Merger with Shinhan EZ Non-Life Insurance planned

[Shinhan Financial Group]
[Shinhan Financial Group]

Shinhan Financial Group is set to acquire Lotte Non-Life Insurance, the seventh-largest non-life insurer in South Korea.

Shinhan Financial announced Tuesday that it had signed a share purchase agreement with JKL Partners to acquire the private equity firm's stake in Lotte Non-Life Insurance. Under the deal, Shinhan Financial will acquire a 77.04 percent stake in Lotte Non-Life Insurance for 693.3 billion won ($518 million), with plans to secure the remaining 22.96 percent after obtaining regulatory approval and completing other required procedures. The total deal values 100 percent of the insurer's equity at 900 billion won. Shinhan Financial's board of directors convened that morning and approved the acquisition.

Shinhan Financial and JKL had held exclusive negotiations over the sale of Lotte Non-Life Insurance through July, but the talks collapsed after the two sides failed to bridge a gap on price. JKL subsequently attempted to pursue an open sale process but struggled to find a suitable buyer. Shinhan Financial maintained its interest in the acquisition throughout, and the two sides ultimately reached a deal in final-stage negotiations.

Lotte Non-Life Insurance is a mid-sized non-life insurer that has built its business around long-term protection products over more than 70 years. It has about 3.34 million customers, and its contractual service margin stood at approximately 2.2 trillion won as of the end of the first half of this year.

Shinhan Financial plans to make Lotte Non-Life Insurance a wholly owned subsidiary and then merge it with Shinhan EZ Non-Life Insurance to strengthen its non-banking competitiveness. The group intends to expand its business reach by combining Lotte Non-Life Insurance's customer base and sales network with the group's own distribution channels and digital capabilities. The merger with Shinhan EZ Non-Life Insurance is also expected to reduce overlapping costs and improve operational efficiency with a focus on profitability.

Shinhan Financial also plans to inject additional capital into the insurer. After completing the full subsidiary conversion, it will work to improve the capital structure and strengthen financial soundness in preparation for the basic capital solvency ratio regulation under the Korean Insurance Capital Standard, which takes effect next year. The acquisition will be funded by redeploying capital already held within the group, with no external financing. Shinhan Financial expects that as the earnings base grows through integration synergies and a phased normalization, capital efficiency metrics such as return on equity will also improve.

The group said it will continue its existing shareholder return policy as it pursues its "Value-up 2.0" initiative on the back of a stable capital ratio. During the integration process, it plans to maintain existing insurance contracts and customer services without disruption, and to communicate with field staff — including employees and insurance agents — to ensure employment stability and a smooth transition.

"We will combine Lotte Non-Life Insurance's accumulated insurance business experience, customer base and sales capabilities with the group's capital and risk management expertise and digital strengths," a Shinhan Financial official said. "We will create new growth engines for the insurance business and lead the group's sustained growth."


forest@heraldcorp.com