Kyobo Life Insurance has acquired SBI Savings Bank, the leading savings bank in the industry, and is now pursuing acquisitions of non-life insurance companies and capital firms. Kyobo Life Insurance is reportedly prioritizing the acquisition of a non-life insurance company, with AXA General Insurance, a former subsidiary, emerging as a strong candidate.
According to the insurance industry on the 30th, Kyobo Life Insurance has decided to acquire SBI Savings Bank to transition into a holding company and is now pursuing acquisitions of non-life insurance and capital firms. Kyobo Life Insurance plans to invest 900 billion won to gradually acquire 50% plus one share of SBI Savings Bank by October 2026. Considering non-voting treasury stocks, Kyobo Life Insurance's voting equity stake exceeds 58.7%.
Kyobo Life Insurance has subsidiaries including Kyobo Securities, Kyobo Asset Trust, and Kyobo AXA Asset Management, but does not have a non-life insurance company or capital firm. The subsidiary Kyobo Life Planet is also a life insurance company. Acquiring a non-life insurance company and a capital firm is necessary to diversify its portfolio and transition into a holding company.
Kyobo Life Insurance is reportedly prioritizing the acquisition of a non-life insurance company. The available options in the market include Lotte Insurance and MG Insurance. It is said that JKL Partners, the largest shareholder of Lotte Insurance, is hoping for a sale price of over 2 trillion won.
Kyobo Life Insurance views the valuation of Lotte Insurance as expensive. There is also a burden because substantial funds will need to be invested for management normalization. By the end of last year, Lotte Insurance's core capital was -27.5 billion won, a dramatic drop compared to the previous quarter (198.8 billion won). The solvency ratio, a key indicator of soundness, is -1.56%. If the financial authorities set the standard at 70%, capital will need to be increased to raise the indicator.
The possibility of acquiring MG Insurance is also low. The largest shareholder of MG Insurance is JC Partners, a private equity fund, but it has been designated as a distressed financial company, and the Korea Deposit Insurance Corporation is overseeing its sale. The financial authorities are considering bankruptcy or contract transfer as a means of resolving MG Insurance rather than resale. Kim Byeong-hwan, chair of the Financial Services Commission, noted on the 28th during a National Assembly full committee meeting that he would prepare a reasonable proposal and present it as early as next month. Kyobo Life Insurance had previously considered acquiring MG Insurance before it was designated as a distressed financial company, but did not pursue the acquisition.
Some analysts predict that Kyobo Life Insurance may pursue the acquisition of AXA General Insurance, a potential target. AXA General Insurance reported a net profit of 1.9 billion won at the end of last year, a decrease of 89.1% compared to the previous year. However, the solvency ratio, a key indicator of soundness, is 213%, exceeding the standard of 200% for quality insurers.
The fact that AXA General Insurance was once a subsidiary of Kyobo Life Insurance also serves as a positive factor for acquisition. AXA General Insurance was launched in 2000 as Korea Direct, and was sold to Kyobo Life Insurance the following year, changing its name to Kyobo Automobile Insurance. Subsequently, Kyobo Life Insurance sold the company to the AXA Group in 2007.
Kyobo AXA Asset Management, in which Kyobo Life Insurance holds 50% equity, is also a joint venture between Kyobo Life Insurance and the AXA Group. This company was launched in 1988 as Kyobo Investment Advisory but changed its name to Kyobo AXA Asset Management in 2008 and has continued operations to this day.
An insider from the insurance industry stated, “Lotte Insurance was mentioned to be valued at 2 to 3 trillion won, but the situation has changed now,” adding, “For the possibility of acquisition to increase, the price needs to drop based on a rational evaluation of the market.” In response, a representative from Lotte Insurance stated, “The solvency ratio for core capital has yet to reach an official standard or formulation by the financial authorities, so it is somewhat premature to definitively interpret the necessity for capital expansion,” adding, “There are no issues with the operational situation or fundamentals.”