+ A

KDB tries 4th time to sell life insurer

It acquired company in 2010 and wants to get asset off its books
Oct 01,2019
Korea Development Bank (KDB) is selling its insurance unit next year, the state-owned financial company announced Monday.

This is the fourth attempt to unload the insurer since it acquired the company in 2010 from the Kumho Asiana Group.

Credit Suisse and Samil PricewaterhouseCoopers have been selected to manage the sale of the insurance company.

KDB will start accepting letters of intent from potential bidders starting in November and name the prime bidder by the end of the year. If all goes according to plan, the sale of KDB Life Insurance will be completed early in 2020.

KDB will be selling off the 88 million common shares it owns of the insurer, which is 92.37 percent of the equity.

The banking group in 2010 swooped in with Consus Asset Management when the troubled Kumho Asiana Group was undergoing restructuring and purchased the life insurer for 650 billion won ($542.6 million).

Starting in 2014, KDB tried to recoup its investment by selling off the life insurer. It made three attempts, all of which failed at the last minute as the proposed bids failed to reach KDB’s expectation.

The state-owned lender’s original plan when acquiring the life insurer was to sell it off within five years.

The market is estimating KDB Life Insurance’s value at around 500 billion won, which is half of the roughly 1 trillion won that KDB is believed to have invested in the life insurer.

KDB might have trouble even finding a buyer for the asset as the sector is now struggling.

Other insurers, such as Tong Yang Life Insurance and ABL Life Insurance, which were acquired by AnBang Life Insurance in 2015 and 2016, are expected to be put up for sale as well.

KDB is hoping that the improving performance of the life insure will attract buyers.

The insurer achieved its first profit in three years in 2018, reporting a 6.4 billion won in net profit, following a restructuring and cost-cutting measures.

In 2018, the insurer increased its paid up capital by 300 billion won through a capital increase. In the first half of 2019, the company managed to report a net profit of 33.5 billion won.

In May, Moody’s issued a Baa2 rating to the life insurer.

“The rating incorporates one notch of uplift from its standalone credit profile of Baa3, reflecting the effective ownership by and support from its parent Korea Development Bank that enhances KDB Life’s branding, capital position, and financial flexibility,” Moody’s stated in its report.

“If the changed KDB Life Insurance is properly delivered to the market, including an interview with potential buyers, we expect a higher interest on the [mergers and acquisitions] than in any other times,” said a KDB official.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]