German insurer ERGO, Munich Re’s primary insurance subsidiary, announced that it has reached an agreement with Daum Communications and LIG Insurance to purchase a 65 percent stake in the South Korean monoline insurer Daum Direct Auto Insurance.
LIG Insurance will retain a 25 percent stake in the company and Daum Communications will remain a shareholder with a 10 percent stake. LIG Nex1 and GS E&C have agreed to sell all of their shares to ERGO.
Financial terms of the acquisition were not disclosed. It remains subject to regulatory approval.
“Daum Direct enjoys a prominent and highly competitive position in the South Korean direct motor market,” said the bulletin. It is Korea’s second largest direct motor insurer with approx. KWON 260 billion (€ 200 million – $293.7 million) in premium income in 2007 and a market share of over 15 percent in the growing direct market. Daum was successfully launched in 2004.
ERGO noted that the acquisition “is an important step in the implementation of ERGO’s international strategy towards selected Asian markets. The transaction will provide ERGO with the opportunity of expanding its successful regional presence as well as complementing ERGO’s legal expense and health activities in Korea.”
Andreas Kleiner, Member of the Board of Management at ERGO International responsible for Asia, indicated that he was pleased with the acquisition, and was “looking forward to a long term partnership arrangement with Daum Communications and LIG Insurance as co-shareholders.” He also noted that being part of the Munich Re Group had facilitated the transaction.
However, Kleiner also took pains to stress “that there is a clear separation between ERGO and Munich Re on all operational levels and thus there is no conflict of interest between ERGO’s primary insurance activities and Munich Re’s reinsurance activities in Korea.”
William Choi, CEO of Daum Direct, added: “ERGO has gained access to the attractive South Korean direct motor market and Daum Direct gains a highly respected partner. The company now has all opportunities to keep up its fast but profit orientated growth of the recent years.” The company intends to operate in future under name ERGO Daum Direct Auto Insurance Company Ltd.
Source: ERGO – www.ergo.com
Topics Mergers & Acquisitions Auto
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