Seoul: The country's financial regulator announced that MG Non-Life Insurance Co., currently facing financial difficulties, will have its policy contracts transferred to five non-life insurers through a "bridge insurance company," and will be prohibited from signing new policy contracts.
According to Yonhap News Agency, the Financial Services Commission (FSC) stated that a bridge vehicle, to be established under Korea Deposit Insurance Co., will assume the assets and liabilities of the non-life insurer. These will subsequently be transferred to Samsung Fire and Marine Co. along with four other non-life insurers. This transition process is expected to take a year to complete, as per the regulator.
As of the end of March this year, MG Non-Life Insurer held 1.51 million policy contracts, with 90 percent related to illness and damage, affecting approximately 1.24 million policyholders. MG Non-Life Insurance was placed on the market after being designated as financially weak by the financial watchdog in April 2022. In March, Meritz Financial Group abandoned its position as the preferred bidder for the insurer, citing disagreements with its labor union over job security. Four rounds of bids to sell the insurer have failed so far.
According to the regulator, MG Non-Life Insurance's financial stability has continued to decline. The insurer's capital adequacy ratio, measured by the Korean Insurance Capital Standard (K-ICS), was reported at 43.4 percent at the end of September, significantly lower than the legally required threshold of 100 percent.