Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Samsung Life embroiled in troubled gold-related DLS
Samsung Life Insurance's headquarters in southern Seoul. / Korea Times file
By Kim Bo-eun
By Kim Bo-eun
Insurers have remained unaffected by the latest series of scandals involving private equity funds (PEFs), as the products were distributed mainly by banks and brokerages. However, Samsung Life Insurance has come under scrutiny after it notified investors of a gold-related derivative-linked securities (DLS) product last week redemptions have been suspended.
Samsung Life sold the bulk of the product that incorporated a letter of credit between firms importing and exporting gold as the underlying asset. Redemptions for products that reached maturity at the end of last month were halted after NH Investment & Securities, which drew up the product, notified the insurer of liquidity issues triggered by COVID-19. The investments were managed by the Hong Kong-based Universe Asia Management.
Samsung Life notified investors last month that they would be able to redeem their investments that reach maturity at the end of July by May next year, based on the notifications from NH.
The issue for Samsung Life as a distributer of the product is whether it was involved in mis-selling. Reports have cited investors who claim Samsung Life promised they would be able to redeem their investments in seven months.
Regarding the issue, a Samsung Life official said, "We are aware that, as the entity that was in charge of the process of investors signing up for the product, we do have the duty to protect customers' assets. We provided detailed explanations including about the risks related to the investments."
The official did not explain which entity was responsible for the delay in fund redemptions. Samsung Life has requested NH to provide further details involving the fund.
The country's top insurer has seen its reputation tarnished over the years, based on repeated episodes of misconducts. The main issue with the insurer is its refusal to comply with orders by the financial authorities to make payments to claimants.
The Financial Supervisory Service (FSS) in 2018 directed Samsung Life to provide payments to holders of its cancer policy. Cancer patient holding the policy had requested payments for nursing home fees, but the life insurer stated it could not make the payments because it does not consider the fees to be expenses for cancer treatment.
Policyholders referred to the terms of the policy, which state the insurer would cover expenses for admission to an institution for cancer treatment. Some hospitals do not allow cancer patients to be hospitalized for more than a week after surgery, and patients are admitted to specialized nursing homes for treatment for this reason.
A suit is ongoing between Samsung Life and its policyholders over the case. Cancer patients holding the policy have been staging a protest at Samsung Life since January. They are demanding the FSS revoke approval for Samsung to operate an insurance business.
The insurer is notorious for defying orders by financial authorities to provide payments to policyholders. Samsung Life only provided 100 percent payments in 62.8 percent of the cases it was ordered to last year, according to the FSS. The figure for other life insurers exceeds 90 percent. Figures for Hanwha and Kyobo, the two other major life insurers, were 90.9 percent and 95.5 percent, respectively.
Samsung Life also saw its reputation marred after authorities issued warnings in May for entrusting the management of its assets to Samsung's asset management unit.
Internal guidelines had stated contracts with asset managers are subject to change based on performance, but Samsung Life allocated its assets to Samsung Asset Management, despite its poor performance.
The insurer was found to have revised the criteria for assessing the investment firm's performance to give it an advantage in an evaluation.