Will Shinhan Financial Group Create Synergies from ING Life?

As the Shinhan Financial Group is negotiating the price of ING Life in the eleventh hour, it is forecast that ING Life's insurance sales force can be a key variable in price adjustment. ING Life Insurance is famous for its high proportion of male insurance planners and its strong sales power. However, some experts say that since MBK Partners acquired ING Life, its insurance planner structure has shrunk from the past.

On August 16, according to the financial industry, since ING Life was acquired by MBK, the financial soundness of ING Life has improved to such an extent that its RBC ratio has exceeded 500%. On the other hand, its insurance planner structure has weakened as its insurance premiums which measure sales power has not grown.

The Shinhan Financial Group expects synergies through the acquisition of ING Life as the KB Financial Group grew rapidly by acquiring LIG Insurance but some experts say that there may be a limit in the generation of such synergies.

In particular, if ING Life is incorporated into the Shinhan Financial Group as a subsidiary, ING Life will be subject to the Financial Holding Company Act. If the act is applied, ING Life will not be able to have general agencies (GAs) as subsidiaries. Given that the portion of product sales through GAs has been growing in the insurance industry in recent years, it may significantly hinder business expansion.

Shinhan Life brought the establishment of its GA to the board of directors as an agenda in March, but the agenda was not passed as financial authorities said that a financial holding company could not have a GA as a subsidiary of its subsidiary. Some experts say that that mattermay also serve as a variable in the final adjustment of ING Life’s price.