Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
CEO Watch Kyobo chairman urged to close feud with investors
By Anna J. Park
Kyobo Life Chairman Shin Chang-jae / Courtesy of Kyobo Life Insurance
By Anna J. Park
Kyobo Life Chairman Shin Chan-jae has been leading the insurer over the past two decades since he took the helm back in 1999. He was tapped again by shareholders at the end of February to lead his eighth straight term as the firm's chairman starting March 27.
The son of the firm's founder Shin Yong-ho, he has been considered to have led the firm's innovations and long-term growth, making the company one of the top three insurers in Korea with over 5 million customers.
The chairman now faces daunting tasks ahead this year, and one of the most pressing matters is to resolve a continuing feud with its key investors, as well as to lead the firm's long-delayed initial public offering (IPO) process.
The Kyobo Life investor consortium is led by Hong Kong-based Affinity Equity Partners, along with Baring Private Equity Asia, Singapore's GIO and IMM Private Equity, as they acquired a 24.01 percent stake in Kyobo Life back in 2012 for 1.2 trillion won ($970 million), at 245,000 won per share. According to the consortium, the purchase contract included a put option of reselling the acquired shares to Chairman Shin, in case the insurer failed to complete its initial public offering (IPO) by 2015.
With Kyobo Life's decision to delay going public amid deteriorating market conditions, the consortium said they exercised the put option of reselling the shares in late 2018, at the price of 409,912 won per share. The share valuation was conducted by Deloitte Anjin.
However, Shin voiced his dissatisfaction with the estimation, claiming the appraisal was two to three times higher than fair market value, which led the consortium to file an arbitration against the chairman at the International Council for Commercial Arbitration (ICC) in March 2019. The arbitration court's final decisions are expected to come out as early as the end of this year or sometime next year.
Against this backdrop, Kyobo Life filed a complaint against Deloitte Anjin with the U.S. Public Company Accounting Oversight Board earlier this month, on the grounds that the accounting firm did not apply “sound and professional practice,” and that they violated fair standards when they conducted the share appraisal.
With Shin owning a 33.78 percent stake in Kyobo Life, the firm with over 60 years of history faces an uncertain future regarding its management rights, depending on the final decision by the arbitration court.
Whatever the ICC's final decision may be, the Korean insurance company also needs to push on with its much-delayed IPO process, as the firm must prepare itself by securing a huge sum of capital for the upcoming implementation of a new set of global financing reporting standards (IFRS 17), which will come into force in 2023.
Yet overall declines of insurance stocks amid the COVID-19 crisis as well as the low-growth environment serve as further obstacles to the firm's late entry into the stock market.
Against all odds, the company raked in 521 billion won in net profit last year, up 7.4 percent from the previous year. The performance is particularly impressive given that the total net profits by all insurers in Korea saw a 22.8 percent decrease last year.