Kyobo in advanced talks to acquire AXA with digital partner

By Lee Min-hyung

Kyobo Life Insurance is in the midst of “advanced talks” to acquire AXA General Insurance by joining hands with an unconfirmed digital partner, the insurer said Friday.

Kyobo and the potential fintech player are set to move forward with a split acquisition of AXA and turn it into a digital-only non-life insurer, according to Kyobo.

“Negotiations are still underway over the sale price of the company,” a spokesperson at Kyobo said. “We will consider a joint acquisition with a digital partner once detailed terms and other specifics are finalized.”

The French multinational insurance group put its Korean non-life insurance affiliate up for sale last year after sales and profitability suffered a continued deterioration. The decision was mostly aimed at realigning the group's Asian business portfolio before the implementation of the new IFRS 17 accounting standard slated for 2023. IFRS 17 aims to standardize insurance accounting globally in order to enhance comparability and transparency.

AXA holds a 99.71 percent stake in AXA General Insurance. The investment industry estimates the sale price of the company at around 200 billion won ($176.6 million).

Earlier, Shinhan and a group of other private equity firms had been tapped as possible candidates to take over a major stake in AXA General Insurance. But they scrapped the plan as the country's non-life insurance industry is losing its luster, which stems in part from a structural slowdown. KakaoPay has also been considered to join the bid as it expressed keen interest in establishing a digital non-life insurer.

Local financial firms that considered taking over the company are known to have given up their plans due to the relatively high price. In 2019, AXA General Insurance generated 929.4 billion won in sales, but reported a net loss of 36.9 billion won. But Kyobo could be flexible in assessing its sales target price depending on the progress of the talks.

Once the deal is completed, the Korean life insurer will get a chance to resume its now-suspended car insurance business. The company sold Kyobo Auto Insurance to the French multinational insurance company for 100 billion won back in 2007. AXA then changed its corporate name to AXA General Insurance.