By Yoon Young-sil | Business Korea | October 15, 2021
Many employees of LINA Life Insurance Co. of Korea feel betrayed as Cigna Group of the United States has decided to sell the Korean life insurance company to Chubb Group of the United States.
LINA employees continue to post complaints on Blind, an anonymous internet community website for salaried workers. They express their resentment toward Cigna Group. Some employees are moving to form a union. An employee said in a message, “Shouldn’t we go on strike? I feel angry at Cigna Group’s insincerity.”
Some say that LINA employees should receive consolation money. There are precedents of an acquiring company paying consolation money to employees of an acquired company in the process of an M&A deal between domestic companies. For instance, when Hanwha Group absorbed Samsung Corning Precision Materials, Samsung Total, Samsung Chemical, and Samsung Techwin from Samsung Group, employees of these companies reportedly received more than 40 million won in consolation money per person from Hanwha Group. In another case, OB Beer employees also received 50 million won in consolation money per person when the company was sold to a foreign private equity fund.
It is unclear whether such consolation money will be actually paid to LINA Life Insurance employees because it is rare for an overseas parent company to pay consolation money to employees of its Korean subsidiary in the sale process.
LINA Life Insurance is known to be a healthy company among domestic life insurers. Its return on assets (ROA) is at the top level. As of 2020, its ROA was 7.27 percent, the highest among life insurers in Korea. The figure is outstanding, given that the ROA of second-ranked Prudential Life Insurance stood at 1.03 percent and the average ROA of other life insurers is a mere 0.36 percent. LINA’s net profit in 2020 was 352.7 billion won, coming in third after Samsung Life Insurance (928.8 billion won) and Kyobo Life Insurance (382.9 billion won).
However, the Korean insurance market has reached saturation and the overall life insurance industry has suffered a slump due to a prolonged low-interest rate trend. Cigna Group was well aware of LINA’s limitations in growth and has decided to withdraw from Korea, analysts say.
Cigna Group has decided to sell its operations in seven Asian countries to Chubb Group through a block deal. The seven countries include Korea, Taiwan, New Zealand, Thailand, Indonesia, Hong Kong and Turkey.