The Korea Deposit Insurance Corporation (KDIC) has wrapped up the initial work for an asset-liability due diligence of YeByeol Non-Life Insurance, the bridge insurer for MG Non-Life Insurance. Together with EY Hanyoung, which was selected as the project management office (PMO) overseeing the business, it has formally begun the sale process for YeByeol Non-Life Insurance. KDIC plans to soon complete the pre-due diligence process, specifically determine the scale of YeByeol Non-Life Insurance's asset and liability, and then seek potential acquirers.
According to the financial industry on the 29th, KDIC recently drew up a detailed plan with EY Hanyoung for an asset-liability due diligence of YeByeol Non-Life Insurance. It is to pre-check elements such as the size of insurance contract asset for an accurate due diligence and, based on that, estimate the time required for the main due diligence. KDIC is also said to have completed prior coordination on the due diligence work by conducting interviews with employees handling YeByeol Non-Life Insurance–related tasks.
KDIC and EY Hanyoung are expected to launch the main due diligence soon. The main due diligence is expected to take about two months. KDIC plans to issue a call for bidders as soon as the due diligence is completed. While it is aiming to select a preferred bidder within the year, there is talk that the timeline could be pushed to early next year depending on circumstances.
A KDIC official said, "We have completed the initial work for the due diligence, and we expect the specific asset and liability scale to be calculated in about two months."
However, the industry sees the likelihood of a successful sale as low. As of the first quarter of this year, before being folded into YeByeol Non-Life Insurance, MG Non-Life Insurance's total equity stood at -244.1 billion won, reflecting a weak financial condition. MG Non-Life Insurance was designated a troubled financial institution in 2022 and, under the supervision of the Korea Deposit Insurance Corporation (KDIC), went through three open bidding rounds, all of which fell through. Last year, Meritz Fire & Marine Insurance was selected as the preferred bidder, but the deal ultimately collapsed amid union opposition over the employment succession rate.
Earlier in May, financial authorities announced that, through a bridge insurer, MG Non-Life Insurance's contracts would be transferred to the five major non-life insurers — Samsung Fire & Marine Insurance, Meritz Fire & Marine Insurance, DB Insurance, KB Insurance, and Hyundai Marine & Fire Insurance. The move came because financially weak MG Non-Life Insurance could not maintain its existing contracts normally. Along with the contract transfer, the authorities also decided to push ahead with the sale of YeByeol Non-Life Insurance. Recently, all insurance contracts of MG Non-Life Insurance were transferred to YeByeol Non-Life Insurance, and the original company's operations were suspended. YeByeol Non-Life Insurance is currently seeking potential acquirers.