Monday, November 16, 2009

Top insurer plans IPO in first half of next year

life insurance

Samsung Life Insurance, Korea’s largest life insurer by assets, said yesterday it would go public on the Seoul stock market in the first half of next year, joining a growing number of life insurers here preparing to float their shares after government restrictions on doing so were eased two years ago.

The insurer said the IPO would help “improve our corporate transparency and expand our capital base,” the company said in a statement yesterday. The statement revealed that the insurer recently started due process, including reviews on listing requirements, with an eye to kick off the IPO in the first half of next year.

The move comes at a time when a growing number of Korean life insurers are taking the plunge onto the market, hoping to win some breathing room to take full advantage of their rapidly growing assets.

For decades, life insurers had been unable to list their shares here because of a longstanding debate over whether their policyholders would be entitled to dividends if they did. Some local civic groups argued that life insurers with listed stocks should pay dividends not just to shareholders but also to clients, since policyholders’ premiums form the basis of the insurers’ profits.

But the debate finally came to an end in 2007, when the government ruled in favor of the insurers, giving them the green light to raise capital on the stock market.

Tong Yang Life Insurance was first out of the gate, floating shares on the main Seoul stock bourse in October. Korea Life Insurance, one of the top three life insurers here, and Mirae Asset Life Insurance, a midsize player, hired several stock brokerages in Korea and abroad to arrange their upcoming share sales, which they hope will take place in 2010.

Samsung Life had total assets of 121.6 trillion won ($105.4 billion) as of the end of its 2008 fiscal year, and several Samsung Group subsidiaries and companies controlled by the conglomerate’s founding family members have stakes in the insurance giant. Former Samsung Group Chairman Lee Kun-hee has a 20.7 percent stake in Samsung Life, followed by 13.6 percent held by Shinsegae, 13.3 percent by Samsung Everland, 4.8 percent by CJ Cheiljedang and 3.2 percent by CJ. The Samsung Foundation of Culture and the Samsung Life Public Welfare Foundation also hold 4.7 percent stakes each.

“If Samsung Life goes public, financial companies that have a stake in Samsung Life and other CJ subsidiaries will heavily benefit from it,” said Lee Sang-hoen, analyst at Hi Investment & Securities.