Hanwha General Insurance Holds 59.57% Stake in Carrot
Likely to Acquire Remaining Shares and Proceed with Absorption Merger
Hanwha General Insurance: "Exploring Various Measures"
Hanwha General Insurance is considering the merger of its subsidiary, Carrot General Insurance. This move comes in response to several years of deteriorating profitability and capital soundness at Carrot General Insurance.
According to the insurance industry on the 9th, Moon Hyo-il, CEO of Carrot General Insurance, recently told employees that rather than selling the company, they are exploring options such as a paid-in capital increase or absorption merger into Hanwha General Insurance. This was a clear statement amid various rumors within the company regarding the recent sale speculation surrounding Carrot General Insurance.
As of last year, Hanwha General Insurance is the largest shareholder of Carrot General Insurance, holding 59.57% of the shares. T Map Mobility also holds 10.72% of the shares. Currently, it is highly likely that Hanwha General Insurance will acquire all shares and proceed with an absorption merger. A Hanwha General Insurance official explained, "We are exploring various measures to normalize the capital soundness of our subsidiary, Carrot General Insurance. To resolve financial soundness issues, we have established a regular consultative body between the two companies to seek solutions, and the merger is part of that."
Carrot General Insurance, established in May 2019, is Korea's first digital general insurance company. It attracted significant market attention by launching the 'Pay-Per-Mile Auto Insurance,' which calculates premiums based on driving distance. However, it has not escaped losses for six consecutive years. The net loss figures were 9.1 billion KRW in 2019, 38.1 billion KRW in 2020, 65 billion KRW in 2021, 79.5 billion KRW in 2022, 76 billion KRW in 2023, and 66.2 billion KRW last year.
The poor profitability of Carrot General Insurance and the push for an absorption merger are interpreted as revealing the limitations of non-face-to-face sales inherent in the insurance industry. Under the Insurance Business Act, digital insurers like Carrot General Insurance must sell more than 90% of their written premiums through online channels such as the internet. Carrot General Insurance focused on small-amount, short-term insurance centered on non-face-to-face sales, which worsened its profitability.
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