Samsung Life Insurance Co., insurance arm of South Korea’s largest conglomerate Samsung Group, has been drawing renewed attention on the stock market as its recent moves suggest it is gearing up to become a financial holding entity.

Samsung Life Insurance last Friday acquired additional 10.94 percent shares in its affiliate Samsung Securities Co. Following the latest purchase, its total holding in the Samsung Group’s brokerage arm rose to 30.1 percent, a step closer to become a holding company for the group’s financial affiliates.

Earlier this year, Samsung Life Insurance already increased its stake in another financial affiliate Samsung Card Co. to above 30 percent. If it buys additional stakes in Samsung Fire & Marine Insurance Co. in which the life insurer already has 14.98 percent shares, the life insurer would be almost ready to become a financial holding company of Samsung Group.

To be eligible for a financing holding entity under the current law, Samsung Life Insurance must own 30 percent or above shares in listed financial affiliates and 50 percent or above shares in non-listed financial units. The life insurer currently owns a 98.73 percent stake in Samsung Investment Trust Management Co., 71.86 percent stake in Samsung Card, and 30.1 percent stake in Samsung Securities on top of shares in other financial affiliates.

The law also bans a financial holding company from owning 5 percent or more shares in non-financial affiliates. This means that Samsung Life Insurance would have to sell off at least 2.55 percent shares in its electronics affiliate Samsung Electronics to reduce its current ownership from 7.55 percent to below 5 percent.

Amid growing speculations that Samsung Life Insurance would soon dispose of its holdings in Samsung Electronics, market experts expect that company’s shares would remain on the upward swing for a while. On Tuesday, Samsung Life Insurance shares ended down 1.3 percent, or 1,500 won, at 113,500 won from the previous session, snapping a three-day winning streak.

The 7.55 percent shares in Samsung Electronics had been bought at 569.0 billion won, far below the current market value of the electronics maker. Based on Samsung Electronics’ closing price of 1,553,000 won on Monday, the insurer’s 2.55 percent shares in the electronics affiliate are valued at 5.5 trillion won.

Samsung Life Insurance would earn more than 5.3 trillion won by unloading its stake in the electronics maker, which could be more than what the insurer earned for the last four years as its 2015 net profit reached 1.21 trillion won.

Even if it spends about 2 trillion won in buying additional stakes in Samsung Fire & Marine Insurance, its cash hoard would become much handsome through profit gain.

Once the company meets all requirements to become a holding company, market experts expect that it would be split into two divisions - investment unit that oversees its financial affiliates’ business and general operation unit that manages life insurance works.

By Hong Jang-won and Bae Mi-jung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]