Kyobo Life in final talks to buy Kakao Pay Insurance

South Korea’s third-largest life insurer Kyobo Life Insurance Co. is in the final stages of talks to buy Kakao Pay Insurance Corp., an online non-life insurer, according to sources familiar with the situation.

Kyobo is conducting due diligence on the insurance unit of fintech Kakao Pay Corp., fine-tuning the terms and conditions of the prospective deal.

Both sides entered into talks late last year. The deal size has not been disclosed, but the insurance unit’s corporate value is estimated at 120 billion won to 150 billion won ($90.5 million to $113 million), according to the sources on Monday.

Kyobo is seeking to re-enter the non-life insurance market ahead of its planned transformation into a financial holding company later next year.

The purchase of Kakao Pay Insurance might diversify Kyobo's business portfolio and create a foothold for the growing online insurance segment.

Kakao Pay Insurance was set up in September 2021 with equity capital of 100 billion won. Kakao Pay controls 60% of the unit, with its parent Kakao Corp., a dominant mobile platform, holding the remainder.

If the deal goes through, Kyobo will likely take a 51% stake or more in Kakao Pay Insurance, according to the sources.

Kakao Pay Insurance launched its business last year. But it struggled to build its presence, unlike its parent company's growing dominance in the non-banking settlement services market.

It has signed only 60 contracts for its first product to insure against voice and messenger phishing, online financial scams and e-commerce trading of second-hand goods.

Back in 2001, Kyobo ventured into the non-life insurance sector by acquiring Korea’s first digital insurance firm specializing in car insurance. But it sold its entire stake in the unit to AXA, Europe’s No. 2 insurance group, between 2007 and 2009.

Late last year, Kyobo tried to buy MG Non-Life Insurance Co., jointly with Seed Partners, a local startup accelerator.

Seed Partners had been chosen as a preferred buyer of MG Non-Life, but gave up its bid early this year.

“We are aiming to transform into a financial holding company by the second half of next year,” said a Kyobo representative.

“As part of such efforts, we are considering advancing into the non-life business. But nothing in detail has been determined about buying Kakao Pay Insurance.”

Kakao Pay on Tuesday said in a regulatory filing it was reviewing various options to expand Kakao Pay Insurance, but no decision has been made in that regard.

Separately, Kakao Pay on Monday denied an earlier report that it was seeking to purchase Loca Mobility Corp. from MBK Partners, although it has been cooperating with the transportation card operator in various ways.

Write to Ji-Eun Ha at hazzys@hankyung.com
Yeonhee Kim edited this article