French multinational insurance group AXA is exiting its South Korean business due to low profits, sources said on Wednesday (August 19), confirming rumors that have swept through the industry for weeks.

Samjong KPMG has been hired to lead the sale process for AXA General Insurance Co Ltd, the company’s South Korean unit, and has started sounding out potential buyers, according to the sources.

The non-life insurance company was set up by Korea Direct in 2000 and taken over by Kyobo Life Insurance Co Ltd in the following year, before the French insurer purchased a 74.7% stake in 2007. AXA bought the remaining shares in 2009 and the company has since positioned itself as an online insurance platform specializing in auto insurance products.

Net assets amounted to 235.1 billion won ($198 million) at the end of 2019, although the company could be given a lower value because of the higher loss ratio of auto insurance compared with other insurance products. The loss ratio is calculated by dividing the total incurred losses by the total collected insurance premiums.

“Auto insurance accounts for most of AXA General Insurance’s business, while many of the domestic non-life insurers are reducing or planning to reduce their auto insurance business due to weak profitability,” a source said. “This could negatively affect the valuation of the company.”

AXA’s departure from the country is seen as part of a larger restructuring of its Asia operations, with the group reportedly already in the process of selling its units in Singapore, Indonesia and Malaysia.

Domestic financial companies and private equity firms are among potential buyers of AXA General Insurance. However, some industry watchers are doubtful that they will express an interest, because the company’s assets are not that attractive and it is seen as a fire sale. The insurer reported revenue of 929.4 billion won and an operating loss of 38.5 billion won in 2019.

U.S.-based Prudential Financial Inc also sold its South Korean unit Prudential Life Insurance Company of Korea Ltd to KB Financial Group Inc four months ago.

“It is too early to tell whether more exits of foreign insurers will follow,” another source said. “The sale process for AXA General Insurance could be closely watched by industry and market participants.” (Reporting by Ik-hwan Choi)