South Korea’s Mirae Asset Financial Group headed by Chairman Park Hyeon-joo is eyeing on PCA Life Insurance Co., a subsidiary of U.K.-based Prudential Group, as its next acquisition target to become one of the country’s top five life insurance firms.

According to investment banking sources on Tuesday, Mirae Asset Financial Group is likely to sign a contract to buy PCA Life Insurance soon to merge it with the group’s life insurance arm Mirae Asset Life Insurance Co.

According to Korea Life Insurance Association, Mirae Asset Life Insurance with 26.79 trillion won ($24.4 billion) in assets is the country’s sixth largest life insurance while PCA Life Insurance, a small- and medium-sized life insurer with 5.2 trillion won in assets as of late last year, ranks 19th among 25 life insurers. If Mirae Asset Life Insurance buys PCA Life Insurance as rumored, Mirae Asset Group that owns Korea’s largest brokerage house through a merger between Mirae Asset Securities and KDB Daewoo Securities would own the country’s fifth largest life insurance company with 32 trillion won asset, beating out ING Life Insurance with 29.56 trillion won in assets.

PCA Life Insurance was established in Korea in 1990 after U.K.-based Prudential Group acquired YoungPoong Life Insurance. Speculation has been swirling that Prudential Group with a full stake in the Korean life insurance unit would sell it off soon, as Prudential Group recently rehired Goldman Sachs to lead the sale of PCA Life Insurance after cancelling a contract with Morgan Stanley.

PCA Life Insurance posted a consolidated net profit of 21.6 billion won in 2015, an improvement from a net profit of 17.4 billion won recorded in 2014, but it has been under mounting pressure to expand capital amid a low interest environment and the expected adoption of new accounting rules in the county.

Life insurance companies in Korea should adopt International Financial Reporting Standard 4 (IFRS4) Phase II by 2020, and with the adoption of the new accounting standard, liabilities at life insurance companies are expected to increase drastically, which could further undermine the financial health of small- and medium-sized life insurance companies including foreign insurers without significant capital expansion.

By Park Joon-hyung

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