KB News Desk
Brokerage-led finance group gears up to step up game with KDB Life acquisition
With the acquisition of KDB Life, Korea Investment Holdings is set to broaden its business portfolio beyond its brokerage-led operations, marking a major step in its push to strengthen its presence across the financial sector.
Policy lender Korea Development Bank selected Korea Investment Holdings as the preferred bidder for KDB Life, the finance group announced through a regulatory filing Thursday. The deal involves 116.32 million common shares in KDB Life, representing a 99.75 percent stake. The proposed purchase price was not disclosed.
Once the acquisition is completed, Korea Investment Holdings will make its first foray into the insurance industry. The financial group, whose core business is its brokerage arm, currently has operations spanning asset management, savings banking and private equity, but has no insurance affiliate.
Korea Investment Holdings first signaled its intention to acquire an insurer in March last year.
Speaking to reporters after the group’s annual shareholders meeting, Chairman Kim Nam-koo said acquiring an insurance company was “one of several options under consideration,” adding that while he would like the process to move quickly, “it would take a while.”
Following the statement, Korea Investment Holdings began acquisition talks with several insurers, including KDB Life, BNP Paribas Cardif Life Insurance, Lotte Insurance and YeByeol Non-life Insurance.
With the acquisition of a life insurer, the financial group aims to reduce its reliance on its brokerage business and diversify its earnings base.
The group posted 1.91 trillion won ($1.35 billion) in net profit in the first half of this year, outperforming major banking groups such as Woori Financial Group. However, Korea Investment & Securities, its core brokerage arm, accounted for 90.4 percent of the group’s total profit.
The group can also secure a stable funding pipeline through the insurer. By raising funds through insurance premium inflows, the group’s brokerage and asset management arms can deploy those funds into investments to generate returns.
Unlike bank deposits, insurance premiums can provide a relatively stable source of funding without the same direct funding costs, as insurers collect premiums upfront and pay out claims much later.
Other nonbank financial groups in Korea, including Meritz, Mirae Asset and Samsung, have similarly leveraged their insurance affiliates to generate synergies across their businesses.
“Korea Investment Holdings’ push to acquire KDB Life is not just a deal aimed at generating short-term profits, but rather focused on securing a long-term funding pipeline,” said Lim Hee-yeon, a research fellow at Shinhan Securities.
“While the purchase price and the size of any capital injection have yet to be finalized, the deal’s immediate contribution to group earnings is likely to be limited. However, securing a long-term asset-management structure could mark a turning point for the group’s growth.”
Korea Investment Holdings is also known to have offered an injection of up to 1 trillion won into KDB Life following the acquisition. The proposed capital injection likely bolstered its bid, demonstrating the group’s financial commitment to the insurer’s turnaround.
Through the deal, KDB is expected to complete the long-sought sale of KDB Life. The state-run policy lender acquired the insurer, formerly known as Kumho Life Insurance, in 2010 as part of the restructuring of Kumho Asiana Group.
KDB has made repeated attempts to sell the insurer since 2014, but six previous deals fell through.
