이 기사는 2020년 02월 21일 08시00분 thebell에 표출된 기사입니다

South Korea’s Hana Financial Group garners keen attention from market insiders whether the financial firm will come up with new strategies for the life insurance business as it is fully geared up to enter the non-life insurance industry.

Market watchers expect the group to expand its life insurance business capabilities once it successfully completes its takeover of The-K Non-life Insurance. While Hana Financial’s competitors have actively moved to enhance their life insurance business capabilities, the firm has remained quite silent.

This was because its acquisition of The-K Non-life was underway. Once South Korean financial authorities’ approval completes the deal, Hana Financial Group will be capable of growing its life insurance business.

Hana Financial Group has operated Hana Life since 2008, but the life insurer has limited presence in the industry. It is the 20th largest insurance company in terms of total assets, out of 24 insurers in the country.

Hana Life has assets worth 4.71 trillion won as of September of 2019. Compared to other life insurers who are under financial holdings’ umbrella, Shinhan Life Insurance has 33.68 trillion won, Orange Life Insurance has 33.75 trillion won, and KB Life Insurance has 10.05 trillion won worth of assets.

While a battle heats up among major groups to boost earnings coming from their non-interest income businesses, Hana Life’s impact on the group’s earnings has been subtle. The life insurer recorded around 8.4 billion won in net income during the first three quarters of 2019.

Shinhan Life recorded net income of 109 billion won and Orange Life recorded 211.5 billion won over the same period of time. KB Life recorded a mere 13 billion won in net income, but its holding company is currently proceeding with the acquisition of Prudential Life Insurance Company of Korea.

There are likely to be plenty of opportunities for Hana Life to grow its life insurance business. Once the deal to acquire Prudential Life Insurance completes, more life insurance companies are expected to be put up for sale. Currently, several potential buyers including KB Financial, MBK Partners, and IMM Private Equity are vying for Prudential Life Insurance. The sale of life insurers has started when Shinhan Financial took over Orange Life (formerly ING Life) for 2.3 trillion won or 1.1 times its book value.

Soon-to-be implemented International Financial Reporting Standards 17 (IFRS17) and Korean Insurance Capital Standards (K-ICS) are expected to accelerate the selling of life insurers. Under IFRS 17, valuations of liabilities will be measured by market value rather than book value.

Insurers must adhere to the new standard by piling up more cash. Foreign insurance companies who see the domestic insurance market has reached saturation are weighing options to sell their Korean operations. Market watchers say Metlife Insurance, AIA Life Insurance, and LINA Life Insurance Company of Korea may be put on the market for sale once the Prudential Life Insurance deal closes.

“The insurance industry expects in common that most of foreign life insurance companies will be up for sale and we can actually see such move. The success of Prudential Life Insurance deal is likely to trigger more deals,” said an insurance industry insider. “I think the most suitable candidates to acquire life insurers are financial holding companies that seek to enhance its non-banking business portfolio,” said a banking industry source.

(By reporter Kim Jang-hwan)