Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
KDIC resumes M&A process of MG Non-Life Insurance
The headquarters of MG Non-Life Insurance in southern Seoul / Yonhap
By Anna J. Park
Litigation risks remain
By Anna J. Park
The Korea Deposit Insurance Corporation (KDIC) has officially kicked off the M&A bidding process for MG Non-Life Insurance this week. Samjeong KPMG, the lead sale manager of the deal, plans to receive Letter of Intent (LOI) submissions by potential buyers by Oct. 5 in order to select preliminary bidders.
Aiming to reduce burdens on potential buyers, the KDIC plans to apply the purchase and assumption (P&A) method for MG Non-Life's sale. Unlike a traditional M&A approach, P&A involves a selective transfer of assets and liabilities, allowing a potential buyer to exclude some of the non-performing assets and subordinate debts. It is also the most common and preferred method used by the U.S. Federal Deposit Insurance Corporation (FDIC) in handling failing banks.
It is the KDIC's second attempt to publicly sell the company this year alone. The state-run deposit insurer initiated the sale process of the company in January, only to see no buyers show up due to concerns over ongoing legal disputes.
The KDIC has been managing the insurer's management, since the Financial Services Commission (FSC), the top financial regulator, designated the firm as an insolvent financial institution in April last year. The FSC cited failures at proceeding with the planned capital increase as well as an inadequate level of the risk-based capital (RBC) ratio as the rationale for the designation.
Following the FSC's decision, JC Partners, the largest shareholder of MG Non-Life Insurance, filed both an injunction and a main lawsuit at the administrative court, asking for the cancellation of the government's designation of the insurance firm as a troubled financial institution.
However, JC Partners lost in both cases. Earlier this month, the Seoul Administrative Court ruled in favor of the financial authorities, clearing the way for the KDIC's rightful sale of MG Non-Life Insurance under its control.
Market watchers view Woori Financial Group, which has emphasized its willingness to strengthen non-banking units, and Kyobo Life, which hasn't had any affiliated insurance companies yet, as the two strongest potential candidates for the bidding.
However, litigation risks with JC Partners remain. The private equity firm is mulling over whether to file an injunction to suspend the bidding process and to appeal the ruling of the first trial.