By Yoon Young-sil | Business Korea | November 1, 2021
Shinhan Financial Group will take over BNP Paribas Cardif General Insurance, a foreign non-life insurance company.
The takeover of the non-life insurance company is intended to acquire the last component needed to become a general financial group. The group launched Shinhan Life Insurance, which was created out of a merger between Shinhan Life Insurance and Orange Life, in the second half of 2021.
Shinhan Financial Group recently held a board meeting to approve the company’s plan to acquire BNP Paribas Cardif General Insurance. It signed a stock purchase agreement (SPA) with France’s BNP Paribas Group, the current major shareholder of BNP Paribas Cardif General Insurance, to acquire a 95 perfect stake in the non-life insurance company for around 40 billion won.
BNP Paribas Cardif General Insurance was launched in 2014 as a joint venture between BNP Paribas Cardif, Shinhan Life and AXA. It is a small and medium-sized general non-life insurance company with assets of 108.4 billion won and debts of 48 billion won as of the first half of 2021. Its main business areas include corporate insurance and special insurance.
Shinhan Financial Group has been seeking to acquire a non-life insurance company to complete its portfolio as a comprehensive financial group. It plans to make BNP Paribas Cardif General Insurance a fully digitalized non-life insurance company. The non-life insurer is expected to create synergies with other affiliates of Shinhan Financial Group, including Shinhan Life Insurance, which has emerged as the fourth-largest life insurer in Korea, and Shinhan Bank and Shinhan Card.
Shinhan Financial Group has not made large M&A deals for more than a decade since it acquired LG Card (currently Shinhan Card) in 2007. Its focus shifted from organic growth to external growth after Cho Yong-byoung took office as chairman of the group in 2017. Cho believed that external growth was needed to seize new profit opportunities amid low-interest rates and a low-growth business environment. Shinhan Financial Group acquired the local retail division of Australia’s ANZ Bank in Vietnam in 2017, which was followed by a series of large and small M&A deals in Korea including a life insurance company (ING Life Insurance), trust company (Asia Trust), and venture capital company (Neo Plux).
Shinhan Financial Group is competing fiercely with KB Financial Group to become the No. 1 financial group in terms of net profit. KB Financial Group owns the industry’s fourth-largest non-life insurer as it took over LIG Insurance and renamed it KB Insurance in 2014. On the other hand, Shinhan Financial Group has had no presence in the non-life insurance industry.