November 6, 2009 / 8:20 AM / 9 years ago

UPDATE 2-Korea Life may raise around $2 bln in IPO-sources

* Valued at $10 bln, plans 20 pct public float-sources

* Asia set for a rush of insurance industry offerings (Adds details, background, quote from industry expert)

By Michael Flaherty and Narayanan Somasundaram

HONG KONG, Nov 6 (Reuters) - Korea Life Insurance Co, the country’s No. 2 life insurer, may raise around $2 billion through its public offering, sources with direct knowledge of the matter said, in what would be Korea’s largest IPO since 2006.

Korea Life joins a rash of planned insurance offerings in Asia, as the industry seeks to expand and as rising stock markets lift earnings for life insurers, which rely on investment returns as a key source of income. [ID:nT334481]

The Asia insurance IPO list includes AIG’s (AIG.N) AIA, Shanghai-traded China Pacific Insurance (601601.SS), which aims to raise $3.5 billion in Hong Kong, Reliance Life in India and Japan’s Dai-ichi Mutual Life Insurance.

By some estimates, there is roughly $20 billion of insurance offerings waiting to hit the Asian markets over the next three years.

“The Asian insurance sector has gone from $40 billion in market capitalisation six years ago to $600 billion now,” said an investment banker who works closely with the industry. He did not want to be quoted by name due to client sensitivities.

Sources on Friday pegged the value of Korea Life at roughly $10 billion, and the expectation is to float a fifth of the business.

If Korea Life manages to raise that much, it would be the biggest IPO in South Korea since Lotte Shopping’s (023530.KS) $3.8 billion listing in 2006.

“Internally, nothing has been decided on the IPO size,” a Korea Life Insurance spokesman said. “We have just started the preparation process.”

The insurance firm has mandated six banks, including Goldman Sachs (GS.N), JPMorgan (JPM.N) and Deutsche Bank (DBKGn.DE), to arrange the IPO.

ASIA INDUSTRY BOOM

The flurry of insurance IPOs offers Asia investors the chance to finally invest in the industry, which for years was owned and operated by local governments.

Asia is home to just a handful of big listed insurers, led by China Life Insurance (2628.HK) (LFC.N) (601628.SS) and rival Ping An Insurance (2318.HK) (601318.SS) — the world’s two most valuable life insurers — and Taiwan’s Cathay Financial Holdings (2882.TW).

AIA plans its IPO in the first half of 2010, after its bailed-out parent failed to find a buyers for it. China Pacific’s offer is expected early next year, while Reliance and Dai-ichi are seen launching their sales later.

Life insurance in Asia, especially India and China is seen as a largely untapped market. Life insurance penetration in India is about 4 percent of GDP, in terms of total premiums underwritten in a year, compared with 2.4 percent in China and about 13.5 percent in the UK. (Additional reporting by Kim Yeon-hee in SEOUL; Editing by Jonathan Hopfner and Lincoln Feast)

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