Korea's No. 3 life insurer, Kyobo Life Insurance, is participating in early bidding for ING Life Korea.
According to a Kyobo official, the company submitted a letter of investment intent to Morgan Stanley, which is managing the sale, on the initial deadline for preliminary bidding. China Life Insurance also sent an LOI.
Anbang Insurance Group, another Chinese giant which acquired Allianz Life Korea for a mere $3 million, is not participating. "Kyobo tried to buy ING Life Korea about three years ago," said an official. "This time, we participated in pre-bidding so that we can conduct due diligence."
Sources said only companies shortlisted as preliminary bidders can conduct due diligence, meaning it is "a great opportunity to observe a rival, or a potential acquisition target." According to Kyobo, it will first conduct due diligence and then its board of directors will decide whether it will join the actual auction.
In December 2013 Kyobo vied with Hanwha Life, Tongyang Life, MBK Partners and the Bogo Fund Consortium to buy ING Life Korea, but later withdrew. MBK, a local private equity company, acquired the firm for 1.84 trillion won. MBK then pledged to the government that it would not resell ING Life Korea for two years.
As of September last year, ING Life Korea had a 4.06 percent market share. Should Kyobo acquire ING Life Korea, its market share will grow to 15 percent, overtaking Hanwha Life's 12.39 percent to take the No. 2 spot behind leader Samsung Life with 23.68 percent.
Listed among the Fortune Global 500 companies, Kyobo is the second largest life insurer in Korea, with 5.5 million customers, 4,200 employees and more than 25,000 life planners who function as agents. In its most recent fiscal year, Kyobo posted total assets of $298 billion, premium income of $80 billion and a net profit of $356.6 million.
Korean government regulations permit insurance companies to offer new products in order to compete and capture market share. However, disconnected, obsolete business systems and ineffective customer service were hampering Kyobo Life’s ability to compete by providing customers the products and services they wanted. The company’s policy offerings were based on its many lines of business, each of which had its own legacy applications and systems.
If there was market potential for a new product spanning multiple lines of business, the company didn’t have the flexibility to quickly design and release it, analysts say, which limited its ability to compete effectively.
In addition, Kyobo Life’s customer service was slow, say the analysts. Claims payment cycles took too long. Duplication and errors in customer data were further eroding the quality of service and costing money to correct. Kyobo Life’s legacy IT systems could not support a consistent menu of services for all of its delivery channels, including call centers, branch offices, Web-based services and automated teller machines (ATMs).
The different channels did not have access to consistent data, which caused errors and drove up costs. These problems prevented Kyobo Life from responding to fast-changing customer requirements and market conditions, threatening the company’s long-term growth strategy and market share.
To address these issues, Kyobo Life needed to transform its core insurance systems to provide integrated, responsive customer service across all its channels, as well as a strong foundation for future growth. With enhanced product support, Kyobo would be able to introduce new products to the market faster than its competitors.
In addition, a centralized data system would allow the company to deliver better customer service.
Insurance Systems for Customer Emotion and Satisfaction provides the same customer account information to all channels 24 hours a day, seven days a week. By integrating customer and product information, the new system helps Kyobo Life respond to competitive pressures by offering the tailored package policies that customers want, the company says.
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A view of the Kyobo Building located in Gwanghwa-mun downtown Seoul.
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