By Yoon Ja-young
Staff Reporter
The Financial Supervisory Commission (FSC) approved on Friday the revision bill for the listing of shares of life insurance companies.
Analysts expect Kyobo Life Insurance to be the first to list on the bourse.
With the approval of the revision bill, the companies can hand in applications to list their shares on the Korea Exchange (KRX), providing they satisfy a number of financial stability criteria.
Currently, five life insurers _ Samsung, Kyobo, Shinhan, Hungkuk, and Green Cross _ meet the conditions for listing. Foreign life insurance firms said they don't have any listing plans and other small-sized players are expected to meet the conditions next year.
Listing is unnecessary for Shinhan, however, as it is incorporated under Shinhan Financial Group, listed on the stock market as a financial holding company. Hungkuk Life Insurance, which has sufficient financing, also does not need to list for now.
Green Cross Life Insurance said it would watch market conditions and look to list in 2009.
Listing is not a simple procedure for Samsung Life Insurance, the top player in the market, as the Samsung Group's governance structure complicates the matter.
Therefore, Kyobo Life Insurance is likely to be the first as although it has 1.8 trillion won in equity capital it needs to pull up its solvency margin ratio, currently at around only 190 percent.
Kyobo said it would determine when to list on the bourse after watching market conditions.
Since the listing procedure takes around six months, Kyobo could be listed on the stock market at the end of the year, at the earliest.
The listing of its insurance arm's shares could help Samsung Group pay back Samsung Motors' debt, but its governance structure remains a hurdle.
Creditors of Samsung Motors have 3.5 million shares of Samsung Life Insurance as collateral. They expect to recover the money once the life insurer gets listed.
However, if Samsung Life Insurance gets listed, Samsung Everland, which has 13.34 percent stake in the life insurer, will be categorized as a financial company. Once listed, its shares in the life insurer would be valued according to market prices instead of their book price. The insurance stocks will account for over half of the total assets of Samsung Everland as they are already priced at around 700,000 won in the over-the-counter market.
If listed, the insurer will have to sell its stake in Samsung Electronics as a financial holding company and its subsidiaries are not allowed to have stakes in manufacturing. This would affect the group's circular shareholding structure.
Samsung Life said it would fix its listing schedule after carefully considering the market situation. Analysts expect the listing to be possible next year, at the earliest.
Kumho Life Insurance, which will satisfy the criteria in September, is likely to be the second to list on the stock market. It has said since last year that it plans listing in 2008.