[Edaily Marketin Reporter Hur Jieun ] The M&A (mergers and acquisitions) market for insurance companies—including LotteNon-LifeInsurance(000400), Yebyeol Property & Casualty Insurance, and KDB Life Insurance—is drawing intense interest right from the preliminary bidding stage. This is because multiple financial holding companies and major financial institutions have simultaneously emerged as potential buyers. However, some analysts suggest that this enthusiasm stems more from artificial demand created by public funds than from a genuine intention to acquire. Critics point out that the “carrot” incentives—such as capital injections—offered by the sellers are luring potential buyers to participate.

According to investment banking (IB) and insurance industry sources on the 30th, a pattern has emerged in the ongoing insurance company acquisition race where a single prospective buyer is simultaneously evaluating multiple assets. Korea Investment HOLDINGS is taking the most proactive stance, having thrown its hat into the ring for all three companies: Lotte General Insurance, Yeobyeol General Insurance, and KDB Life Insurance.

T. K. CORPORATION (HeungkukFire&MarineInsurance and Heungkuk Life Insurance) and Kyobo Life Insurance have also each put their names forward for two assets simultaneously: Ye-Byeol Non-Life Insurance and KDB Life Insurance, respectively. HANWHA LIFE INSURANCE was also mentioned as a potential buyer for both Acuon Capital Partners Co., Ltd. and KDB Life Insurance, but was selected as the preferred bidder for Acuon Capital Partners Co., Ltd. the previous day.

This has raised questions in the market about whether these companies are genuine buyers. This is because it is physically impossible to acquire all the assets under consideration due to limited financial resources. An industry insider stated, “Ultimately, they will likely acquire only one or two companies at most, so putting a bid on every asset suggests they have a different strategy in mind.”

There is also speculation that the financial holding companies’ simultaneous review of acquisitions is a strategy aimed at “scraping the bottom of the barrel.” For both Yeobyeol Property & Casualty Insurance and KDB Life Insurance, the Korea Deposit Insurance Corporation (KDIC) and the Korea Development Bank (KDB), respectively, are reducing the burden on potential buyers by leaving open the possibility of preemptive capital injections. The KDIC has expanded its support funds from the previously considered range of 700 billion to 800 billion won to a maximum of 1.2 trillion won. The Korea Development Bank has also injected nearly 2 trillion won into KDB Life Insurance through multiple capital increases. In effect, the sellers are offering financial injections ranging from hundreds of billions to trillions of won as an incentive.

In contrast, Lotte General Insurance, whose largest shareholder is a private equity fund, is viewed as having relatively low acquisition appeal due to its structure, which makes it difficult to receive public funds. While Lotte General Insurance is rated as the strongest in terms of fundamentals—such as brand value, financial soundness, and viability—the incentives included in the sale conditions are effectively acting as a barrier. This is why critics argue that potential buyers’ interest is focused more on the conditions offered by the sellers than on the intrinsic value of the assets themselves.

There is also a view that it is difficult to predict the success of the sale at this preliminary bidding stage. This is because the preliminary bidding stage has low barriers to entry, allowing bidders to gather information without incurring due diligence costs or assuming an obligation to acquire the company. In reality, bidders may simply register for the preliminary bidding to secure bargaining power, which may have nothing to do with their actual intent to acquire the company. In other words, a large number of participants does not necessarily mean the sale will be successful.

There are also concerns that if a large number of bidders withdraw during the formal bidding stage, the sale process could be delayed or the terms could deteriorate. In the case of KDB Life Insurance, there are worries that the sale could once again be left in limbo for an extended period if the Korea Development Bank (KDB) fails to sufficiently accommodate the potential buyers’ demands. The extent to which KDB is willing to share the burden of capital expansion is expected to be a key factor in the success of the sale.