AIA to set up Korean subsidiary

Life insurance company AIA Group Ltd, plans to set up a subsidiary in Korea, a move closely watched as a preparatory step to pull out of the country amid sluggishness in the insurance market and ahead of tighter capital regulations.

According to the insurance industry, AIA Group is said to be preparing to separate Korean operations from its Hong Kong branch and create an independent outlet in Korea.

Sources have said that the move could be preparation to pull entirely out of the Korean market. AIA, however, denied such allegation.

According to the Korea Life Insurance Association, AIA Korea is the fourteenth largest life insurer by capital – KRW14.4 trillion (USD13.2 billion) as of the end of the first quarter – among the total 25 life insurance companies. Its net income rose 57.4 percent to KRW134.4 billion last year. Its net profit in the first three months this year totaled KRW87 billion, up 116.9 percent from a year ago. Its risk-based capital ratio, a barometer of insurer’s financial soundness, improved to 277.3 percent in the first quarter, from the previous year’s 253.8 percent.