Kyobo Life Insurance Reports Deloitte Anjin Accounting Firm to US Accounting Regulatory Authority

[Asia Economy Reporter Oh Hyung-gil] Kyobo Life Insurance has reported Deloitte Anjin Accounting Firm to the U.S. accounting oversight authority.

On the 31st, Kyobo Life Insurance announced that it filed a complaint against Deloitte Anjin Accounting Firm with the Public Company Accounting Oversight Board (PCAOB) in the United States for violating evaluation work standards.

The reason was that Deloitte Anjin Accounting Firm violated the standards to be followed in calculating the FMV (Fair Market Value).

Kyobo Life Insurance explained, "It is judged that Deloitte Anjin Accounting Firm violated the evaluation work standards in calculating the appropriate FMV," adding, "As a result, a prolonged dispute among shareholders has caused tangible and intangible business damages such as deterioration of management stability and reputation, leading the company to take legal action."

Shin Chang-jae, the largest shareholder of Kyobo Life Insurance, signed a shareholder agreement including a put option with financial investors (FI) such as the Affinity Consortium in September 2012. Subsequently, in October 2018, the FI exercised the put option, but Chairman Shin reportedly did not comply, citing issues with the legality and validity of the contract. Both parties are currently undergoing arbitration procedures at the International Chamber of Commerce (ICC).

At that time, Deloitte is known to have used the peer group stock prices from the one year prior to June 2018, rather than the exercise date, to calculate the FMV.

The period includes late 2017 to early 2018, when major peer groups such as Samsung Life Insurance and Orange Life reached record-high stock prices. The price calculated by Deloitte was 409,912 KRW per share.

If the ICC arbitration panel accepts all claims of the Affinity Consortium and orders the largest shareholder to buy at 409,912 KRW per share, and the largest shareholder fails to secure sufficient funding, a change in governance structure cannot be ruled out.

Additionally, Kyobo Life Insurance has completed preparations for a damages lawsuit against Deloitte Global, which oversees Deloitte Anjin Accounting Firm, and plans to file the complaint soon.

A Kyobo Life Insurance official stated, "We are exploring various measures to minimize the company's damages," adding, "This complaint and the forthcoming lawsuit are also being pursued to enhance the stability of corporate value for all stakeholders including customers, investors, and employees."