Hana Insurance, Plans to Sell Office Building Just One Year After Launch

Scheduled Selection of Sale Advisory Firm
Promotion of Financial Improvement and Growth Engine Investment

Hana Insurance Building (Former The-K Insurance Building Bird's-eye View)

[Asia Economy Reporter Oh Hyung-gil] Hana Insurance is planning to sell its office building. The strategy is to secure growth momentum through proactive financial improvement and investment in IT infrastructure using the proceeds from the sale.

According to the insurance industry on the 29th, Hana Insurance plans to select an advisory firm on the 30th of this month to promote the sale of its office building in Jongno-gu, Seoul. The Hana Insurance building located in Inui-dong, Jongno-gu, is a building with 3 basement floors and 12 above-ground floors, completed in 1982 and remodeled in 2018. Hana Insurance intends to start the sale process by discussing sale plans and conditions, beginning with a rights analysis of the building through the advisory firm.

It is expected that, similar to previous insurance company office building sales such as Lotte Insurance, the sale will proceed through a 'sale and leaseback' method rather than a simple sale.

Hana Financial Group acquired 70% of The-K Non-Life Insurance, previously held by the Teachers' Pension, for 77 billion KRW in February last year and officially launched Hana Insurance in June last year. The company declared a transformation from a business structure centered on automobile insurance to a digital-based comprehensive non-life insurance company.

Since joining the group, Hana Insurance's performance has gradually improved. After recording a net loss of 10.4 billion KRW in 2018, it continued to post losses of 44.5 billion KRW in 2019 and 6.8 billion KRW in 2020. However, this year, it achieved a turnaround with a net profit of 1.6 billion KRW in the first quarter, laying the foundation for business normalization.

The market expects that securing funds through this office building sale will have a positive impact on financial improvement. Hana Insurance's Risk-Based Capital (RBC) ratio stood at 235.1% at the end of the first quarter, down 8.1 percentage points from the end of the previous year.

The capital expansion burden due to the new solvency regime (K-ICS) to be implemented in 2023 can also be alleviated. Under K-ICS, the reserve requirement ratio for owned real estate is expected to rise from the current 6-9% level to as high as 25%.

For these reasons, several insurance companies have been conducting building sales for years. In March, Lotte Insurance sold its Namchang-dong office building to Capstone Asset Management for 224 billion KRW through a 'sale and leaseback' deal, and Shinhan Life also sold its Shinhan EL Tower office building in Jung-gu, Seoul, to Shinhan REITs Management for 280 billion KRW last September and continues to lease it.

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