Financial authorities have decided to establish a bridge insurance company as a solution for MG Insurance, which has faced concerns of liquidation following repeated failed sale attempts.
According to the financial sector on May 12, the Financial Services Commission plans to approve an agenda regarding the partial suspension of MG Insurance's operations and the licensing of a bridge insurance company at its regular meeting scheduled for May 14. An official from the financial authorities stated, "Measures for the restructuring of MG Insurance, including the establishment of a bridge insurance company, will be discussed at this regular meeting."
A bridge insurance company is a temporary insurer operated by the Korea Deposit Insurance Corporation to manage and resolve insolvent insurance firms. This approach was previously used during the savings bank crisis with the introduction of 'bridge savings banks.' However, this is the first time such a method is being applied in the insurance industry.
Once the bridge insurance company is established, it is expected to take over and manage MG Insurance's contracts?which involve around 1.24 million policyholders?as well as its assets and liabilities, before eventually transferring the contracts to a major non-life insurer or pursuing a sale to a third party.
Under the bridge insurance company system, new business operations will be suspended. As a result, workforce reductions and restructuring at MG Insurance appear inevitable. The labor union of MG Insurance has expressed strong opposition to the establishment of a bridge insurance company and has stated it will respond firmly.
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