said it would not pay more than KRW2.2 trillion for a 100% stake in ING Life Korea. KB Financial has started renegotiating with MBK Partners again since the end of last month.

ING Life Korea is considered the soundest insurer in terms of IFRS 17 and K-Insurance Capital Standard (ICS). The risk-based capital (RBC) ratio of ING Life Korea reaches 500% even with IFRS 17 applied. The RBC ratio of most domestic insurers is at the 200-300% level. There are even insurance firms with an RBC ratio of less than 150%, a minimum ratio recommended by the Financial Supervisory Service (FSS).


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