AIA to set up Korean subsidiary

Insurer’s plans seen as a preparatory move to step out of the Korean market

Insurance News

By Mina Martin

AIA Group Ltd., an independent publicly listed pan-Asian life insurance group, is preparing to set up a subsidiary in Korea, a move some believe could be in preparation of the group’s exit of the Korean market, it has been reported.

The insurance industry said on Tuesday that AIA is preparing to separate its Korean operations from the Hong Kong branch and create an independent outlet, Pulse reported.

The move is being watched closely as AIA’s preparatory step for pulling out of the Korean market entirely amid sluggishness in the insurance market and ahead of tighter capital regulations, said the report.

AIA denied the allegation, however.

The Pulse report cites figures from the Korea Life Insurance Association, which identified AIA Korea as the fourteenth largest life insurer by capital at 14.4 trillion won ($13.2 billion) as of the end of the first quarter.

AIA Korea’s net income grew 57.4% to 134.4 billion last year; while its net profits in the first three months of this year increased by 116.9% from a year ago to 87 billion won. Its risk-based capital ratio, a barometer of insurer’s financial soundness, has also improved to 277.3% in the first quarter from last year’s 253.8%, Pulse reported.

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