As Samsung Electronics' stock price has surged, signs of change are emerging in the management stance of Samsung's financial affiliates, which had maintained a conservative approach. The first beneficiary is Samsung Life Insurance, which secured massive capital firepower thanks to a spike in the value of its Samsung Electronics equity. Leveraging its reinforced balance sheet, it has kicked off an aggressive push into mergers and acquisitions (M&A).
Affiliate Samsung Securities is also fueling market expectations as the possibility of a large-scale capital increase is being strongly discussed.
Boosted by the semiconductor supercycle, Samsung Electronics' share price has skyrocketed over the past year. The stock, which was around 50,000 won a year ago, topped 100,000 won at the end of last year and recently broke through 300,000 won. The one-year gain is approaching 400%.
Thanks to this, major shareholder Samsung Life Insurance has secured a massive cash pile. There are two channels through which it raised funds.
First, Samsung Life Insurance sold part of its holdings in line with Samsung Electronics' share buybacks. When Samsung Electronics cancels treasury shares, Samsung Life Insurance's ownership stake naturally rises, which raised the risk of exceeding the 10% cap on equity holdings in nonfinancial companies set by the Act on the Structural Improvement of the Financial Industry.
In March, Samsung Life Insurance sold 0.11% of its Samsung Electronics equity (about 6.24 million shares) through a block deal. The sale proceeds exceed 1.2 trillion won.
On top of this, a large dividend from Samsung Electronics is scheduled. At its regular shareholders meeting in March, Samsung Electronics finalized this year's dividend plan, including a regular annual dividend of 9.8 trillion won and an additional dividend of 1.3 trillion won.
Kiwoom Securities said, "The consensus for Samsung Electronics' 2024–2026 free cash flow (FCF) has risen to 265 trillion won," and added, "In this case, the increase in Samsung Life Insurance's net profit expected in 2027 would reach 6 trillion won."
Armed with ample firepower, Samsung Life Insurance is quickly making its presence felt in the M&A market. It jumped into the preliminary bidding for KDB Life Insurance, where a contest between Korea Investment Holdings and Heungkuk Life Insurance had been expected, and is showing an aggressive stance by even forming a dedicated acquisition team. The industry says, "With cash in hand, Samsung Life Insurance could emerge as a 'big player' in the M&A market."
Samsung Life Insurance also signaled a strong investment appetite at a recent IR event. The company said, "As Samsung Electronics dividends are reflected in retained earnings, we will increase dividends per share above the growth rate of ordinary income," and added, "We are actively reviewing investments in new businesses such as overseas M&A in the insurance and asset management segments, diversification of asset management, and senior living, using the excess capital accumulated in addition to this."
With Samsung Life Insurance, the eldest in Samsung's financial group, taking an aggressive turn, expectations are growing that warmth will spread to other financial affiliates. Samsung Life Insurance owns 100% of Samsung Asset Management equity and is the largest single shareholder of Samsung Securities (29.4% as of March), Samsung Card (71.9%), and Samsung Fire & Marine Insurance (15.9%).
Market attention is focused especially on the possibility of a capital increase at Samsung Securities. That is because the essence of competition among large securities firms hinges on business scalability tied to the size of their equity capital.
As of the end of March, Samsung Securities' equity capital exceeded 8 trillion won, meeting the requirements to pursue the issuance of short-term notes and the integrated managed account (IMA) business. However, with capital competition intensifying across the industry, the prevailing view is that Samsung Securities, too, could move to scale up via an additional paid-in capital increase. The analysis is that the ample firepower held by Samsung Life Insurance will back Samsung Securities' aggressive business expansion.
Previously, NH Investment & Securities conducted a paid-in capital increase of 650 billion won last year and, in June, received an additional 400 billion won injection from its largest shareholder, NongHyup Financial Holdings. KB Financial Group also decided to inject 1 trillion won into KB Securities. Once the capital increase is completed, KB Securities' equity capital will rise to around 9 trillion won, meeting the requirements for the IMA business.
On this, Samsung Life Insurance said, "At this point, there are no plans to acquire additional equity in (financial affiliates)," but added, "We will review comprehensively in line with the principle of enhancing shareholder value and company growth."