Life Insurance Industry's 'Big 4' Emergence Imminent... Shinhan and Orange Merger Nears Completion (Comprehensive)

Two-Year Integration Process
Application for Final Approval to Financial Services Commission
'Shinhan Life' Launch in July

[Asia Economy Reporter Oh Hyung-gil] The two-year integration process between Shinhan Life Insurance and Orange Life, which heralds the birth of a new ‘Big 4’ in the life insurance industry, has entered its final stage.

They are expected to receive merger approval from financial authorities as early as mid-this month and make a fresh start as ‘Shinhan Life’ on July 1. Both companies have achieved strong performances consecutively last year and this year, signaling the emergence of a major life insurance company.

According to financial authorities and the insurance industry on the 4th, the two companies applied for final approval for the merger to the Financial Services Commission on March 16 and are currently awaiting the final decision from the Commission. Insurance company mergers are required to be processed within 60 days after the final approval application, so a final conclusion is expected next week.

The insurance industry anticipates that the merger approval between Shinhan Life and Orange Life will be granted without difficulty. The financial authorities review whether the applying insurance companies’ capital adequacy ratios and liabilities are appropriate, and comprehensively examine solvency ratios and the suitability of major shareholders.

In particular, the dominant view is that there will be no surprises as the sanction variable concerning Shinhan Financial Group (Shinhan FG), the major shareholder of Shinhan Life, has been resolved.

Regarding the Lime incident, Shinhan Financial was preliminarily notified of a severe sanction of ‘institutional warning,’ but at the Financial Supervisory Service’s disciplinary committee held last month, the level was finally lowered by one step to ‘institutional caution,’ easing the burden of the major shareholder suitability review.

Seong Dae-gyu, CEO of Shinhan Life... Spotlight on Leadership of the Integrated Corporation

Shinhan Life and Orange Life have been conducting full-scale integration efforts since January 2019, after Orange Life became a subsidiary of the group, by activating the ‘New Life Promotion Committee.’

To minimize the burden of the merger, they chose to apply integration projects by department, starting with ICT and finance. Last month, they also secured new talent by conducting recruitment for the first batch of new employees at Shinhan Life.

The insurance industry has anticipated that Shinhan Life and Orange Life, each having differentiated strengths in sales channels such as telemarketing (TM) and financial consultants (FC), as well as in key products like health insurance and variable insurance, will be able to generate synergy through integration.

Also, by early on appointing Seong Dae-gyu, CEO of Shinhan Life, as the CEO of the integrated corporation, they minimized confusion regarding management leadership. CEO Seong is an insurance expert who has experience with financial authorities, research institutions, and private life insurance CEOs, and has been leading the practical integration work alongside Lee Young-jong, Vice President of Orange Life. Vice President Lee previously handled the integration work of Shinhan and Choheung Bank.

Shin Yong-byeong, Chairman of Shinhan Financial Group, stated, "We will combine the capabilities of both companies in new product development from the customer’s perspective, enhancing digital convenience, and consumer protection to provide differentiated value to customers who transact with Shinhan," adding, "Through Shinhan’s unique success DNA that turns crises into opportunities, we will nurture a top-tier insurance company that shakes the industry’s landscape."

The launch of the integrated corporation ‘Shinhan Life’ is also expected to change rankings in the life insurance industry.

As of the end of last year, the total assets of Shinhan Life and Orange Life amounted to KRW 36.7592 trillion and KRW 34.7504 trillion, respectively. This ranks them fourth after Samsung Life (KRW 309 trillion), Hanwha Life (KRW 127 trillion), and Kyobo Life (KRW 115 trillion). In terms of net income, they recorded KRW 168.6 billion and KRW 227.5 billion, respectively, surpassing Hanwha Life (KRW 196.9 billion) and Kyobo Life (KRW 382.8 billion).

The strong performance trend has continued this year. Shinhan Life’s net income for the first quarter of this year was KRW 72.8 billion, an 83% increase compared to the same period last year. It is evaluated that they succeeded in adjusting their portfolio mainly to protection-type insurance through a sales strategy focused on profitability-advantaged products.

Orange Life also achieved a net income of KRW 107.7 billion, an 81% increase compared to the same period last year. Despite the COVID-19 pandemic and sluggish insurance market conditions, both companies have grown over 80%, raising expectations for synergy from the integration.

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