By Insurance Asia | April 14, 2020
KB Financial has acquired 100% of Prudential Life Korea for W2.3 trillion (US$1.9 billion).
The South-Korean financial giant beat out other potential buyers — including private equity firms MBK Partners and Hahn & Company — in a bidding war that saw KB Financial offer the highest price.
In March of this year, it was predicted that KB Financial would be the final buyer, as the strongest bidder in the acquisition war.
In an official statement, US-based Prudential Financial said: “This transaction is consistent with Prudential Financial’s strategic focus internationally on Japan and higher-growth emerging markets around the world.” The company is expected to file an after-tax loss of US$300 million in net income; and sale proceeds will be used for general corporate purposes.
The acquisition of Prudential Life Korea by KB Financial will propel the Seoul-based group into the top ranks of domestic life players, and improve their life insurance business portfolio. The deal is also a signal to rival Shinhan Financial — who beat out KB Financial to acquire ING Life Insurance (rebranded to Orange Life) in early 2019. At the time, ING was Korea’s fifth-largest life insurer.
KB Financial is one of South Korea’s top three banks by asset value and operates through six business segments. It has both life and non-life business arms. Chairman Yoon Jong-gyu reaffirmed their commitment to developing their life business, commenting in March: “Life insurers carry a higher price-to-book ratio than banks in markets with zero interest rate, like Europe. Challenging times often provide new opportunities and insurance would make a good business.”
Meanwhile, Prudential Life Korea, a subsidiary of US-based Prudential Financial, was established in 1989. The Korean insurer has a strong market profile in the country, holding W20.2 trillion (US$17.1 billion) in total assets in the period ended June 2019.
The sale means US-based Prudential Financial will leave the South Korean market after 30 years; and will be a boon to Korea’s market, in the face of Covid-19 worries.
The transaction is subject to regulatory approval and is expected to be completed by the end of 2020.