Korean insurance firm up for grab
A few private equity funds at home and abroad strive to gobble up MG Non-Life Insurance, South Korea’s cash-strapped insurance company.
A source familiar with the issue said on April 12 that the PEFs are hoping to snap up MG Non-Life Insurance, which is expected to benefit from the rising interest rates.
“A few PEFs submitted their letters of intent to purchase MG Non-Life to Samil PricewaterhouseCoopers,” said the source who asked not to be named.
On the lips of the anonymous source was Glenwood.
“As far as I know, there are more PEFs, which handed in their letters of intent. The competition is quite stiff,” the source said.
MG Non-Life has financially struggled over the past few years as its losses continued.
The Seoul-based insurer managed to reduce its loss last year but still, the amount was as large as 61.7 billion won ($48 million).
As a result, its RBC ratio dipped below the 100-percent benchmark to mark 88 percent as of the end of 2021.
RBC ratio is calculated by dividing the total adjusted capital of a firm by the required risk-based capital. It is a metric of capital sufficiency of financial outfits.
Against this backdrop, MG Insurance entered the M&A market with Samil leading the procedures.
As insurance companies typically fare well when the interest rate goes up, observers point out that the sales would attract interest from many potential buyers.
To tame the rising inflationary pressure, South Korea’s central bank is also set to raise the interest rates in line with the stance of the U.S. Federal Reserve.
The price of MG Non-Life Insurance is expected to be around $400 million.