Fubon Life Insurance Co (富邦人壽), the primary life insurance subsidiary of Fubon Financial Holding Co (富邦金控), has received permission from South Korea’s financial regulator to acquire a stake in a South Korean life insurer.
The South Korean Financial Services Commission approved Fubon Life’s acquisition of a 48 percent stake in Hyundai Life Insurance Co to become the second-largest shareholder in the company, trailing Hyundai Motor Group, which has a 50.2 percent stake.
South Korean authorities have also approved Fubon Life taking five of the 11 seats on Hyundai Life’s board, with Hyundai Motor Group holding the remaning six seats.
Fubon Financial on Friday said in a statement that the deal, which is expected to be closed today, would help the Taiwanese financial services company extend its reach into the East Asian market, in line with government policies aimed at encouraging financial institutions to expand regionally through mergers and acquisitions.
Fubon Financial vice chairman Richard Tsai (蔡明興) said in the statement that the acquisition of Hyundai Life shares would boost Fubon Life’s presence in Asia following its founding of a Vietnamese subsidiary in 2011. The insurance subsidiary has also received approval to open a unit in Hong Kong.
Once the Hyundai Life deal is concluded, Fubon Life is to send a team of asset management, risk management, finance and product development specialists to help the South Korean unit expand its business, the statement said.
Fubon Life would be able to utilize its experience in overseas investments to help strengthen Hyundai Life’s investment returns and decrease its investment risks, it said.
Hyundai Life president Lee Joo-hyuk said in the statement that he looked forward to the synergy to be created by the strategic partnership and expects Fubon Life and Hyundai Life to become good business partners in the long term.
According to Fubon Life, South Korea’s life insurance business is the nation’s second-largest financial services sector after banking.
Hyundai Life has 51 outlets in South Korea, employing more than 2,300 people. It has posted a 51 percent increase in monthly initial premium income and a 49 percent increase in gross premium income so far this year, Fubon Financial said, adding that Hyundai Life hopes to become one of South Korea’s top 10 insurers by 2020.
In related news, Moody’s Investors Service on Friday upgraded its ratings for Cathay Life Insurance Co (國泰人壽) on the back of the company’s improving profitability, solid capitalization and strong business profile.
Moody’s upgraded its insurance financial strength rating for Cathay Life, the insurance flagship of Cathay Financial Holding Co (國泰金控), to “Baa1” from “Baa2,” and also raised Cathay Financial’s issuer rating to “Baa2” from “Baa3.”
The ratings agency said that the outlook of both Cathay Life and Cathay Financial is stable.
According to Moody’s, Cathay Life’s return on capital has increased since 2013. The annualized return as of the third quarter this year was more than 10 percent, higher than 8.5 percent recorded last year.
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