AXA General Insurance Unloading Korea Operation

AXA is keen to sell a 100% stake in its South Korean operation, AXA General Insurance Co. The 100% stake is estimated to be worth between 160 billion won ($135.3 million) and 240 billion won ($203 million). The net asset value of AXA General is 235.1 billion won. Non-life insurance transactions have recently been valued at a price-to-book ratio of 0.7 times. Earlier this year, Hana Financial Group’s 70% stake purchase in The-K Non-Life Insurance for 77 billion won was also based on a P/B ratio of 0.7.

AXA General Insurance was Korea’s first “direct auto insurance” firm, whereby a company and a contractor could sign up for insurance directly, without an agency or a recruiter. M&A market sources say that financial holding companies are likely to be more interested in the deal than private equity funds (PEFs) since the auto insurance sector is strictly regulated by financial regulators — a hurdle that may put off potential buyers.

The asset might not be so attractive to PEFs that need to retrieve funds after a certain period. Local financial holding companies that need non-life insurance licenses are likely to show greater interest.

Currently, Shinhan Financial Group and Woori Financial Group are the two financial holding companies that do not have non-life insurance portfolios. Shinhan Financial, Korea’s largest bank holding company, has acquired Orange Life Insurance, the former Korean operation of ING Life Insurance, but it does not hold a non-life insurance company.

As for Woori Financial, it invested 20 billion won into a project fund managed by JC Partners, a PEF that owns MG non-life insurance company, but the financial group does not directly operate a non-life insurance company.

Korea Direct, an independent local insurance company, entered Korea’s online insurance market in 2000. The name changed to Kyobo Auto Insurance in 2001 when it was acquired by Kyobo Life Insurance, one of the largest life insurers in Korea. In 2007, it became Kyobo AXA Auto Insurance when AXA Group acquired a 74.7% stake in Kyobo Life.

In 2009, it became AXA General Insurance when AXA Group acquired the remaining shares.

Aside from auto insurance, the Korea-based AXA also offers general and long-term insurance products, including fire insurance, accident insurance, and health insurance.

AXA General secured 903,759 fresh contracts during the first quarter of this year. The insurer has accumulated 2,788,239 contracts to date. In 2019, AXA General posted 929.4 billion won in operating profits.