Is an M&A Wave Coming from Woori Financial-Backed Insurance Companies?

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[Asia Economy Reporter Oh Hyung-gil] Woori Financial Group, which has successfully completed full privatization, is showing signs of bringing a wave of mergers and acquisitions (M&A) to the insurance industry. As a piece to complete its business portfolio, the acquisition of insurance companies is emerging as a strong possibility. With foreign insurance companies continuing to withdraw from the Korean market, there is interest in whether Woori Financial will follow the precedent of domestic financial groups emerging as new owners.

On the 23rd, Sohn Tae-seung, Chairman of Woori Financial Group, sent an email to employees congratulating them on the full privatization after 23 years and urged to "complete the group portfolio early." Since the group currently lacks securities and insurance companies, there is speculation that it will actively pursue M&A going forward.

In the insurance industry, potential candidates for sale include MG Insurance and KDB Life, which have investment ties with JC Partners and Woori Financial, as well as foreign insurance companies such as Dongyang Life, ABL Life, and AXA General Insurance.

Woori Financial invested 20 billion KRW when JC Partners acquired shares of MG Insurance in 2019. Currently, MG Insurance is undergoing a management normalization process through a paid-in capital increase, and Woori Financial is expected to be an invaluable supporter in this effort.

However, MG Insurance has faced serious management issues due to deteriorating performance over the past few years, making it a relatively less attractive asset compared to other financial holding companies’ acquisitions such as Orange Life (now Shinhan Life) or Prudential Life, according to industry consensus.

KDB Life is currently up for sale to JC Partners. Since signing a stock purchase agreement (SPA) with KDB Industrial Bank at the end of last year, the deal has yet to be finalized after more than a year. KDB Life’s profitability is also at a crossroads, with a cumulative net profit of 16.2 billion KRW for the first three quarters of this year, down 61.8% compared to the same period last year.

There has been a scenario where Woori Financial acquires MG Insurance, KDB Life, and Rich & Co, a corporate agency (GA) recently targeted for acquisition by JC Partners, but industry analysts believe this will not be an easy task.

Foreign insurance companies are also strong candidates. Dongyang Life and ABL Life have been considered representative potential assets as their Chinese major shareholder, Dajia Insurance, is undergoing privatization by Chinese financial authorities. It is expected that overseas insurance companies will be sold after Dajia Insurance’s privatization.

If Dongyang Life is acquired, it could instantly rise to the mid-tier in the industry. Dongyang Life posted a cumulative net profit of 249.8 billion KRW for the first three quarters, an increase of 131.5% compared to the same period last year, nearly doubling last year’s annual net profit. In July, Dongyang Life sold all of its 3.74% stake in Woori Financial Group.

French-based AXA General Insurance was in acquisition negotiations with Kyobo Life earlier this year, but the deal fell through. It is considered attractive because it holds a non-life insurance license, which is seen as more appealing amid the market downturn in life insurance.

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