Woori, KB to clash over Prudential takeover

The headquarters of Prudential Life Insurance Company of Korea in Seoul

By Lee Kyung-min

Competition between Woori Financial Group and KB Financial Group will become fierce over the acquisition of Prudential Life Insurance Company of Korea, the local insurance arm of Prudential Financial, industry sources said Friday.

Either of the two that adds the Korean subsidiary of the U.S. insurance giant will solidify its business presence among its top five peers, all of whose top priority in 2020 is bolstering non-banking sectors via mergers and acquisitions (M&As).

The process to select a preferred bidder for the life insurer is scheduled for Jan. 20.

KB Financial is showing a keen interest to boost life insurance business, the long-cited weakness of the former industry leader recently outperformed by Shinhan Financial.

Shinhan reclaiming the top in 2019 was helped largely by successful acquisition of ING Life Korea, now Orange Life Insurance, from MBK Partners in 2018.

“Acquiring Prudential Life will certainly help us to improve overall business portfolio,” a KB official said. “We cannot comment on the specifics about the ongoing developments.”

Non-life insurance subsidiary of KB had an asset of 35.4 trillion won ($30.3 billion) as of September 2019, coming in fourth in the industry.

If the merger materializes, KB's life insurance with only 10.5 trillion won in asset can soar to the fifth largest in the industry from the current 17th.

Woori Financial Group is also gearing up for the takeover in line with group chairman Son Tae-seung who repeatedly emphasized growth via M&As especially involving securities and insurers.

This is in addition to the group-wide strategy to enhance closer integration among group subsidiaries that handle banking, card, asset management, real estate investment trust and investment businesses.

Prudential Life recorded 146.5 billion won in net profit in the first nine months of 2019, coming in sixth in the industry.

Its net profit was 311.3 billion won in 2018, coming in fifth.

The performance is notable given its asset size is only the 11th-largest in the industry at 20.1 trillion won as of June 2019.

Its risk-based capital ratio, considered a barometer for financial soundness, stood at 505.1 percent in June 2019, the top of the list of life insurers.

Besides the two, Hana Financial Group is seeking to acquire The-K Non-Life Insurance, owned by the Korea Teachers Credit Union (KTCU).

Despite the net losses reported by the non-life insurer specializing in auto insurance, Hana views injecting additional capital will soon normalize the operation of what could be a strong cash cow of the group.