Shinhan Financial Group has signed a contract to acquire Lotte Insurance, marking a significant step in enhancing its non-banking operations. Following the acquisition, the group plans to merge Lotte Insurance with Shinhan EZ Insurance to improve profitability and overall financial competitiveness.
On October 13, Shinhan Financial announced that it has entered into a stock purchase agreement (SPA) to acquire a 77.04% stake in Lotte Insurance from JKL Partners for 693.3 billion won. The acquisition will be finalized after obtaining approval from financial authorities, and the group aims to secure additional shares. Subsequently, it will pursue the merger with Shinhan EZ Insurance and invest further resources to enhance financial soundness.
Lotte Insurance is a mid-sized property and casualty insurer with approximately 3.34 million customers. As of the end of the first half of this year, its insurance contract margin (CSM) stands at about 2.2 trillion won. CSM is a metric that evaluates the present value of expected unrealized profits from insurance contracts.
Shinhan Financial plans to leverage Lotte Insurance's customer base by integrating it with the group's sales channels and digital capabilities to boost profitability. The merger with Shinhan EZ Insurance is expected to reduce redundant costs and improve capital structure in preparation for the upcoming basic capital solvency (K-ICS) ratio regulations set to take effect next year.
This acquisition will be executed by reallocating the group's existing capital without external funding.
A Shinhan Financial representative stated, "Lotte Insurance has a long history of experience in the insurance business, a solid customer base, and strong sales capabilities. By combining these strengths with the group's capital and risk management, as well as customer and digital capabilities, we aim to create new growth momentum for the insurance business."
* This article has been translated by AI.
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