Financial Soundness Crisis Averted by Hana and MG Insurance... Second Half Showdown (Comprehensive)

Hana to Pursue Capital Increase of Over 100 Billion KRW
RBC Ratio Expected to Rise to 200% Range

MG to Expand Capital After Major Shareholder GP Change
In-House Innovation and Profit Improvement Planned 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 hurdle of capital increase side by side, they have officially started 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 through a method below the par value, laying the foundation for capital expansion. The new share price is about 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 participation scale in this capital increase at the board meeting scheduled for the 23rd of this month.

The scale of Hana Insurance's paid-in capital increase is estimated by the industry to be between 70 billion and 100 billion KRW. Since the Korea Teachers' Credit Union, which holds 30% of Hana Insurance's shares, has not yet decided whether to participate, there is a possibility that the scale may increase further.

It is expected that the capital increase will 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 to rise to the 200% range once the 100 billion KRW capital increase is completed.

The RBC ratio is an indicator of an insurer's financial soundness, showing whether it can pay insurance claims to consumers. The Insurance Business Act mandates maintaining it above 100%, and the Financial Supervisory Service recommends maintaining it above 150%.

Hana Insurance plans to use the capital secured through the paid-in capital increase to invest in expanding 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. Additionally, an ICT Strategy Team was created to enhance digital synergy.

Through the reorganization, the previous structure of one Senior Vice President, five divisions, four offices/departments, 25 teams, and six claims departments was changed to one General Headquarters, five main divisions, four offices/departments, 31 teams, and five claims departments. Vice President Kim Jae-young oversees business operations and directly manages the Digital Headquarters.

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), was changed from Zabez Partners to JC Partners to raise funds. Accordingly, MG Insurance is estimated to have grown its RBC ratio to the 220% range by the end of the first half of this year through a capital increase of about 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 sales 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, and by strengthening sales capabilities through face-to-face sales and bancassurance.

MG Insurance has recently strengthened its product portfolio by introducing comprehensive insurance covering over 130 guarantees including injury, illness, nursing care, expense loss, and liability, as well as a direct driver’s insurance with a monthly premium of 2,900 KRW.

An industry insider said, "Having resolved financial soundness issues, they now have the conditions to fully focus on management," adding, "The second half of the year is a time to address challenges such as improving organizational health and performance."

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