Samsung Life Insurance (032830) and Samsung Fire & Marine Insurance (000810) are eyeing financial firms at home and abroad, backed by cash and cash equivalents of at least 5 trillion won ($3.6 billion). Their war chest is set to grow further, with brokerages projecting the two insurers could collect as much as 7 trillion won in dividends from Samsung Electronics (005930) this year.
Samsung Life held 2.81 trillion won in cash and cash equivalents on a separate basis at the end of June, while Samsung Fire & Marine held 2.06 trillion won, for a combined 4.86 trillion won, according to the Financial Supervisory Service on the 3rd.
Dividends from Samsung Electronics could also serve as investment funds. The chipmaker has signaled shareholder returns of 90 trillion to 110 trillion won this year and plans to pay 30 trillion won in cash dividends in the third quarter alone. Based on their stakes of 8.51% for Samsung Life and 1.49% for Samsung Fire & Marine, the two would receive an estimated 2.55 trillion won and 450 billion won, respectively. KB Securities estimates Samsung Electronics will pay 70 trillion won in cash dividends in the second half, which would give the two insurers 7 trillion won.
The insurers also have ample room to raise funds by selling assets such as bonds. At the end of June, Samsung Life held 46.18 trillion won in financial assets measured at fair value through profit or loss, and Samsung Fire & Marine held 12.57 trillion won. Most are bonds and funds acquired for short-term trading gains, making them available for mergers and acquisitions.
"Once you strip out the portion going to shareholders and participating policyholders, the funds Samsung Life can use for M&A will amount to about one-third of the total dividends it receives from Samsung Electronics," an insurance industry official said. "Even selling only part of its bond holdings would leave no major difficulty in securing M&A funds."
The industry expects the two companies to expand with their deep pockets. Samsung Life alone is reviewing capital increases at its Thai subsidiary and its Chinese joint venture. U.S. financial firms are also under consideration. Samsung Fire & Marine is examining a plan to acquire an additional stake in Canopius, a British specialty insurer.
