Will KDB Life find purchaser this time?
Official sales notice to be announced today
Korea Development Bank (KDB) is gearing up once again to sell KDB Life Insurance, the state-run bank’s life insurance unit, the bank said Sunday.
KDB has put up its life insurance unit for sale three times before, but has so far failed to find a buyer.
Reflecting KDB Life’s solid earnings this year, however, the state-run bank displayed confidence in selling its life insurance unit this time. It added it will also look for a possible buyer abroad.
Industry observers agreed this might be the best time to sell the firm but the task seems still too high considering the nation’s ever-worsening insurance market environment.
The bank said it will officially announce its notice to sell KDB Life today. The move is considered to select a preferred bidder by the end of the year.
KDB acquired the then Kumho Life Insurance in 2010 when Kumho Asian Group underwent a largescale restructuring. The group had suffered a cash shortage after posting a stream of operating losses for years.
The state-run bank acquired the then ailing Kumho Life jointly with Consus Asset Management for 650 billion won ($540.9 million). KDB and Consus Asset Management jointly set up KDB Consus Value, a private equity firm (PEF) to operate the life insurer.
The insurer later changed its name into the KBD Life Insurance, and increased capital by issuing new stocks several times to secure additional cash.
In the meantime, KDB attempted to sell the life insurer three times between 2014 and 2016 only to fail.
The PEF currently owns a 65.8 percent stake while KDB separately holds a 26.93 percent stake.
KDB is seeking to sell its entire 92.73 percent stake including its shares owned indirectly through KDB Consus Value.
“The timetable for the KDB Life sale is a bit tight, but I believe it’s an interesting firm for sale,” a KDB official was quoted as saying.
“KDB Life boasted solid earnings for the past year while demonstrating strong cash reserve. We failed to sell it three times before, but it will be different this time.”
According to the Financial Supervisory Service, the risk-based capital (RBC) ratio of KDB Life stood at 232.66 percent as of end of the second quarter.
The RBC requirement refers to a rule that establishes minimum regulatory capital for financial institutions. The government recommends firms to feature over a 150 percent RBC ratio.
Industry insiders said, however, the sale would face a high hurdle considering the nation’s ever-worsening market situation.
“KDB Life has strengthened its earnings as well as cash reserve. As they believe, this could be the right time,” said a major insurance firm official who asked not to be named.