Samsung Fire & Marine Insurance and Samsung Life Insurance are shifting away from their long-standing growth formula, turning to mergers and acquisitions to find new sources of revenue. Both companies hold stakes in Samsung Electronics, which has expanded dividends on the back of a semiconductor upturn, and the insurers intend to use that cash to pursue overseas expansion in earnest.
Samsung Fire & Marine is examining a plan to acquire the remaining 60% stake in Canopius, a British specialty insurer, and turn it into a wholly owned subsidiary, according to financial industry sources on the 2nd.
Canopius is a global specialty insurer that covers risks difficult to insure under general policies, including terrorism, kidnapping, war and fine art. Samsung Fire & Marine currently holds a 40% stake in Canopius. It has invested about 1.2 trillion won across three rounds since 2019 and is in discussions with a consortium led by U.S. private equity firm Centerbridge Partners, the largest shareholder, over acquiring the rest. The additional purchase price is expected to range from the high 2 trillion won level to about 3 trillion won, including a control premium.
A senior insurance industry official familiar with the matter said Samsung Fire & Marine is reviewing a plan to acquire the remaining Canopius stake, adding that the timing and price of any deal have not been finalized.
Canopius posts a return on equity of about 20%. Samsung Fire & Marine booked 168.5 billion won in equity-method gains from its 40% holding in the first half of this year alone, more than 12% of its first-half net profit. If the acquisition is completed, the company is expected to be able to expand its specialty insurance and reinsurance businesses using Canopius' sales networks in the United States, Europe and Asia.
Samsung Life is also reviewing M&A options across several potential targets. Its earlier review of a bid for KDB Life came in the same context. The insurer has sent a request for proposal to investment banks on the premise of acquiring an overseas operator, sources said. A senior insurance industry official said the domestic market is now seen as having limits to growth, and that Samsung Life is likewise moving away from its previous pattern of organic growth without M&A to seek growth through acquisitions.
One of the targets mentioned for Samsung Life is Principal Financial Group of the United States. PFG is an insurance and asset management group headquartered in Iowa and a major player in the U.S. 401(k) defined-contribution retirement market. Its assets under management exceed 1,100 trillion won. PFG is seen as relatively strong in retirement plan management experience and in alternative investment capabilities such as real estate and infrastructure. That could widen the scope for cooperation, including supplying North American alternative assets to the Korean market or pursuing joint ventures. Depending on the size of the stake, PFG's earnings could also be reflected in Samsung Life's consolidated results.
Some observers say Samsung Life could spend trillions of won to buy a stake in PFG, but the company said nothing has been decided.
For Samsung, completing both deals would make them the largest overseas M&A transactions ever undertaken by a Korean financial company. Internally, there is said to be a strong view that improved earnings and expanded dividends at Samsung Electronics, driven by the chip upturn, should be used to secure medium- to long-term growth drivers.
