Seoul: Financially feeble MG Non-Life Insurance Co. is facing a looming liquidation as a potential buyer announced the termination of a takeover deal Thursday. Meritz Financial Group said earlier in the day that it has decided to drop its status as the preferred bidder for the non-life insurer, citing differences with its labor union over job security.
According to Yonhap News Agency, Meritz Non-Life Insurance Co., the group's unit, was selected as the preferred bidder for MG Non-Life Insurance in December. This development follows the insurer's designation as a financially weak company by the financial watchdog in April 2022, which put the company on the selling block. However, four rounds of sale bids to sell the insurer have fallen through.
The Financial Supervisory Service, the country's financial watchdog, has noted that the insurer's financial footing has continued to weaken and emphasized that the matter should be addressed in accordance with principles and laws. The insurer's capital adequacy ratio under the Korean Insurance Capital Standard (K-ICS), a barometer of a financial company's financial stability, was reported to be 43.4 percent at the end of September, significantly below the legally required threshold of 100 percent.
The Korea Deposit Insurance Co., which has been actively seeking to sell the insurer, had previously indicated that it would consider all possible options, including liquidation, should Meritz Financial decide to abandon its takeover bid. MG Non-Life Insurance currently has approximately 1.24 million policyholders.