Japan’s Orix to Invest $277 Million in Korea’s Mirae Asset Life

Orix Corp., a Japanese financial services group, said it plans to invest 300 billion won (US$277 million) in South Korea'sMirae Asset Life Insurance Co. Ltd. through a private investment fund jointly formed with other companies, in a bid to expand in potential overseas markets. Orix's local investment management subsidiary, Orix Private Equity Korea Corp., will acquire 21.13 million shares of newly issued preferred shares from Mirae Asset Life through an investment fund jointly established with LTI Investments, a South Korean investment company.

Nine companies are expected to join the private investment fund as investors, including National Pension Service, the Korea Teachers Pension and other institutional investors in South Korea. "Orix will participate as an investor along with the aim to expand its fee business by managing the fund," said Orix Corp. in a statement.

Mirae Asset Life, a midsize life insurer, "aims to fortify its financial platform through this capital increase for the purpose of further expanding its business and strengthening the creditworthiness of the company," said Orix.

In South Korea, more life insurers are expected to raise capital through initial public offerings in the coming years, according to a recent A.M. Best Co. special report. They would follow companies such as Korea Life Insurance Co. Ltd. and Samsung Life Insurance Co. Ltd., which launched IPOs in March and May 2010, respectively.

Tong Yang Life Insurance Co. Ltd. was the first life insurer to list on the Korea Exchange in October 2009. Dongbu Life Insurance Co. Ltd., Kyobo Life Insurance Co. Ltd., Mirae Asset Life Insurance Co. and <org>Green Cross Life Insurance Co. are also preparing for IPOs in South Korea. The life insurers have sought public listing to raise capital to fuel further business growth (BestWire, May 14, 2010).

South Korea introduced a new retirement pension plan this year, requiring companies to change their retirement insurance or personal pensions to a pension fund. The current market share of pension funds in life insurance is about 4% and it is expected to rise with the pension reform. With a growing pension market, competition among financial institutions such as banks, insurance companies and securities firms will be fierce (BestWire, Feb. 1, 2011).

Mirae Asset Life is a subsidiary of Mirae Asset Group, a leading securities and equities asset manager in South Korea, and the insurer focuses on variable and pension insurance capitalizing on the group's asset management capabilities.

Mirae Asset Global Investments Group planned to expand in the greater China region by acquiring a 60% stake in TLG Asset Management Co., a subsidiary of Taiwan Life Insurance Co. Ltd. (BestWire, Feb. 2, 2011).

Mirae Asset Life is the fifth-largest life insurer in South Korea based on total assets, which amounted 14.94 trillion won as of March 31, 2011. The insurer has about 1,400 employees.

Tokyo-based Orix is publicly listed in the Tokyo, Osaka and New York stock exchanges. With operations in 27 countries and regions, Orix provides corporate financial services such as leases and loans, and has operations in automobile, rental, real estate and life insurance. Orix Life Insurance Corp. is the group's wholly owned insurance unit.

Orix Corp. was the second-largest shareholder with a 15.53% stake in Fuji Fire & Marine Insurance Co. Ltd. but it agreed to tender all of its shares to Chartis Inc., the nonlife insurance unit of American International Group Inc. last February. Chartis acquired the remaining 45.3% shares in Fuji Fire it hadn't already owned for about 47 billion yen (US$582 million). The transaction aimed to strengthen Chartis' position in the Japan market while allowing Fuji Fire to benefit from the group's resources and financial strength, said Chartis (BestWire Feb. 11, 2011).

(By Iris Lai, Hong Kong bureau manager: [email protected])