AXA acquires online auto insurer Ergo DaumAXA General Insurance Korea, the local unit of French global insurer AXA S.A., said it plans to cement its leading position through its acquisition of general insurer Ergo Daum Direct, signed late Thursday.
“Direct [insurance] is a very important part of AXA’s strategy, [and] the Korean market is one of strategic importance for AXA,” said AXA Global Direct CEO Stephane Guinet in a press conference in southern Seoul yesterday. “Through this acquisition, we are strengthening our No. 1 position in the Korean motor direct [insurance] market.”
Ergo Daum Direct, since 2008 a subsidiary of Ergo Insurance Group, which is itself a subsidiary of global reinsurer Munich Re, had been up for sale since last year. It suffered from losses due to high loss ratios in auto insurance and insurance premiums largely frozen under government pressure.
Although AXA executives declined to reveal the purchase price of Ergo Daum Direct, local media reported that the price had been around 50 billion won ($44.2 million).
AXA successfully outbid the Korean Federation of Community Credit Cooperative, which had been vying to acquire Ergo Daum Direct but was hemmed in by local laws that bar the cooperative from owning more than 30 percent share of a financial company.
With the acquisition, AXA is now the biggest player in Korea’s direct auto insurance market with its market share jumping from 14 percent to 22 percent. With the combined net premiums of AXA and Ergo Daum roughly 700 billion won as of January, AXA’s Korean operations is set to rank ninth among general insurers.
“The deal signed [Thursday] is the result of discussion and exchange,” said Guy Marcillat, executive chairman and group executive officer for AXA General Insurance Korea.
By Lee Jung-yoon [email@example.com]