President Lee Byung-chan of Shinhan Life Insurance Co.

President Lee Byung-chan of Shinhan Life Insurance Co. said the company will beef up its capital from 200 billion won to 300 billion won in the second half of this year and follow it up with a similar move if needed. The company still has 200 billion won in paid-in capital and is ready to supplement that for the first time in 28 years, the CEO said.
He said the company plans to boost its capital to get ready for the new accounting standard, the IFRSI 17, which is to be enforced in the fall by pulling up its RBC or cash reserve capacity ratio to a proper level from the current 175 percent, the lowest among rival life insurers in the country.
President Lee said the company will make a firm decision on its plan to acquire a stake in ING Life after looking at the results of due diligence on the life insurer and the price of the company. Shinhan Bank is seeking to acquire ING Life for 2.5 trillion won, sources familiar with the issue said. Shinhan Financial is interested in ING. The financial group wants to close the deal for 2.5 trillion won including the management premium," one source in the local private equity fund industry (PEF) told a local media.
He added the banking group is considering partnering with strategic financial investors to lessen the financial burden for what officials say is a "mega-sized acquisition."
"Shinhan Financial is in the process of studying and analyzing ING's market valuation. If the deal gets approval from its board, then it would be a plus factor to help Shinhan expand its business portfolio to non-banking, which is quite promising and lucrative," said the industry executive.
MBK Partners, Korea's top private equity company, bought ING from ING Group for 1.8 trillion won in 2013.
By last year, ING's assets totaled 31.4 trillion won, the sixth-largest among its domestic competitors. ING generated 4.32 trillion won last year. Its profit for 2017 reached 340 billion won, according to data provided by financial regulators.
In 2012, Shinhan Life acquired the highest grade of ‘AAA’ in the insurance industry for insurance financial strength rating from the Korea Investors Service, which is an affiliate of Moodys. Since 2008, Shinhan Life received recognition for its management stability in the industry by acquiring the ‘AAA’ grade annually.
The Korea Investors Service and the Korea Ratings made evaluations by taking consideration of the major evaluation indicators, including market status (marketability), profit-generation ability (profitability) and capital adequacy (stability), in the areas of insurance sales, asset management and capital adequacy.
In the case of insurance sales, the premium income came evenly from different types of insurances, including survival insurance, life insurance and mixed insurance, while high evaluations were made on achieving a balance between various sales channels, including FC, TCM, AM and bancassurance.
“In the case of asset management, we established a long-term stable portfolio based on strict risk management to greatly exceed the industry average of 4.9% to achieve the ratio of return on invested assets at 5.8% as of the 3rd quarter of the fiscal year 2012,” the company said.
In line with this, despite the strengthening of capital adequacy by the supervisory authorities, Shinhan Life maintained outstanding solvency margin ratio without acquiring supplementary capital.

A view of the building in Seoul, where Shinhan Life Insurance has offices.(Photos: Shinhan Life)