이 기사는 2021년 11월 24일 08:25 thebell 에 표출된 기사입니다.

JC Partners’ acquisition of KDB Life Insurance is expected to speed up amid heightened expectations for MG Non-Life Insurance’s business normalization.

Private equity firm JC Partners, the largest shareholder of MG Non-Life, signed a stock purchase agreement in December 2020 to buy a majority stake in KDB Life from the state-run Korea Development Bank (KDB), but hasn’t received approval from the financial authorities for nearly a year.

The Financial Services Commission (FSC) plans to hold a regular meeting on Wednesday, said industry sources. The agenda for the meeting hasn’t been revealed, but many expect commissioners to decide whether to approve MG Non-Life's management improvement plan at the upcoming meeting.

MG Non-Life submitted a new management improvement plan to the financial authorities at the end of last month. The FSC didn't approve the previous one, citing an absence of a specific capital increase plan. The insurer’s new plan is highly likely to get approval as it includes phased plans for capital increase.

The possible approval is expected to accelerate the sale of KDB Life, which has been halted for nearly a year since the end of last year. It normally takes about 60 days for the regulatory review to complete. The Seoul-based PE firm filed paperwork with the Financial Supervisory Service (FSS) in June to kick off a process to examine whether it is eligible to become the largest shareholder of KDB Life, but was requested to submit supplementary documents.

Industry insiders said a poor capital adequacy ratio of MG Non-Life is the biggest hurdle in closing KDB Life's acquisition by JC Partners. MG Non-Life’s risk-based capital (RBC) ratio was below Korea’s minimum requirement of 100%.

The financial soundness of MG Non-Life is not supposed to have a direct impact on the approval to become the largest shareholder of KDB Life, because the financial soundness of other portfolio companies held by the PE firm is not part of the review requirements.

However, it reportedly is burdensome for the financial authorities to approve JC Partners’ acquisition of a new insurance company in a situation where the previously acquired MG Non-Life remains financially unhealthy.

In Korea, there are not many cases in which a PE firm owns an insurance company like JC Partners does. In addition, both MG Non-Life and KDB Life have lower capital adequacy ratios than the industry average, which is expected to lead to a large scale capital increase in the future.

Some pointed out that MG Non-Life’s new management improvement plan could lessen FSC commissioners’ concerns as it contains forward-looking measures, unlike the previous one. If the insurer attracts financial investors and issues subordinated bonds as planned, its RBC ratio will rise to the stable 170% level. The first round of capital infusion was also completed, which is one of the main pillars of MG Non-Life’s improvement plan.

Some also said the financial authorities need to give the green light for the stabilization of KDB Life, which is suffering from management uncertainty. (Reporting by Eun-sol Lee)