By Yoon Ja-young
Staff Reporter
Kumho Asiana Group is speeding up sale of its life insurance arm and has engaged in negotiations over conditions with potential buyers. The insurer's huge deficit or almost 200 billion won, however, is hampering the move.
The group is reportedly in talks with three potential buyers for Kumho Life Insurance ― SC First Bank, Consus Asset Management, and a private equity fund (PEF) set up by Quantum Fund.
Originally, it planned to list the life insurance arm on the bourse, but failed because of liquidity trouble amid the global financial crisis.
The group has been looking for a buyer since last September. Some global players had shown interest in Kumho Life, but withdrew as many troubled insurance companies around the world were put on sale amid the crisis.
It had hoped to dispose of the life insurer before a shareholders' meeting late this month, but that plan is now out of reach.
Though the group is known to be in talks with the three, the selling price has fallen. There had been speculation that it was asking for 1 trillion won, but now analysts wonder whether it can get half that much. Shares, which had traded on the over the counter market at near 30,000 won per share, have fallen to around 7,000 won.
``Kumho was not good in negotiations. It took too long,'' an analyst said.
Kumho Life Insurance saw its deficit snowball to nearly 200 billion won for the fiscal year 2008, much bigger than the originally estimated 100 billion won, under new accounting standards. Its solvency margin ratio stands at around 120 percent as of April, far below the 150 percent recommended by regulators.
Hence, the insurer would need further capital infusion from its parent group first to attract a potential buyer. The solvency margin ratio fell below 120 percent at the end of last year, but was pulled back up in April through capital increases and loans.