Financial Soundness Crisis Averted by Hana and MG Insurance... Launching a Bold Move in the Second Half

Hana Plans 100 Billion Won Capital Increase
RBC Ratio Expected to Rise to 200% Range

MG to Expand Capital After Major Shareholder GP Change
In-House Innovation and Profit Improvement Scheduled for Second Half

[Asia Economy Reporter Oh Hyung-gil] MG Insurance and Hana Insurance, which had previously faced a 'red light' warning on financial soundness, are preparing for a complete transformation in the second half of this year. Having overcome the critical hurdle of capital increase side by side, they have officially launched efforts to normalize management under new leadership.

According to the insurance industry on the 22nd, Hana Insurance held a board meeting the day before and finalized a paid-in capital increase plan through a method below par value, laying the foundation for capital expansion. The new share price is approximately 4,100 KRW per share, marking the first paid-in capital increase since its acquisition by Hana Financial Group in February. Hana Financial Group is expected to decide the specific scale of its participation in this capital increase at the board meeting scheduled for the 23rd of this month.

The industry estimates that Hana Insurance's paid-in capital increase will be in the range of 70 billion to 100 billion KRW. Since the Korea Teachers' Credit Union, which holds a 30% stake in Hana Insurance, has not yet decided on its participation, there is potential for the scale to increase further.

The capital increase is expected to provide an opportunity to resolve financial soundness issues. As of the end of March, Hana Insurance's Risk-Based Capital (RBC) ratio stood at 128.3%. Although it was below the financial authorities' recommended level of 150%, it is estimated that the RBC ratio will rise to the 200% range once the 100 billion KRW capital increase is completed.

Additionally, Hana Insurance plans to use this capital for investment to expand its digital business. Since its acquisition by Hana Financial Group, it has officially transitioned into a comprehensive digital-based non-life insurance company. Starting with automobile insurance, it plans to introduce travel, leisure, and specialized insurance products through the group platform.

Kwon Tae-gyun, CEO of Hana Insurance appointed in May and formerly from Hana Financial Group, recently carried out an organizational restructuring to strengthen digital capabilities. A Digital Headquarters was established, operating three permanent teams including the Digital Strategy Team and Digital Promotion Team, as well as project-based 'Agile' teams. An ICT Strategy Team was also created to enhance digital synergy.

Earlier in April, MG Insurance, which improved its financial soundness by successfully increasing capital for the first time in two years, is also focusing on management normalization in the second half of the year. The major shareholder, the operating company (GP), changed from Jabez Partners to JC Partners to secure funding. Accordingly, MG Insurance is estimated to have raised its RBC ratio to the 220% range by the end of the first half of this year through a capital increase of around 200 billion KRW.

Park Yoon-sik, who moved from Hanwha Insurance to MG Insurance in March, has completed executive and management replacements as well as organizational restructuring and is now leading the selection of internal innovation tasks.

It is understood that the intention is to review key tasks such as loss ratio management, core business strategies, and agent organization operations in each headquarters. The plan is to improve profitability by managing loss ratios in major business sectors such as automobile and long-term insurance, as well as strengthening sales capabilities through face-to-face sales and bancassurance.

An industry insider said, "Having resolved financial soundness issues, the companies are now equipped to fully focus on management," adding, "The second half of the year is a time to address challenges related to both organizational health and performance improvement."

This content was produced with the assistance of AI translation services.