MG Non-Life Insurance shifts from liquidation to sale under new administration

MG Non-Life Insurance employees chant slogans during a rally near the presidential office in Seoul, Monday, calling for the withdrawal of the bridge insurer and policy transfer plan. Yonhap

Financial authorities are once again pursuing the sale of MG Non-Life Insurance, shifting from their initial plan to liquidate the company through the establishment of a bridge insurer, according to government and industry officials Tuesday.

The state-run Korea Deposit Insurance Corp. (KDIC) said it has reached a broad agreement with the labor union of MG Non-Life to pursue both the transfer of insurance contracts to five non-life insurers and the company's sale.

"While we will proceed with transferring contracts to five insurers through a bridge insurance company, the agreement also includes a plan to pursue the sale of MG Non-Life for a certain period, as long as it does not delay the establishment of the bridge insurer or the contract transfer schedule," a KDIC official said.

Last month, authorities decided to liquidate MG Non-Life by establishing a bridge insurer, following four failed attempts to sell the company.

However, the abrupt policy reversal comes just six weeks after that decision and follows the inauguration of the Lee Jae-myung administration on June 4, amid pressure from the firm's labor union.

The shift in policy has already drawn criticism, as the original liquidation plan had been carefully crafted to minimize potential harm to policyholders.

MG Non-Life's labor union has been staging a hunger strike in front of the presidential office, voicing opposition to the plan to liquidate the company. The union argues that the plan fails to ensure job security for the firm's 521 employees.

When announcing the liquidation plan on June 14, authorities said they would suspend the insurer's new business activities, establish a bridge insurer and transfer all existing policies to five major non-life insurance firms.

The measure was introduced following four unsuccessful sale attempts and was primarily aimed at protecting policyholders.

As of the end of March, MG Non-Life held about 1.51 million insurance contracts, with around 90 percent consisting of long-term policies such as health and accident insurance. The policyholders include 1.21 million individual clients and 10,000 corporate accounts.

Following the completion of policy transfers, MG Non-Life was expected to enter liquidation proceedings.

However, according to sources, authorities have shifted course and will resume efforts to sell the insurer.

They said the original plan to establish a bridge insurer by the third quarter of this year and complete policy transfers by the end of 2026 will proceed as scheduled, while the search for a buyer will also continue within this time frame.

MG Non-Life Insurance's headquarters in Seoul / Yonhap

Industry insiders, however, believe that securing a buyer for the insurer within the given timeline will be difficult.

Since being designated as a financially distressed company in 2022, MG Non-Life has undergone four public sale attempts — all of which have failed.

As of the first quarter of this year, the company's capital adequacy ratio under the Korean Insurance Capital Standard — a key measure of financial health — stood at minus 18.2 percent, far below the statutory minimum of 100 percent. Bringing it back into compliance would require a significant capital injection.

Policyholders have criticized the union for focusing solely on job security while neglecting their concerns.

"The authorities are only negotiating with the union while ignoring the voices of policyholders," one policyholder wrote in a group chat with about 1,500 members.

Another commented, "Those responsible for the company's mismanagement should be held accountable."