Meritz stocks rally to daily ceiling on integration announcement

Shares of Meritz Financial Group Inc., Meritz Fire & Marine Insurance Co. and Meritz Securities Co. rallied up to their daily ceilings Tuesday after the Korean investment bank group announced it was placing securities and insurance arms into its fully-owned subsidiaries as part of restructuring amid rising uncertainty.

Meritz Financial Group, Meritz Securities and Meritz Fire & Marine Insurance shares soared by their daily limit of 30 percent to 34,750 won ($25.61), 5,870 won, and 46,350 won, respectively, on Tuesday morning.

Meritz Financial Group announced in a regulatory filing on Monday that the shareholders of the securities and insurance arms will be compensated with shares of the financial holding firm based on share swap ratio, to be decided later, for the integration. Meritz Fire & Marine Insurance and Meritz Securities will be delisted from the main Kospi bourse following the merger.

Meritz Financial Group currently owns 59.5 percent stake in Meritz Fire & Marine Insurance and 53.4 percent in Meritz Securities.

“We made the integration decision to create stable profit during the times of uncertainty for future investment and rising volatility in financial market,” the financial holding firm said. “It is also aimed at forming a stable and efficient management system by simplifying decision making process and resolving conflict of interest among shareholders.”

The integration comes as part of the financial group’s restructuring efforts amid the fizzling real estate market and fundraising challenges in a high interest rate environment. Earlier this month, Meritz Financial Group announced a plan to sell its asset management subsidiary.

Meritz Financial Group also announced a shareholder return plan that involves offering 50 percent of net consolidated profit to shareholders from 2023 through dividends and buyback, which exceeds the level of returns by each of the group, non-life insurer, and brokerage in the past three years.