Mirae Asset Life Insurance Co. will become South Korea’s fifth largest life insurer based on asset size after acquiring PCA Life Insurance Co., a subsidiary of U.K.-based Prudential Plc.

Mirae Asset Life Insurance said on Thursday that it signed a stock purchase agreement to buy entire 23,395,700 shares in PCA Life Insurance at 170 billion won ($145.7 million). It is equivalent to 9.15 percent of its capital amount on a consolidated basis as of the end of last year.

The company stands as the country’s sixth largest life insurer as of the end of last year with 27 trillion won in assets and it will replace the country’s fifth largest life insurer ING Life Insurance Korea after expanding its assets to 32 trillion won from the acquisition of PCA with 5 trillion won in assets. PCA is a medium-sized life insurer that was renamed from YoungPoong Life Insurance after U.K-based insurance giant Prudential took over in 1999.

Mirae Asset had submitted a letter of intent to purchase PCA in August and has conducted due diligence during the last several months. Industry observers previously had expected the sale price would reach around 300 billion won but the final sale price was halved to 170 billion won.

Mirae Asset’s decision to purchase PCA comes after recognizing PCA’s strength in variable life insurance sector and it believes the merger will create a synergy effect, said an unnamed Mirae Asset official. The company aims to become the best retirement planner after the acquisition, added the official.

The variable life insurance is a permanent life insurance policy attached with investment in securities and bonds. The insurer invests a part of insurance payment received and returns profits to insurance policy holders. It carries less risk for insurance companies to bear as policyholders shoulder both profits and losses.

As of the end of August, PCA’s assets related to variable life insurance products stands at 3.83 trillion won, 72 percent of the total assets while Mirae Asset’s variable life insurance products accounts for 22 percent or 6.05 trillion won of its total assets, making the combined volume of the two firms’ variable life insurance products to reach 10 trillion won. Based on variable life insurance product volume only, Mirae Asset will be the country’s fourth largest life insurance firm following Samsung Life Insurance Co., Hanwha Life Insurance Co, Kyobo Life Insurance Co.

Currently out in local merger and acquisitions market, there are also ING Life Insurance Korea and KDB Life Insurance Co. waiting for a new owner. The buyout deal over ING Life Insurance Korea that the country’s largest private equity fund MBK Partners is carrying out in a progressive auction, running the bidding race without a deadline to raise the final sale price, has drawn four or five contenders including three Chinese firms - JD Capital, Taiping Insurance Group, and Fosun International.

The preliminary auction on KDB Life Insurance that Korea Development Bank ran last month attracted IBK Securities Co.’s private equity fund and two or three Chinese financial firms and they have launched due diligence.

As of 14:31 p.m. on Friday, Mirae Asset Life Insurance shares stands at 4,545 won, up 225 won or 5.21 percent from the previous session.

By Kim Tae-sung

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