'The Final Piece' in Non-Life Insurance... Shinhan Financial Group Considers Acquiring Lotte Insurance

Task Force Formed, First M&A Bid in Four Years
Key Issue: Acquisition Price Approaching 1 Trillion Won

Shinhan Financial Group is pursuing business expansion through mergers and acquisitions (M&A) for the first time in more than four years. The group has officially begun efforts to acquire a non-life insurance company, which is considered the final piece in strengthening its insurance capabilities.

Shinhan Financial Group Headquarters.

According to the financial industry on June 28, Shinhan Financial Group recently submitted a non-binding offer for the acquisition of Lotte Insurance to JKL Partners, a private equity fund manager and the largest shareholder of Lotte Insurance. Although Shinhan did not submit a letter of intent (LOI) in the latest round, it has effectively expressed its interest in the acquisition and entered into behind-the-scenes negotiations. JKL Partners has reportedly agreed to cooperate with due diligence and other procedures as if an LOI had been submitted.

Shinhan Financial Group has established a task force for insurance company acquisitions and is actively reviewing the purchase of insurers currently on the market, including Lotte Insurance, Yebyeol Insurance (formerly MG Non-Life Insurance), and KDB Life Insurance.

The non-life insurance sector is seen as the weakest link for Shinhan Financial Group. Unlike the group’s other subsidiaries—such as banking, securities, credit card, life insurance, and capital—which rank among the industry’s top players, Shinhan EZ Insurance, its digital non-life insurer, has a relatively small asset base. It is also a painful point for Shinhan that KB Financial Group successfully acquired LIG Insurance, thereby strengthening its insurance capabilities and increasing its non-banking business ratio within the group.

Industry observers expect that if Shinhan Financial Group acquires Lotte Insurance, which has assets totaling 14 trillion won, it would rise to become the seventh-largest player in the non-life insurance industry.

The key issue is the acquisition price. JKL Partners is asking for about 1 trillion won, but Shinhan Financial Group internally considers this price excessive. Even after acquiring Lotte Insurance, it would need to purchase the remaining shares and conduct a capital increase to improve management. Since JKL Partners holds a 77.04% stake in Lotte Insurance, Shinhan would need to acquire the remaining 22.96% from the market to make it a wholly owned subsidiary.

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