A partnership between Shinhan Life Insurance and BNP Paribas Cardif appears to be weakening as the South Korean insurer stops putting funds into their joint venture company BNP Paribas Cardif General Insurance, allowing its stake in the general insurer to decline.

Shinhan Life Insurance did not purchase any of the new shares issued by BNP Paribas Cardif General Insurance last month, with all being bought by BNP Paribas Cardif, the largest shareholder, industry sources said. Shinhan’s stake fell from 8.71% to 7.46%.

BNP Paribas Cardif General Insurance was established in 2014 after BNP Paribas Cardif, the insurance arm of French banking group BNP Paribas, and Shinhan Life Insurance, part of Shinhan Financial Group, jointly acquired 85% of ERGO Daum Direct General Insurance from AXA for 10 billion won ($9.1 million). Shinhan Life had about a 10% ownership stake.

The general insurer tried to diversify its products away from auto insurance to include cancer insurance and other niche products, but the company has recorded consecutive annual net losses for the last four years. The number of employees was also reduced to 77 at the end of September, which is the smallest among general insurers in South Korea.

Mounting net losses led to a decline in the insurer’s risk-adjusted capital (RBC) ratio. To maintain its capital levels, BNP Paribas Cardif General Insurance has issued new shares almost every year since 2015, causing increased volatility in the RBC ratio. The ratio has fallen during each year and rise sharply at the end of each year thanks to the share issues.

Shinhan Life Insurance purchased new shares issued by BNP Paribas Cardif General Insurance from 2015 to 2017, but stopped injecting additional funds in 2019. Sung Dae-kyu and Olivier Calandreau, the chief executives of the two companies, reportedly met last year to discuss the funding, but the South Korean firm opted not to make any more investment.

Industry watchers said Shinhan Life’s reduced ownership could indicate a weakening of the partnership between Shinhan Financial Group and BNP Paribas, which started in 2001 when the South Korean financial services conglomerate was founded. The French bank’s stake in Shinhan Financial Group has fallen since 2010. (Reporting by Eun-sol Lee)