Shinhan Financial hires sales advisor for AXA General Insurance buyout: sources

2020.09.14 12:09:18 | 2020.09.15 15:55:24

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Shinhan Financial Group has reportedly hired an advisory firm to oversee its buyout of AXA General Insurance as it looks to expand its insurance portfolio and digital business.

Shinhan Financial tapped EY Hanyoung Korea as its sales advisor for the planned acquisition, according to investment banking sources on Sunday. It has already settled on Deloitte Anjin as its accounting advisor.

Shinhan Financial declined to confirm its interest in the bid.

The preliminary tender is scheduled for Sept. 18.

Reports surfaced last month that the French insurance giant AXA.S.A. is seeking to sell its 99.7 percent stake in the Korean operation and appointed Samjong KPMG to manage the deal.

Interest in the Korean midsize insurer, however, has remained muted, especially among private equity firms, as its heavy reliance on auto insurance makes it hard for investors to work out an exit plan. As of December 2019, Axa General Insurance generated 84.3 percent of its total 755.3-billion-won ($638 million) original premium income from auto insurance, which has been suffering from falling loss ratios.

Last year, the company’s auto insurance business incurred a cumulative loss ratio of 94.8 percent, higher than the industry average of 77-80 percent. As a result, the insurer swung to a net loss of 36.9 billion won in 2019. Revenue also slipped to 929.4 billion won from the previous year’s 930.9 billion won.

The French parent is reportedly seeking 400 billion won from the sale, while analysts have put the market price at around 200 billion won.

Market experts expect the tender to gain traction with Shinhan`s participation.

Shinhan has been keen on acquiring a general insurer as it lacks a non-life insurance business. AXA General Insurance`s specialization in online auto insurance is also expected to help the financial house enhance its digital platform business.

Kakao Pay, the mobile payment service of Korea’s largest messenger app operator Kakao Corp., is said to be another potential bidder eyeing the deal. But the company has yet to receive regulatory approval for its digital general insurance operations, which could frustrate its efforts to join the bid.

By Park Jae-young and Kim Hyo-jin

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