Kyobo Acquires Insurtech Company... Will It Become a Successful Case of Digital Transformation? (Comprehensive)

Kyobo Lifeplanet Acquires Fortress Innovation
No Issues Expected with Regulatory Approval Avoiding Kyobo Life's Severe Disciplinary Action

[Asia Economy Reporter Oh Hyung-gil] Kyobo Life Planet, a subsidiary of Kyobo Life Insurance, has acquired an insurtech (a combination of insurance and technology) company. This is the first case since the government allowed insurance companies to own fintech subsidiaries three years ago. Attention is focused on whether this will become a new success story in Kyobo Life Insurance's digital transformation management strategy, which is being accelerated.

According to the insurance industry on the 30th, Kyobo Life Planet resolved at the board meeting held on the 24th to add the financial simulation solution company 'Fortress Innovation' as a subsidiary. The investment amount was 1.98 billion KRW, securing a 60% stake by Kyobo Life Planet. Established in 2013, Kyobo Life Planet is an internet-only life insurance company wholly owned (100% stake) by Kyobo Life Insurance.

Fortress Innovation was established in October 2013 and has been engaged in businesses such as asset risk management consulting for financial and insurance companies and providing large-scale financial simulation solutions based on GPU parallel technology. In addition, it is also responsible for asset risk management consulting for insurance companies ahead of the introduction of the new International Financial Reporting Standards (IFRS17).

In 2015, it delivered a dynamic hedge system to Kyobo Life Insurance, and in 2018, it was involved in building Kyobo Life Planet's IFRS17 system.

Kyobo Life Planet plans to finalize the acquisition after reporting the subsidiary ownership to the Financial Services Commission.

A Kyobo Life Planet official explained, "This is to secure the driving force for digital transformation by acquiring digital specialists."

Recently, as the major shareholder Kyobo Life Insurance avoided severe disciplinary action in the comprehensive audit results, it is expected that there will be no significant issues in the regulatory approval process for owning a grandchild company in insurtech.

Since 2019, Kyobo Life Insurance has operated the open innovation platform Innostage, building a collaborative ecosystem with various startups. At the end of last year, it carried out an organizational restructuring to expand and reorganize the Digital Transformation Support Office, and in August, it launched various programs to jointly select and nurture startups with Hanyang University’s Startup Support Group and to create an industry-academia cooperation startup ecosystem.

Recently, it has accelerated digital transformation by building a data management and analysis system called the 'Business Intelligence Visualization Portal.' The aim is to fundamentally innovate the way of working, seek innovation in digital-based product services, streamline work processes, and discover new business models.

In particular, this case is attracting attention as the first acquisition of fintech in the insurance industry.

Although insurance companies have been allowed to acquire fintech subsidiaries, there has been no case of an insurance company acquiring an insurtech company. In July 2019, the Financial Services Commission amended the Enforcement Decree of the Insurance Business Act to provide a basis for insurance companies to invest in fintech subsidiaries to revitalize insurtech.

Although the insurtech sector has emerged as a new growth engine in the insurance industry, acquisitions have not been active because the business growth potential and stable profitability have not been verified.

An insurance industry official said, "Expanding externally through acquisitions can be a new option as much as strengthening internal capabilities for digital innovation," adding, "Active partnerships with insurtech companies that possess excellent technology can be a win-win strategy for both."

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