"The DNA of OK Financial Group is about taking on a challenge. We started with the expectation that we can do well even if we acquire Yebal Insurance."
Sim Sang-don, CEO of OK Next, explained the background behind pursuing the acquisition of Yebal Insurance (formerly MG Insurance) in this way. OK Next has been selected as the priority negotiation target for the M&A of Yebal Insurance by OK Financial Group, which is the acquiring entity. OK Financial Group and the Korea Deposit Insurance Corporation are currently conducting negotiations with the goal of finalizing a contract by the end of this month.
Shim (CEO) has been a key figure leading the group's growth alongside OK Financial Group Chairman Choi Yoon. Following Choi (Chairman), he also served as CEO of the group's founding entity, 'Rush & Cash' (Apro Finance). Ahead of the critical moment of signing the acquisition contract for Yebal Insurance, Shim (CEO) stepped forward for his first media interview.
The acquisition of Yebal Insurance is also a challenge for the OK Group. In fact, there are reportedly some voices of opposition within the group. Shim (CEO) said, "We were indeed very afraid of whether we could do well," and added, "There were internal and external opinions suggesting that we should acquire a normal insurance company rather than a distressed one."
For OK Group, which holds savings bank and capital companies, acquiring and operating an insurance company is unprecedented. Nevertheless, the confidence of OK Group has its basis. OK Group already acquired Yejoo and Yena-rae Savings Banks, which were distressed savings banks in 2014, and transformed them into 'OK Savings Bank', the second-largest in the industry. Shim (CEO) described this as a "unique DNA of business normalization."
Shim (CEO) also emphasized that OK Group began with 'consumer finance'. He stated, "For the past 20 years, individual customers have been our foundation," and added, "We are confident in communicating with individual customers and have handled everything from product design to consumer protection."
Acquiring and operating an insurance company requires enormous funds. Shim (CEO) noted, "OK Group is believed to be the only entity that has met Yebol's proposed price conditions and business normalization requirements," and emphasized, "OK Next's total capital is approximately 3 trillion won." It is reported that OK Next submitted a lower support fund requirement for acquiring Yebal Insurance compared to competitors during the formal bidding process.
OK Next plans to conduct a capital increase in the initial year after acquiring Yebal Insurance. With only the capital injection in the initial year, it is expected that the K-ICS (Korean Insurance Capital Standard) ratio of 130% can be maintained for the stabilization period of 3–5 years.
Shim (CEO) did not disclose the acquisition amount he bid or the scale of the capital increase in the initial year due to confidentiality obligations (NDA). However, he stated, "As insurance assets grow, a decline in K-ICS is inevitable," and added, "Depending on Yebal Insurance's growth rate, we are also considering an additional capital increase of 200 billion to 300 billion won."
Shim (CEO) also expressed confidence in resolving the issue of employment succession. In the past, Marui Fire & Marine Insurance attempted to acquire MG Insurance but had to give up due to strong opposition from labor unions.
Shim (CEO) stated, "The past cases of other companies abandoning acquisitions largely stemmed from the asset and liability acquisition (P&A) method and a lack of communication with employees," and emphasized, "OK Group has experience in smoothly resolving labor union and employment succession issues even when acquiring the predecessors of Rush & Cash, OK Savings Bank, or Capital."
There are also hurdles to OK Next's acquisition of Yebal Insurance. Even after completing negotiations with Yebol, it must undergo a suitability review by the Financial Services Commission as a major shareholder. In particular, there is a Fair Trade Commission sanction issue. However, OK Group explained that this issue has been known for several years and that sufficient communication has been maintained with financial authorities and Yebol during the negotiation process.
Shim (CEO) also stated, "The business performance and compliance management processes demonstrated over 10 years after acquiring savings banks prove our suitability as a major shareholder and our sincerity," revealing his determination to complete the acquisition. He then expressed concern about the social impact if the Yebal Insurance acquisition fails. He said, "First and foremost, 1.22 million insurance policyholders will be exposed to anxiety and confusion, and employment insecurity for over 250 Yebal Insurance employees will become a reality."
Shim (CEO) stated, "Acquiring an insurance company will serve as an opportunity to give employees a new vision and hope," and added, "OK must remain true to OK. From a long-term perspective, we will grow the company based on our own corporate culture and create an insurance company where customers feel that 'if OK does it, it's different.'"
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