ING Life confident about local IPO
“We are an attractive investment that stands out against other life insurers that have been listed,” Cheong said, “with the best financial soundness and a dividend yield of near 6 percent.”
The company is aiming to list on the Korean stock exchange next month and will be the first insurer to go public in two years, after Mirae Asset Life Insurance in 2015.
Most notably, ING Life Insurance Korea will be the first company entirely owned by a private equity fund to be publicly list. Last June, the government allowed private equity funds to recollect their investment through IPOs in hopes of spurring the local M&A market. Local private equity firm MBK Partners has owned ING Life Insurance Korea since buying the Korean operation from Dutch financial group ING in 2013.
Cheong showed particular confidence in the company’s ability to overcome stricter accounting regulations that the government plans to implement in the insurance industry in 2021, when insurers will be required to report their debt in terms of market value rather than book value.
Under the new regulation, the Korea Insurance Development Institute, an organization of insurance firms, estimates the debt balance of Korean insurers will rise by 47 trillion won ($41.2 billion). The more the debt swells, the lower the insurer’s risk-based capital, a barometer for assessing the company’s soundness, drops.
“ING Life Insurance’s risk-based capital ratio is currently 319 percent, the highest in the industry,” Cheong said. “Even with the tougher regulation, that ratio will not fall below 300 percent and instead go up.”
Cheong affirmed that the company’s portfolio was strong. Its safe assets, including long-term bonds, account for 97 percent, he said, while its short-term profit rate is higher than other life insurers traded on the stock market.
The CEO said the most recent short-term profit rate of ING Life Insurance Korea was 6.8 percent, compared to the competition’s 2.8 percent.
ING Life Insurance Korea is expected to raise between 1.05 and 1.34 trillion won from the IPO, with the offering price on 33 million shares between 31,500 won and 40,000 won. Sales are scheduled to be open for two days on April 27 and 28.
BY LEE HO-JEONG [firstname.lastname@example.org]
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