Tongyang Life Insurance sold its entire stake in Woori Financial Group on Friday to secure more capital, in preparation for a stricter rule on local insurers’ fiscal soundness.
According to a regulatory filing, the company had decided to sell all of its 3.74 percent stake (27.04 million shares) in the banking giant to some 60 domestic and foreign institutions, during its shareholders meeting held Thursday.
The sale price was 301.5 billion won ($262 million), which accounts 9.7 percent of its equity capital worth 3.93 trillion won.
Since Tongyang Life Insurance acquired the shares in Woori Financial in December 2016, the insurer has reportedly raised a 3 percent return on investment.
With a 15.25 percent stake, the state deposit insurer Korea Depository Insurance Corp. is the largest shareholder in the banking group. Other major shareholders are the National Pension Service, the Employee Stock Ownership Association, IMM Private Equity, Korea Investment and Secutities, Kiwoom Securities and Hanwha Life Insurance.
Tongyang Life said the move was aimed at “securing more capital to swiftly respond to an anticipated regulatory change following the introduction of the Korean Insurance Capital Standard, or K-ICS, set to come into effect in 2022.”
The new insurance liability market valuation system requires insurance firms to increase their risk-based capital ratio the actual solvency capital divided by the minimum solvency capital required so that they can hedge against various management risks.
Tongyang Life’s risk-based capital ratio stood at 221.2 percent at the end of the first quarter, below the industry average of 273.2 percent, data showed.
Currently, Dajia Insurance Group, China’s state insurance company, holds the largest stake of 75 percent in Tongyang Life Insurance.