À̹ÌÁö È®´ë South Korea¡¯s Kyobo Life Insurance Co. will go public next year as the industry¡¯s sixth player to raise money from the stock market to meet new insurance standards for payment capability, effective in 2022.
Kyobo Life Insurance on Tuesday held a board meeting and approved the initial public offering (IPO) plan for the second half of next year. The company said that the IPO, which is the first in its 60-year history, is to increase its capital base before new accounting rules International Financial Reporting Standards (IFRS) 17 and K-Insurance Capital Standard (K-ICS) take effect in 2022. Under the new accounting rule, insurers¡¯ payment liabilities will be measured based on market value, not book value, which could result to an increase in liabilities. The K-ICS would newly evaluate insurers¡¯ premium payment capability based on a weaker bottom line.
The ratio of Kyobo Life Insurance¡¯s risk-based capital (RBC), which is the minimum capital an insurer must hold to protect investors, currently stands at 292 percent, higher than the standard 100 percent. However, its bottom line will appear weaker under the new IFRS 17, given sales from high-interest savings-type products that will be excluded from revenue standards.
Kyobo Life Insurance is estimated to need at least several trillion won in capital under the new accounting standards.
The IPO, meanwhile, comes at a time when the country¡¯s stock market is stuck in a bearish cycle. Market insiders noted that Kyobo Life Insurance¡¯s move despite the sluggish market comes as it is concerned about its financial investors that were given put options to resell their shares to Kyobo Life Insurance Chairman Shin Chang-jae at a pre-set price if the company is not listed by the end of 2015 when they bought a 24 percent stake in the company from Daewoo International in 2012.
As the company was not listed by the target year, financial investors looking to recoup their investments informed Chairman Shin that they would exercise 1.2 trillion won ($1.06 billion) put options. Affinity Equity Partners among others, including IMM Private Equity, Baring Private Equity Asia, and Government of Singapore Investment Corporation, is known to have pressed the insurance company the most.
The IPO would allow Kyobo Life Insurance to persuade financial investors to keep their stake to recoup their investments and generate profit.
By Kim Gang-rae and Lee Eun-joo
[¨Ï Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]