Samsung Life sees limited impact from Samsung Fire subsidiary plan
Samsung Life rules out additional stake in Samsung Fire post-affiliation, vows to boost shareholder returns
Samsung Life Insurance said Thursday that it expects limited impact on its business following its planned incorporation of Samsung Fire & Marine Insurance as a subsidiary.
"The subsidiary incorporation will have no impact on the company's profits or capital ratio, nor will there be any changes in overall business management," Samsung Life's Chief Financial Officer Lee Wan-sam said during an earnings call earlier in the day.
However, given that both firms are market leaders in their respective insurance sectors, synergy is expected, particularly as the boundaries between life and general insurance continue to blur amid evolving consumer needs. Like other life insurers, Samsung Life has been expanding into the health insurance sector in recent years.
"The two companies are already active in the overlapping health insurance sector. Within legal boundaries, we will pursue further synergy through cross-selling and joint investments in alternative assets," Lee added.
The comments follow Samsung Life's application for regulatory approval from the Financial Services Commission last week for the subsidiary affiliation. Industry watchers estimate the review process will take about two months.
This move comes after Samsung Fire's January announcement of plans to reduce its 15.9 percent treasury shareholding to below 5 percent by 2028 as part of efforts to enhance corporate value and boost shareholder returns.
If the affiliation is approved, Samsung Life's stake in Samsung Fire will increase from 14.98 percent to 16.93 percent, surpassing the 15 percent cap set by local insurance regulations. Under the Insurance Business Act, an insurer must incorporate another insurer as a subsidiary if its stake exceeds this threshold.
While Samsung Life could alternatively sell shares to comply with the cap, industry analysts believe subsidiary incorporation is the more likely outcome.
A key concern had been the overhang risk before any potential stake sale, as uncertainty over a divestment could have prompted investors to offload shares preemptively, potentially driving down stock prices.
However, following Samsung Life's formal application for subsidiary affiliation submitted to the FSC last Wednesday, this overhang risk subsided, triggering a rally in both insurers' stock prices. Samsung Life surged 15.1 percent, while Samsung Fire jumped 18.5 percent over the next two trading days.
Selling shares also carries the risk of weakening Samsung Life's dominant position within Samsung Group's governance structure.
Currently, Samsung Electronics Chairman Lee Jae-yong holds an 18.9 percent stake in Samsung C&T, which in turn owns 19.34 percent of Samsung Life. Samsung Life, in turn, is the largest shareholder of both Samsung Fire and Samsung Electronics, reinforcing Lee's control over the group's key business divisions. Any reduction in Samsung Life's stake in Samsung Fire would require careful management to preserve this strategic power structure.
While some industry insiders speculated that Samsung Life might further increase its stake in Samsung Fire post-affiliation, the company dismissed the possibility on Thursday, stating it has no plans to expand its holdings at this time.
Meanwhile, Samsung Life reaffirmed its commitment to increasing shareholder returns, setting a 50 percent shareholder return rate for this year, largely boosted by strong earnings in 2024.
In 2024, the company posted a net profit exceeding 2 trillion won ($1.4 billion).
"We aim to enhance corporate value by maintaining an appropriate capital ratio while ensuring a stable and steadily increasing shareholder return rate," the CFO said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Korea Herald
35 minutes ago
- Korea Herald
Lee, Fiala hail $18b nuclear power deal as 'touchstone' for broader economic exchange
President Lee Jae-myung and the Czech Republic's Prime Minister Petr Fiala in their first phone call on Wednesday acknowledged that the $18 billion nuclear exports deal with the European country could further stimulate bilateral economic exchanges. Referring to the deal signed between the two countries on June 4, Lee's spokesperson Kang Yu-jung told reporters that the deal to build two nuclear reactors in Dukovany, Czech Republic, would "serve as a touchstone for the broader bilateral economic exchanges." Kang added that the two countries may also cooperate comprehensively in cutting-edge technologies, infrastructure and energy. In July 2024, a South Korean consortium led by the state-run Korea Hydro and Nuclear Power was chosen to build two 1,000 megawatt nuclear power units in the Czech Republic. However, the final contract was not signed until this month after the local court lifted an injunction filed by France-based EDF, which was a competing bidder. During their 20-minute phone call, both leaders also called for a more active people-to-people cultural exchange and cooperation, as this year marks the 35th anniversary of forging diplomatic ties and the 10th anniversary of the strategic partnership between the two nations. Lee also expressed his anticipation for Fiala's visit to South Korea at his convenience during their call, Kang added. Lee's phone call with Fiala followed those of US President Donald Trump, Japanese Prime Minister Shigeru Ishiba and Chinese President Xi Jinping.
Korea Herald
3 hours ago
- Korea Herald
Lee Jae-myung vows dividend boost, transparency in capital market
President calls for measures to seize profits from unfair stock transactions President Lee Jae-myung on Wednesday pledged to map out various incentives for listed companies on South Korean stock markets to pay out more dividends, saying the stock market could play a key role in boosting the national economy. "In other countries, people buy blue-chip stocks and use the dividends paid from them to supplement their living expenses, which boosts domestic consumption and contributes to a virtuous cycle in the economy, but (companies in) our country are not willing to pay dividends," said Lee during a meeting with representatives of the Korea Exchange, South Korea's main stock market operator, which is also tasked with market oversight. President Lee also said South Korean stocks tend to lag behind in dividend payments compared to other countries such as China. "There must be various reasons for that. So we are preparing for tax code reforms and policy improvements to boost dividends," Lee said. "If equities become an alternative destination that people find as attractive as real estate, then by allowing people to get more dividends and make money to cover living costs, companies will find it easier to attract capital, and a virtuous cycle will be created," he also said. The remarks came as South Korea's stock market hit a three-year high, extending a winning streak that started with his inauguration the previous week. Lee, who took office on June 4, also said restoring transparency in South Korea's capital market was his priority. Meeting the KRX representatives, including 55 rank-and-file employees of the bourse operator, Lee stressed the need for stronger market monitoring to tackle unfair trading practices -- namely, insider trading, market manipulation and market disruption. "At the core of a capitalist economy lies the stock market," Lee said. "The most important task is to resolve, or at least alleviate, the unfairness and opacity of the stock market." Later in the afternoon, Lee's spokesperson elaborated on the president's remarks that the government would respond firmly to unfair trading by implementing a "one strike, you're out" policy for acts such as stock manipulation. The government would seek measures to recover illicit gains through fines equal to the profits obtained,' his spokesperson Kang Yu-jung told reporters. During his presidential election campaign, Lee pledged to improve market liquidity for stock investors and come up with measures to better distribute profits to shareholders. Lee, the former leader of what was then the main opposition party, has also called for a legal revision to require boardrooms at South Korean companies to fulfill their fiduciary duty not only to their companies but also to their shareholders. The Kospi -- South Korea's benchmark stock index -- hit its highest point in about three years and five months, continuing its winning streak for a fifth consecutive trading day since Lee's inauguration on June 4. The market did not operate on Friday due to the observance of National Memorial Day. At 3 p.m. Wednesday, the Kospi stood at 2,903.10 points, up more than 1 percent from the previous day's close. Over the first week of Lee's presidency, the index had risen nearly 8 percent. Foreign investor net inflows also continued for the past five trading days, including net purchases of 93.2 billion won ($68 million) on Wednesday as of around 3 p.m.
Korea Herald
4 hours ago
- Korea Herald
Kospi soars to 3-year high on foreign buying, tech rally
Optimism builds as analysts forecast continued gains on policy, global tailwinds The South Korean benchmark Kospi broke through the 2,900-point threshold for the first time in over three years on Wednesday, marking a notable milestone as it extends its bullish rally. The Kospi reached as high as 2,904.21 during intraday trading, surpassing the 2,900 mark for the first time since it peaked at 2,902.79 on Jan. 18, 2022. The index opened at 2,887.32 and quickly gained in early trading, exceeding the 52-week high of 2,896.43 recorded on July 11 last year. The rally followed overnight gains on Wall Street, driven by growing expectations of improved trade conditions between the US and China. Hopes are rising that restrictions on semiconductor sales to China may be eased. After hitting its peak, the Kospi pared some gains, retreating to the 2,890-point range as of press time. At 2 p.m., it stood at 2,897.23, up 25.38 points or 0.88 percent from the previous session. The index has been on a six-day winning streak, which began a day before the country's presidential election on June 3. A massive influx of foreign capital has fueled the rally. Offshore investors purchased nearly 4 trillion won ($3 billion) worth of shares on the Kospi in June, extending the 1.16 trillion won net buying spree seen in May, according to Korea Exchange data. As of 2 p.m. Wednesday, foreigners had net bought 72 billion won worth of shares, while institutional investors purchased 146 billion won. Retail investors, meanwhile, sold off 198 billion won, likely to lock in profits. Market heavyweight stocks showed strong performances with tech giants leading the game, tracking the rally in US chip stocks. Blue-chip shares Samsung Electronics and SK Hynix were up 0.93 percent and 4.12 percent, respectively, as of 2 p.m. On the back of expectations for a de-escalation in the trade war, shares of LG Energy Solution, Hyundai Motor and Kia were also traded higher, while Hanwha Solution stocks surged by 18 percent as of press time. In an attempt to support the rally, President Lee Jae-myung visited the headquarters of the Korea Exchange in Yeouido, western Seoul, on Wednesday, where he held a meeting to discuss measures to prevent unfair trading. During the election campaign, Lee pledged to usher in a 'Kospi 5,000 era' by strengthening minority shareholder protections. Amid the continuing upward momentum of the Kospi, local brokerage firms are upping their outlooks. KB Securities, for instance, raised its 12-month target for the Kospi to 3,240 points by the first half of 2026. 'Although tariff risks are expected to continue through the third quarter, along with an increased possibility of a recession if the threats materialize into actual impositions, the Korean stock market is likely to demonstrate relatively strong resilience, supported by a weakening dollar, domestic stimulus measures and ongoing capital market reforms,' analyst Lee Eun-taek said. 'By the fourth quarter, trade tensions could enter a phase of resolution, leading to a rise in risk appetite and revitalized investment activity,' Lee added. With the rally of the stock market, the secondary bourse Kosdaq stood at 786.09 as of 2 p.m., up 14.89 points or 1.93 percent. The Korean won was quoted at 1,369.57 per dollar as of 2 p.m., losing value by roughly 5 won from the previous daytime trading.
