MG Insurance Union Launches Company-wide Hunger Strike: "Bridge Insurer Plan Must Be Halted"

MG Insurance Union Takes Drastic Action, Opposes Bridge Insurer Plan
"Merger and Acquisition Approach Should Be Pursued Again"... Demanding Job Succession Guarantees
Ongoing Talks with Government and Ruling Party, but No Significant Progress

The labor union of MG Insurance is set to begin a company-wide hunger strike. This move comes as a last resort after repeated protests failed to halt the contract transfer plan via a bridge insurer.

On June 30 at 11 a.m., the MG Insurance union will hold a rally in front of the presidential office in Yongsan-gu, Seoul, to announce the launch of a collective hunger strike. Since the general strike resolution rally held on May 29 in front of the Financial Services Commission in Jongno-gu, Seoul, some union leaders have already been on hunger strike. However, as the hunger strike enters its second month with no significant response from financial authorities or political circles regarding the handling of MG Insurance, the union has decided to escalate to a company-wide hunger strike.

The MG Insurance union is demanding a complete halt to the contract transfer method via the establishment of a bridge insurer. The union argues that this method does not guarantee job succession. A bridge insurer is a temporary insurance company established by the Korea Deposit Insurance Corporation to restructure failing insurers. Depending on whether new business is conducted, bridge insurers are categorized as either "open" or "closed." Financial authorities are currently pursuing a plan to manage MG Insurance’s insurance contracts, liabilities, and assets?since MG Insurance is a financially troubled institution?through a closed bridge insurer, and then transfer them to five non-life insurance companies (Samsung, DB, Hyundai, Meritz, KB). MG Insurance currently has 521 executives and employees, and 460 exclusive planners. If a closed bridge insurer is established, only about 10% of essential personnel will remain.

On the afternoon of the 29th of last month, around 400 executives and employees of the MG Insurance Branch of the National Office Finance Service Labor Union held a general strike rally in front of the Financial Services Commission in Jongno-gu, Seoul, shouting slogans. Photo by Donghyun Choi

The authorities are prioritizing the protection of policyholders in their push for a closed bridge insurer. It is also interpreted as meaning that MG Insurance executives and employees should bear some responsibility, given the company’s five consecutive years of losses. Choosing an open bridge insurer would require the Korea Deposit Insurance Corporation to inject additional capital in the trillions of won to maintain normal operations, which is a significant burden. MG Insurance’s risk-based capital ratio (K-ICS) is -18.2%, far below the financial authority’s recommended level of 130%.

The union claims that the Yoon Suk Yeol administration bears some responsibility for this situation. An official from the National Office Finance Service Labor Union stated, "MG Insurance was designated as a troubled financial institution by the Yoon Suk Yeol transition committee, which led to a rapid deterioration in management," adding, "The incompetent and ignorant response of the Yoon Suk Yeol administration has driven MG Insurance to this extreme situation."

Since the start of the Lee Jae Myung administration, the MG Insurance union has met with the Ministry of Employment and Labor, Democratic Party lawmaker Kim Hyun Jung, and other government and ruling party officials to discuss normalization measures for MG Insurance. MG Insurance has expressed its position that a merger and acquisition (M&A) approach should be pursued again, but given the company’s repeated failed sales attempts, this seems unlikely at present. As of the end of last year, MG Insurance’s net assets stood at minus 125.3 billion won, resulting in complete capital erosion, and there appear to be few companies willing to invest. A financial authority official stated, "Other than the plan to establish a bridge insurer, nothing has been decided," adding, "We are continuing to communicate with the union."