KB acquires Prudential Life for W2.26 tril.

By Lee Min-hyung

KB Financial Group signed a contract Friday to take over the Prudential Life Insurance Company of Korea by purchasing a 100 percent stake in the mid-tier life insurer for 2.26 trillion won ($1.86 billion), the group said.

The deal will allow the nation's second-largest financial holding firm by market capitalization to enhance its non-banking sector and build a balanced group-wide business portfolio, the company said.

KB Financial said it decided to acquire 15 million shares of Prudential Life at the price. The latter reported 140.8 billion won in 2019 net profit. The firm's total assets are worth 21 trillion won as of the end of last year.

In January this year, KB Financial submitted a letter of intent for acquiring Prudential Life. Other firms which took part in the bidding included Fubon Financial in Taiwan and three local private equities ― MBK Partners, Han & Company and IMM Private Equity.

KB Financial Group Chairman Yoon Jong-kyoo has repeatedly expressed his willingness to win the bidding, in a move to strengthen the group's life insurance business.

KB runs its own life insurance subsidiary, KB Life Insurance, but the company is ranked 17th in terms of total asset out of 24 local life insurers. As of the end of November, the company's assets were worth 10 trillion won.

Against this backdrop, Yoon has sought to tighten his company's life insurance business by pushing ahead with aggressive acquisitions.

KB lost its status as the nation's largest financial holding company to Shinhan Financial Group last year when the latter took over Orange Life, formerly ING Life Insurance Korea.

After taking over Prudential, KB will speed up its drive to steal the limelight from Shinhan.

“Demand for insurance remains in place, and the insurance business is fine enough to provide opportunities for us,” Yoon said in a regular shareholders' meeting in March.

The remark came amid growing uncertainty in the insurance industry due to prolonged low interest rates and weak economic growth here. Major insurers here reported big declines in their 2019 earnings amid external uncertainties, unfavorable market sentiment and toughening competition.

Despite the uncertain business environment, KB considered Prudential's future outlook promising enough. KB hopes to generate synergy in its life insurance business by taking advantage of Prudential's business capability and diverse sales channels.

“The fundamentals of the Prudential Life Insurance Company of Korea remain solid, as its business capability is more stable than rivals even during the time of worsening market conditions,” an official from KB said.