Shinhan Financial Group to acquire Lotte Insurance for 693.3 billion won

Shinhan Financial Group has approved the acquisition of a 77.04% stake in Lotte Insurance for 693.3 billion won. The deal, finalized through a share purchase agreement with private equity firm JKL Partners, aims to strengthen Shinhan’s non-banking portfolio and address the relative weakness in its current non-life insurance sector.

Shinhan plans to integrate Lotte Insurance with its existing subsidiary, Shinhan EZ Insurance, to reduce overlapping costs and improve operational efficiency. Lotte Insurance brings a significant customer base of approximately 3.34 million people and a Contractual Service Margin (CSM) of roughly 2.2 trillion won.

However, the acquisition presents financial challenges. Lotte Insurance faces capital adequacy issues, with its basic capital recorded at negative 91 billion won as of June. Shinhan will need to manage capital expansion and implement management improvement plans to comply with upcoming regulatory standards, such as the K-ICS basic capital ratio requirements.