Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
KDB Life fails to find new owner for fifth time as Hana withdraws
KDB Life Insurance headquarters in Seoul / Courtesy of KDB Life Insurance
By Lee Yeon-woo
Hana Financial Group has announced its decision to withdraw from the acquisition of KDB Life Insurance. This marks the fifth time that the insurance subsidiary of the Korea Development Bank (KDB) has failed to secure a new owner.
According to sources in the investment banking industry, Thursday, Hana Financial Group Chairman Ham Young-joo reportedly conveyed the group's decision to abandon the acquisition to KDB Chairman Kang Seog-hoon during the annual meeting of the International Monetary Fund.
"We have terminated the acquisition process because acquiring KDB Life Insurance does not align with Hana's strategy for strengthening the insurance sector," Hana stated. However, no further details were provided.
Since being chosen as the preferred bidder in July, Hana had been undergoing the due diligence processes.
KDB Life Insurance has been struggling to find a new owner in the M&A market, failing on four separate occasions. KDB initiated public sale efforts twice in 2014 and then once each in 2016 and 2020. However, all of these attempts proved fruitless.
Market watchers suggest that, while Hana entered the M&A competition to boost its non-banking profits, it likely faced challenges ensuring the internal stability of KDB Life Insurance. Initially, the expected sale price for KDB Life Insurance was around 200 billion won ($147 million). But to address the insurer's fragile financial structure, it's believed that an investment ranging from several hundred billion won to as much as 1 trillion won is necessary.
"The decision to put KDB Life Insurance up for sale again is still pending," said an official from KDB. "In the short term, we will set up emergency management plans, while in the long term, our focus will be on enhancing the firm's value."
Several insurance companies, including Lotte Insurance and ABL Life Insurance, have been listed for sale this year. However, potential buyers appear to be somewhat hesitant. The slowing growth of the insurance industry has lessened its allure, yet insurance firms up for sale are keenly trying to boost their valuations, highlighting a noticeable difference in perspectives.