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Prudential Life takeover battle heats up

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The headquarters of Prudential Life Insurance Company of Korea in Seoul is seen in this file photo, Friday. Korea Times file
The headquarters of Prudential Life Insurance Company of Korea in Seoul is seen in this file photo, Friday. Korea Times file
By Lee Kyung-min

Attention is growing over who will take over Prudential Life Insurance Company of Korea, a battle with raised stakes after local private equity funds threw their hats into the ring at the last minute, industry sources said Friday.

Vying for the takeover of the local insurance arm under the U.S. insurance giant Prudential Financial are KB Financial Group, MBK Partners, Hahn & Company, IMM Private Equity and Taiwan's Fubon Life Insurance.

They all submitted letters of intent (LOI) to Goldman Sachs, the lead manager for the sale, late Thursday.

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

KB Financial Chairman Yoon Jong-kyoo in his New Year address reiterated his resolve to seek mergers and acquisitions (M&As), in a broader move to diversify its business portfolio and elevate the group as a leading, full-service financial firm.

The sentiment is largely shared by Woori Financial Group Chairman Son Tae-seung who repeatedly emphasized growth via M&As, especially involving securities and insurers.

But the group has yet to join the race due chiefly to shortage of funds in the amount of 2 trillion won ($1.7 billion) and overall heightened management risk brought on by the mis-selling of derivative-linked funds (DLFs), a fiasco in which many investors with Woori Bank and KEB Hana Bank lost their entire investments.

Son, who doubles as Woori Bank CEO and former KEB Hana Bank CEO Ham Young-joo are awaiting sanctions from the Financial Supervisory Service (FSS), whose deliberation could essentially void Son's move to seek extension of his term.

Yet possibilities remain that the group can forge ties with one of the PEFs to swoop in last minute, a move pursued when it acquired Lotte Card in a consortium joined by MBK Partners in 2019.

Cash-strapped Woori is expected to seek a partnership with MBK Partners, a fast-emerging market player backed by a slew of successful deals, notably the sales of ING Life Insurance to Shinhan Financial, netting itself over 2 trillion won in profit.

Adding life insurance to the group portfolio is a goal long pursued by Son who repeatedly emphasized growth via M&As especially involving securities and insurers.

Prudential Life recorded 146.5 billion won in net profit in the first nine months of 2019, coming in sixth in the industry while its net profit was 311.3 billion won in 2018, coming in fifth.

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

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


Lee Kyung-min lkm@koreatimes.co.kr


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