MG Non-Life Insurance is seeking a new owner through a public sale. This marks the fourth public sale, and there is a prevailing outlook that finding a new owner will not be easy.
According to the financial sector on the 17th, the Korea Deposit Insurance Corporation (KDIC) and the MG Non-Life Insurance labor union have reportedly adopted a public sale as the method for the sale of MG Non-Life Insurance.
The financial authority decided to proceed with the re-sale of MG Non-Life Insurance along with the establishment of a bridge insurance company and the transfer of contracts, accommodating the demands of the labor union. Subsequently, the KDIC and the union confirmed the sale method through negotiations.
The KDIC attempted to sell MG Non-Life Insurance a total of five times, including three public sales since January 2023. This is the fourth public sale.
In the third public sale held in April of last year, two domestic and foreign private equity funds participated. However, they all failed to attend the final bidding, resulting in the sale's failure. The KDIC then converted the process to a negotiated contract and selected Meritz Fire & Marine Insurance as the preferred bidder.
However, due to opposition from the labor union, due diligence could not be conducted, and Meritz Fire & Marine Insurance decided to abandon the acquisition in March. Meritz Fire & Marine Insurance proposed to employees a guarantee of employment for 10% of the staff and a total of 25 billion won in severance payments, but the union rejected this.
The KDIC has also taken legal action, including applying for a prohibition of obstruction of work against the MG Non-Life Insurance labor union that hindered the due diligence.
The market views that MG Non-Life Insurance will struggle to find a new owner on its own. As of the first quarter of this year, MG Non-Life Insurance is in a state of complete capital erosion, and its soundness indicators do not meet the standards set by the financial authorities. Additionally, there are significant issues such as accumulated losses, low revenue, and a lack of competitive sales channels.
However, as the Lee Jae-myung administration transitioned MG Non-Life Insurance to a resale, there are expectations that it will also intervene in the search for a new owner. Consequently, the involvement of Woori Financial Group and the Industrial Bank of Korea in the bidding is also being discussed.
An industry insider noted, 'I understand that the government is also looking for acquisition candidates.'