Samsung Life Insurance to Incorporate Samsung Fire & Marine Insurance as Subsidiary... Approval Requested from Financial Services Commission

Samsung Life Insurance
“Weighing Samsung Fire & Marine Insurance Shareholding and Government Value-Up Policies”

Samsung Life Insurance is pursuing a plan to incorporate Samsung Fire & Marine Insurance as its subsidiary.

According to financial authorities on the 13th, Samsung Life Insurance submitted an application to the Financial Services Commission in the afternoon to incorporate Samsung Fire & Marine Insurance as a subsidiary. After the Financial Supervisory Service conducts a two-month approval review for the subsidiary incorporation, the final decision will be made following the Financial Services Commission's resolution and the Fair Trade Commission's corporate merger review.

Samsung Life Insurance's intention to incorporate Samsung Fire & Marine Insurance as a subsidiary became visible after Samsung Fire & Marine Insurance announced its value-up (corporate value enhancement) disclosure on the 31st of last month. Samsung Fire & Marine Insurance announced its value-up plan, setting target levels for the solvency ratio (K-ICS) and return on equity (ROE) at 220% and 11?13%, respectively, and stated it would gradually increase the shareholder return ratio to 50% by 2028. It also mentioned that the currently held treasury shares of 15.93% would be gradually reduced to below 5%.

To properly implement the value-up, Samsung Fire & Marine Insurance must dispose of at least 10% of its currently held treasury shares by 2028. However, if Samsung Fire & Marine Insurance cancels treasury shares, the shareholding ratio of Samsung Life Insurance in Samsung Fire & Marine Insurance (14.98%) could increase.

According to the Insurance Business Act, insurance companies cannot hold more than 15% of another company's shares. If the shareholding exceeds 15%, the company must incorporate the other company as a subsidiary after regulatory review. The securities industry expects that if Samsung Fire & Marine Insurance reduces its treasury shares to 5%, Samsung Life Insurance's shareholding ratio will rise to 16.93%. Some have suggested that Samsung Life Insurance might sell shares in the market to keep its stake below 15%, but concerns were raised that the overhang (potential sell-off volume) issue would dilute the value-up effect. A Samsung Life Insurance official explained, "We are proceeding with the subsidiary incorporation process for Samsung Fire & Marine Insurance by comprehensively considering the holding of high-quality assets such as Samsung Fire & Marine Insurance shares and government value-up policies."

Samsung Fire & Marine Insurance stated that even if it is incorporated into Samsung Life Insurance, there will be no change in its board-centered management structure. Koo Young-min, Chief Financial Officer (CFO) of Samsung Fire & Marine Insurance, said during a conference call held after the earnings announcement the previous day, "Even if incorporated as a subsidiary of Samsung Life Insurance, there will be no special changes in business operations or governance," adding, "We will continue to operate the business centered on the board of directors as we do now."