Aviva plc is to enter the South Korean life insurance market by forming a consortium with Woori Finance Holdings Company Ltd.
The consortium has entered into a definitive agreement with LIG Insurance Co Ltd and seven individual shareholders to acquire a 91.65% stake in LIG Life Insurance Co Ltd, a South Korean life insurance company, for a consideration of KRW 137.17 billion in cash. After completion Aviva will hold 40.65% of LIG Life.
LIG Life distributes life insurance products through multiple distribution channels and focuses on the Busan metropolitan area located in the south-eastern region of South Korea. It reported life insurance premium income of KRW 328 billion and total assets of KRW 1,300 billion for the year ended 31 March 2007.
Aviva and Woori plan to develop LIG Life’s business distribution predominantly through bancassurance via Woori’s banking network and independent financial advisors, a rapidly growing distribution channel.
“South Korea is the second largest life insurance market in Asia in terms of premium income and, with Aviva aiming to significantly increase its presence in Asia, a foothold in this market is a logical step. Our strategy is to grow our global customer reach and deliver average annual growth of 20% in the Asia Pacific region. Already 8% of Aviva’s total sales come from our rapidly growing businesses in Asia. LIG Life will enable Aviva to roll out its global bancassurance expertise in South Korea in conjunction with Woori, one of the country’s largest financial institutions,” says Simon Machell, CEO, Aviva Asia Pacific.
The closing of the transaction, which is subject to regulatory approval, is expected to take place in the first half of 2008.