Taiwan’s Fubon Life raises stake in Korean unit via $405 mn rights offer

Fubon Life Insurance Co., a unit of Taiwan’s Fubon Financial Holding Co., has raised its stake in a Korean joint venture with Hyundai Motor Group to 77.4% from 62.1% earlier by assuming all new shares issued via a rights offering.

The JV, Fubon Hyundai Life Insurance Co. decided in January to conduct a rights offering worth 458 billion won ($405 million) to raise capital needed to maintain its financial stability.

A company official said on Monday Fubon Life Insurance assumed all new shares as of June 24 as its Korean partner, Hyundai, decided not to join the rights offering. As a result, Hyundai’s stake in the JV will fall to 22.3% from 37.5%.

Following the fundraising, Fubon Hyundai Life’s risk-based capital (RBC) ratio, a measure of financial strength, will rise to 225% from 178% at the end of March.

The Financial Supervisory Service recommends local insurance companies maintain the RBC ratio, which measures an insurer's ability to absorb losses and pay the insurance money to policyholders, above 150%.

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“The rights offering this time is aimed at maintaining the RBC ratio at appropriate levels and to prepare for the introduction in 2023 of the international financial reporting standards (IFRS17),” said an official at Fubon Hyundai Life.

The Taiwanese financial group entered the Korean insurance market in 2015 by taking a 48.6% stake in Hyundai Motor Group’s insurance unit in 2015. Fubon increased its holding in the JV to 62.1% in 2018 by acquiring additional new shares.

Following the latest rights offering, Fubon Life Insurance’s investment in Korea now stands at 1.27 trillion won, including a 4% stake in Woori Financial Group.

As of end-March, Fubon Hyundai Life’s total assets were 18.58 trillion won. Its retirement pension assets stood at 8.87 trillion won, the second-largest following market leader Samsung Life Insurance Co.

Write to A-Young Yoon at youngmoney@hankyung.com
In-Soo Nam edited this article.