KB Insurance Co. will invest in a Vietnamese non-life insurance company to carve out a niche for itself in the Southeast Asian country's growing insurance market.
As South Korea’s major non-life insurance companies are seeking to push into the Vietnamese market, competition for acquisition of local insurance firms is also overheating.
According to insurance industry sources on Nov. 28, KB Insurance is planning to acquire a 17 percent stake in Bao Minh Insurance, the third biggest insurance company in Vietnam with an 8.2 percent market share.
Bao Minh Insurance is under the control of State Capital Investment Corp. (SCIC) which has a 50.7 percent stake. SCIC is run by Vietnam Asset Management Co.
If KB Insurance acquires a 17 percent stake in Bao Minh Insurance, it will become its second largest shareholder. Then, global insurance firm AXA Insurance Co. will become the third largest shareholder with a 16.7 percent stake.
KB Insurance will hold a board meeting early next month and decide on the stake acquisition plan. The company will sign a formal agreement as soon as the board of directors approves the proposal. An official from KB Insurance said, “The board of directors will vote on the proposal next week. It is hard to disclose detailed terms and conditions of the contract and policy on cooperation for now.”
Bao Minh Insurance's net assets total US$95.6 million (107.88 billion won) and its original premium comes to US$152.6 million (172.21 billion won).
KB Insurance first entered the Vietnamese market by opening its office in Hanoi in 1995. The company additionally opened an office in Ho Chi Minh in 2001 but didn’t expand to such an extent as to set up a local subsidiary like the one in the United States and Indonesia. When KB Insurance acquires Bao Minh Insurance, it will be the largest M&A carried out by a domestic insurance firm in Vietnam.