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Hana to take over The-K Non-Life Insurance

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Hana Financial Group's building in central Seoul / Courtesy of Hana Financial Group
Hana Financial Group's building in central Seoul / Courtesy of Hana Financial Group

Financial group takes first step to expand non-banking business

By Kim Bo-eun

Hana Financial Group has taken the first steps in expanding its non-banking affiliates by taking over The-K Non-Life Insurance as a battle heats up among major groups to scale up their portfolios.

Hana's board approved the group's acquisition of 70 percent of the non-life insurer' shares. This is its first acquisition since taking over the Korea Exchange Bank in 2012 and its first in the non-banking sector.

The group is in the process of negotiating the deal with the insurer owned by the Korean Teachers' Credit Union.

Hana's move to acquire the insurer is part of the group's drive to boost earnings coming from its non-banking units.

Hana has stated plans to bring up earnings from non-banking affiliates to 30 percent by 2050.

The group has a bank, brokerage, card firm, life insurer and savings bank in its portfolio but does not have a non-life insurer.

The-K Non-Life Insurance is a small firm specializing in auto insurance.

"We will continue to monitor the market for potential acquisitions," a Hana official said. "Strengthening the non-banking arm is a common task financial groups face."

This is based on the structure of financial groups, which rely heavily on their banking units to generate earnings.

For Hana, KEB Hana Bank's earnings accounted for 76 percent of the group's earnings as of the third quarter of last year. For Woori, KB and Shinhan, the figure is 97 percent, 68.5 percent and 66 percent.

The groups have turned their eyes to non-banking units, as their banks are seeing their net interest margins (NIM) squeezed amid lower interest rates.

All of the groups saw their NIM earnings fall in the third quarter of 2019 ― that of Woori and Hana each fell by 0.09 of a percentage point quarter-on-quarter and that of Shinhan fell 0.04 of a percentage point, and KB 0.03 of a percentage point.

Shinhan solidified its ranking as the top financial group after taking over ING Life Insurance in February last year. The insurer was rebranded as Orange Life.

Shinhan posted record earnings in the first three quarters last year, with its net profit exceeding 2.8 trillion won.

The group's non-interest income for the same period grew 37.3 percent year-on-year. This is attributed to Orange Life earnings.

Woori, which has the highest reliance on its bank unit for earnings, has been on the move, acquiring Tongyang Asset Management, ABL Asset Management and real estate management company Kukje Trust last year.

It is set to complete the acquisition of Aju Capital this year. The group is also eyeing the acquisition of an insurer and brokerage.

KB has joined a preliminary bid to acquire Prudential Life Insurance Company of Korea, to strengthen its life insurance unit. Its existing unit KB Life Insurance ranks 17th among life insurers and its earnings account for 1 percent of the group's total.


Kim Bo-eun bkim@koreatimes.co.kr


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