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Financial regulator backs KDB ownership of insurer

The KDB Life Insurance headquarters in Seoul
The KDB Life Insurance headquarters in Seoul
South Korea’s financial regulator Monday cleared uncertainties, allowing the Korea Development Bank to take control of a local insurer unit for the time being and buy the time to sell it off.

A private equity firm jointly created by KDB and Consus Asset Management -- which controls a combined 92.73 percent of KDB Life Insurance -- reached the end of a 10-year grace period before being regulated as an insurance holding company in February.

Under the Capital Markets Act, the private equity firm will be subject to the Financial Holding Companies Act, placing it under a fresh regulation as a nonfinancial shareholder of the insurer.

But the Financial Services Commission said in a recent authoritative interpretation that the shareholder -- KDB-Consus Value private equity firm -- is exempt because their assets are too small.

According to the top financial regulator, KDB-Consus Value private equity fund’s total asset did not exceed 500 billion won ($409.2 million) as of end-2019. The 500 billion won mark is a minimum threshold to be recognized as a shareholder of an insurer under the act.

Removing legal uncertainties, a KDB spokesperson said it would focus on efforts to divest the insurer arm, adding the due diligence of preliminary bidders is underway.

KDB and Consus Asset in 2010 teamed up to buy what was formerly known as Kumho Life Insurance for 650 billion won.

By Son Ji-hyoung (consnow@heraldcorp.com)
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