The Financial Supervisory Service plans to seek expert opinions regarding Samsung Life Insurance's accounting treatment of its affiliate stocks.
According to financial authorities on the 19th, the FSS will hold a closed meeting on the 21st in the afternoon regarding the accounting treatment of equity in life insurance companies' affiliates, attended by accounting industry officials and professors. The issue is whether the accounting for life insurance company affiliates' equity will continue to be categorized as policyholder equity adjustments or classified as insurance liabilities.
According to the new accounting standards (IFRS 17) introduced in 2023, when Samsung Life Insurance disposes of its equity stake (8.51%) in Samsung Electronics, it must treat the profits that go to participating policyholders as insurance liabilities.
However, the FSS allowed an exception for Samsung Life Insurance to continue categorizing the resources for participating policyholders as 'policyholder equity adjustments' even after the new standards were introduced. This was in response to industry claims that it could lead to misunderstandings among financial statement users.
As of the end of June this year, the scale of Samsung Life Insurance's policyholder equity adjustments is 8.9458 trillion won. Recently, however, controversy has arisen around the accounting treatment of Samsung Life Insurance's equity stake in Samsung Fire & Marine Insurance, primarily driven by the Korea Accounting Standards Board and political circles. It is argued that even though Samsung Life Insurance's equity stake (15.43%) is below 20% after incorporating Samsung Fire & Marine Insurance as a subsidiary under insurance law in March, equity method accounting should still be applied.