ING to Raise $152 Million from Selling Stake in Life Insurance JV -Source
04/17/2013| 01:10am US/Eastern
By Kanga Kong
SEOUL--ING Groep N.V. (>> ING Groep N.V.) agreed to sell its entire 49% stake in a life-insurance joint venture with KB Financial Group Inc. (>> KB Financial Group Inc) for $152 million to the Seoul-based banking group, a person familiar with the matter said Wednesday.
KB Financial will wholly own KB Life Insurance Co., which the two companies have co-owned since 2004, the person told The Wall Street Journal.
KB Financial will seek approval for the plan from its directors on April 19, the person said.
The sale price of 170 billion won is a sharp discount to the stake's book value of around 300 billion won.
Talks on the sale have been going on for months as the two companies wrangled over the price, but the negotiations recently gathered pace partly because KB Financial plans to raise fresh equity for the insurer to meet Korean regulators' tougher capital requirements.
KB Life Insurance's risk-based capital ratio stood at 158.2% as of the end of 2012, the lowest among life insurers in South Korea, according to the data from the Financial Supervisory Service. That compared with an average of 331.1% in the sector.
Risk-based capital is the amount of capital, based on an assessment of risk, that a company should hold to protect its policyholders against losses in the event of a crisis. South Korea's financial regulators have been slowly preparing insurers to meet new global financial industry standards since 2009, including by moving toward new risk-based measures of capital adequacy. The FSS recommends insurers maintain a risk-based capital ratio of around 200% in the coming months.
KB Financial and ING started to wind down their business ties after KB Financial last year dropped out of exclusive negotiations to buy ING Life Insurance Korea, ING's wholly owned Korean insurance operation, for $2.1 billion. In February, ING disposed of its entire 5% stake in KB Financial for some $676 million.
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