Samsung, Hanwha Life CEO jobs at risk

By Nam Hyun-woo

Samsung Life CEO Kim Chang-soo

Hanwha Life CEO Cha Nam-gyu

The CEOs of Samsung and Hanwha life insurance firms may face trouble in their bids to grab additional terms after the country’s financial watchdog slapped heavy penalties on them over unpaid benefits for suicide claims.

The Financial Supervisory Service (FSS) announced disciplinary action on the big three life insurers here -- Samsung, Hanwha and Kyobo -- last week over their resistance to provide payouts to suicide claims.

The FSS decided to issue reprimands on Samsung Life CEO Kim Chang-soo and Hanwha Life CEO Cha Nam-gyu. A reprimand is the third-heaviest penalty among the regulator’s five-scale punishment system for CEOs. However, Kyobo Life Chairman Shin Chang-jae received a cautionary warning, which is a level softer than a reprimand.

If the Financial Services Commission (FSC), which directs the FSS, upholds the decision, Kim and Cha will not be able to serve additional terms after their current ones expire. Also, no financial firms can hire them for the next three years.

This would deal a heavy blow to Samsung CEO Kim, who hopes to be renewed for a third term at a shareholders’ meeting on March 24. If the FSC finalizes its decision before that, Kim’s CEO job will be on the line.

The FSC will hold meetings on March 8 and 22 and the issue will be discussed at one of the two. If the FSC finalizes the penalty on March 8, Kim will have to leave.

If the FSC makes its decision on March 22 and notifies Samsung Life later than March 24, Kim will get a chance to serve three more years because such a measure takes effect only after official notification.

An option that Samsung Life can resort to is administrative litigation which can delay the punishment from taking effect.

“Since the FSC is yet to make a final decision, we will review the matter (of administrative litigation) after the result comes out,” a Samsung Life official said.

Regardless of the timing of the FSC’s decision, Hanwha Life CEO Cha is not likely to remain as chief after March 2018, when his current term expires. Some observers expect Cha may not be able to finish his term because reprimanded CEOs of financial firms typically resign before the end of their term.

In 2014, the CEO of Hana Bank, now KEB Hana Bank, had to resign before finishing his term after receiving an FSS reprimand.

“Since we have yet to get any official notification of the regulator, we cannot comment on how the company will cope with the matter,” a Hanwha official said.

Kyobo Life CEO Shin only received a warning from the regulator as Kyobo notified the regulator it would pay all the suicide claims just hours before the FSS held an internal committee meeting on the matter.