On the 1st, it was reported that the financial authorities would sign an agreement to push for the sale of MG Non-Life Insurance by the end of 2026, when the contract transfer will be completed. The initially planned contract transfer will proceed without disruption, but an additional plan to find a buyer for MG Non-Life Insurance in the market will be pursued during this period.
According to the insurance industry and others, the Financial Services Commission, Korea Deposit Insurance Corporation (KDIC), and the MG Non-Life Insurance Labor Union are expected to sign an agreement containing these details on this day.
Earlier, the financial authorities announced plans to establish a bridge insurance company and transfer contracts held by MG Non-Life Insurance to five non-life insurance companies without changing the terms. This decision was made to minimize damage to policyholders after four unsuccessful attempts to publicly sell the company. As of the end of March, MG Non-Life Insurance held 1.51 million contracts, of which about 90% were long-term insurance, including health and accident insurance. The policyholders include 1.21 million individuals and 10,000 corporations. Once the contract transfer is completed, MG Non-Life Insurance will undergo liquidation.
However, the financial authorities shifted direction to pursue the sale of MG Non-Life Insurance separately from the contract transfer according to the agreement. The existing plan to establish the bridge insurance company in the third quarter of this year and transfer the contracts by the end of 2026 will proceed as scheduled, with the intention of locating a buyer for MG Non-Life Insurance within this timeframe. In effect, the end of 2026 is the deadline for the sale of MG Non-Life Insurance.
The financial authorities are reportedly planning to sell the bridge insurance company after finding a buyer following its establishment. If no buyer appears within the deadline, the contract transfer will proceed according to the previously stated schedule.
The decision by the financial authorities was influenced by opposition from the labor union and mediation from the political sector. The labor union opposed the establishment of the bridge insurance company and the contract transfer, citing uncertainty about job succession, and staged a hunger strike in front of the presidential office. The bridge insurance company was supposed to hire some employees from MG Non-Life Insurance, but the union argued that once the contract transfer is completed and the bridge insurance company is dismantled, future employment could not be guaranteed.
Earlier, the labor union did not cooperate when Meritz Fire & Marine Insurance, selected as the preferred bidder, pursued a transfer of assets and liabilities (P&A) because they advocated for a merger and acquisition (M&A). At that time, Meritz Fire & Marine Insurance proposed to retain 10% of employees for job succession and offer severance pay of 25 billion won to non-retained employees; however, the union did not accept this. There are a total of 521 employees at MG Non-Life Insurance.
However, the insurance industry forecasts that it will be difficult for a buyer of MG Non-Life Insurance to emerge within the deadline. It is said that MG Non-Life Insurance, which did not appear attractive even when its financial structure was not poor in the past, would struggle to be sold now. As of the first quarter of this year, the solvency margin ratio (KICS), a health indicator for MG Non-Life Insurance, is at -18.2% after the transitional measure, and significant capital injection will be unavoidable to raise it to the legal standard of 100%.
Policyholders of MG Non-Life Insurance criticized the labor union for focusing only on job succession, neglecting the damage to policyholders. In a group chat room for MG Non-Life Insurance subscribers, which has about 1,500 members, complaints are emerging such as, "They only talk to the union and do not ask for policyholder opinions," "The responsible employees for poor management should be held accountable," and "If acquired by a private equity fund, the uncertain situation will continue."