Kyobo Life plans to shift to holding company structure

Kyobo Life Insurance headquarters in Gwanghwamun, Seoul [Photo by Han Joo-hyung]

Kyobo Life Insurance Co. is seeking to become the first Korean life insurer to operate under a financial holding company structure.

The company made the plan official on Wednesday, saying a financial holding company structure is needed to respond to rapid market dynamics and build a foundation for future growth. The plan was presented to a board meeting held on Thursday.

Kyobo Life Insurance has been internally reviewing a shift to a holding company since 2005, but this is the first time the plan has been officially announced.

Under its roadmap unveiled on Wednesday, Kyobo Life Insurance will create a financial holding company by splitting the stock and cash of its subsidiaries in the first phase and then will issue new shares of the holding company to existing Kyobo Life Insurance shareholders.

In the second stage, Kyobo Life Insurance will be incorporated as a subsidiary of the financial holding company. To this end, the holding company will raise capital by issuing new shares to Kyobo Life Insurance and receive Kyobo Life Insurance shares in lieu of payment for the new shares.

Kyobo Life Insurance has 16 subsidiaries and affiliated companies. Among them, Kyobo Securities Co. is the only listed company. Other affiliates include Kyobo AXA Investment Managers Co., Kyobo Lifeplanet Life Insurance Co., Kyobo Asset Trust Co. and Kyobo Bookstore Co.

Kyobo Life Insurance expects it will be able to secure a mid- to long-term growth momentum through business diversification, discovery of new growth engines and creation of synergies among affiliates under the holding company structure.

A key barrier to transform into a holding company is whether major shareholders will agree. Currently, Kyobo Life Insurance Chairman Shin Chang-jae controls 33.78 percent of the insurer. Some 37 percent of the company is held by parties close to him, with 24.01 percent held by financial investors, including Affinity Equity Partners. Affinity Equity Partners exercised a put option against Shin in 2018, and the two sides have been in a legal dispute for several years due to differences in their positions over the put-option price.