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| The corporate logo of MG Non-Life Insurance is displayed at its headquarters in Seoul. Yonhap |
By Lee Min-hyung
Woori Financial Group and Kyobo Life Insurance are expected to jump into the race to acquire MG Non-Life Insurance, in their bid to build tighter business portfolios amid toughening market competition.
The sales process of the mid-tier insurer will begin sometime as early as July after the ruling of its first trial. JC Partners, a private equity firm which is the largest shareholder of MG, filed a suit against the Financial Services Commission after the government agency designated the cash-strapped insurer as an insolvent financial institution.
Following the ruling slated for July 6, Woori and Kyobo are widely forecast to join the race for the acquisition of the insurer.
Woori has for years expressed its strong willingness to acquire securities and insurance firms, as unlike its rivals, it does not have any affiliates operating the two major non-banking businesses. All eyes are thus on Woori Financial Group Chairman Yim Jong-yong's next move. Given Yim's repeated remarks on the need to do so, industry officials say there stands an ample possibility for Woori to bet big on the acquisition of the insurer.
Even if Woori's top priority is still to purchase a securities firm, few brokerage houses are up for sale at the moment. The Woori chief also said recently his company is considering the purchase of an insurance firm first.
Kyobo Life Insurance is the biggest potential rival for the acquisition race. Last week, the company held a board meeting and discussed its plans to expand into the non-insurance sector.
The company is moving to transform into a financial holding firm by the end of next year at the earliest. Kyobo operates diverse financial businesses ― such as life insurance, securities and asset management. But the company is likely to tighten its insurance portfolio through the acquisition of MG ahead of its planned establishment of the financial holding firm.
"The acquisition of MG will not guarantee any immediate earnings returns to both companies, so we still need to see specific contract terms," an industry source said. "But Woori and Kyobo will keep looking for attractive non-insurers up for sale on the market for their portfolio diversification."
According to an audit report from the Financial Supervisory Service, MG Non-Life Insurance suffered an operating loss of 56.8 billion won ($43.1 million) in 2022.
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