Hanwha Life has the inside track to acquire ING

The race to find a new owner for ING Life Korea is under way and all eyes are on the contenders to see who will take win the nation’s fifth-largest insurer.

According to market observers yesterday, four potential buyers - Hanwha Life Insurance, Kyobo Life Insurance, Tongyang Life Insurance and private equity fund MBK Partners - had submitted letters of interest for a binding bid to acquire the Korean unit of the Dutch insurance giant as of Friday.

If No. 2 player Hanwha acquires ING Life Korea, it would boast in excess of 100 trillion won in assets, trailing only market leader Samsung Life Insurance. It would also help Hanwha cement its position over No.3 player Kyobo, which has 69.3 trillion won in assets, according to the Korea Life Insurance Association.

Hanwha has 76.9 trillion won in assets and ING Life Korea has 23.3 trillion won.

“For the past 10 years, the market share difference between Hanwha and Kyobo was as high as 1.3 percentage points and as low as 0.5 percentage point,” said an industry insider. “If either Hanwha or Kyobo bags the ING Life Korea deal, it will inherit the company’s financial stability as well as a stable customer base as it has mainly sold coverage insurance to the middle class.”

The market’s eighth-largest player, Tongyang Life Insurance, also is interested.

Industry insiders involved in the sale suggested the deal has technically become a two-horse ride between Hanwha and Kyobo, because financial authorities have expressed concerns about private equity funds’ acquiring the insurer.

In addition to MBK Partners, Tongyang’s largest shareholder is Vogo Fund, a private equity fund.

Others suggested Hanwha has the edge because it has offered more than Kyobo.

“The minimum acquisition price is estimated to be 2.2 trillion won and a company that submitted higher amount is likely to secure an advantage,” said an industry insider.

A preferred bidder is expected to be announced this month with a final decision two to three months later.

Dutch banking giant ING Group put its Asian insurance and asset management operations up for sale because it was ordered by the European Commission to divest its global insurance arm in return for aid it received during the 2008 financial crisis.

Last year, KB Financial Group Chairman Euh Yoon-dae also tried to acquire ING Life Korea, but met strong opposition from KB’s board of directors.

Some suggested a bumpy ride is expected for Hanwha as ING Life Korea’s labor union strongly opposes a Hanwha’s acquisition.

The National Tax Service launched a probe of Hanwha on Friday.

Hanwha Group Chairman Kim Seung-youn’s absence is also deemed another hurdle. The group runs the conglomerate and its affiliates under emergency management because Kim is in jail for embezzlement.

Cha Nam-gyu, president and CEO of Hanwha Life Insurance, said the tax watchdog’s probe will have no impact on the ING Life Korea acquisition deal.

“We were scheduled to get a regular tax probe in June,” Cha said on Friday. “The acquisition of ING Life Korea is needed for Hanwha Life’s future.”

By Kim Mi-ju [mijukim@joongang.co.kr]