KB Financial unionists oppose acquisition of life insurance company
The sales of Prudential Life Insurance of Korea were expected to be a big hit as multiple candidates made their bids to acquire the profitable life insurer.
They are KB Financial Group, Hahn & Company and IMM Private Equity. KB was touted as the major contender of the deal whose value is estimated at around $1.6 billion.
However, uncertainties surface as the Seoul-based financial group’s trade union opposes the acquisition. The labor union of KB Financial criticized Chairman Yoon Jong-gyu during its annual shareholders’ meeting on Friday.
“A new accounting rule will increase the liabilities of life insurance companies. In addition, it is not right to buy a life insurer at a time when the interest rate is very low,” a KB unionist said during the meeting.
“Doesn’t Chairman Yoon try to take over Prudential to exaggerate his performances for his reappointment? Can he take responsibility in case the value of Prudential depreciates?”
South Korean life insurers are scheduled to adopt the International Financial Reporting Standard 17 in 2023 under which their values are feared to go down.
The second term of Chairman Yoon, who took charge of KB Financial in 2014, will finish this year. Observers expect that he would vie for another three-year term.
In response, Chairman Yoon said that the takeover of Prudential would raise the overall value of KB Financial.
On top of the trade union’s opposition, the coronavirus outbreak is likely to weigh on the M&A deal, which is headed by Goldman Sachs. The investment bank is set to designate a preferred bidder in months to come.
To deal with the virus threat, the Bank of Korea slashed its benchmark interest rate to 0.75 percent this month, the lowest in the country’s history.
The low borrowing rate negatively affects life insurance companies, which would decrease the value of Prudential.
This article is provided by UPI News Korea. _ ED.