'Samsung Life bill' causing conflict

By Kim Jae-won

The chief financial regulator opposes the so-called “Samsung Life bill,” saying it would cause confusion in the market and hurt legal stability, according to scripts from the National Assembly, Friday.

If the bill, submitted by New Politics Alliance for Democracy (NPAD) Rep. Lee Jong-kul, is passed, an insurance company can own no more than a 3 percent stake in its affiliate by market value. If it has equities more than the ratio, it will have to sell them.

Currently, the value of the equities is calculated based on when the company purchased them, not the market value.

Samsung Life is the first company that could be affected by the rule. The nation’s biggest insurer by assets owns a 7.2 percent stake, worth about 18 trillion won, in Samsung Electronics.

“If the standard is changed, legal stability will be loosened totally. And it is expected that the market will suffer big confusion, because the equities should be sold and purchased again whenever the stock prices move,” Financial Services Commission Chairman Yim Jong-yong said during a bill examination meeting at the parliament last month.

However, Rep. Lee, who was chosen as the floor leader of the main opposition party Thursday, said it did not make sense to allow an exception for the insurance industry.

“All of our country’s legislation applying to the savings banking, banking and securities industries has been changed to reflect market values. However, we cannot change only this. Now, it is time to discuss it,” Lee said at the meeting.

But observers said that it was unlikely the bill would pass because the governing Saenuri Party, which controls more than half the 300 seats in the parliament, opposes the bill. Rep. Park Dae-dong of Saenuri said the bill was problematic because the new regulations could damage the stability of the insurance business, which requires long-term investments.

Total assets of Samsung Life reached 214.4 trillion won in December, up 11.1 percent from a year ago. Its net profit marked 1.3 trillion won last year, increasing by 46.7 percent from the previous year.