MG Insurance, which had been undergoing liquidation procedures through the establishment of a bridge insurance company, is once again up for sale. The Korea Deposit Insurance Corporation (KDIC) and the MG Insurance labor union have agreed to simultaneously pursue both the sale and the establishment of a bridge insurance company.
According to financial authorities and the insurance industry on the 30th, the financial authorities, the KDIC, and the MG Insurance labor union have reached a tentative agreement to push for the resale of MG Insurance. The core of the agreement is to make another attempt to sell MG Insurance before the establishment of a bridge insurance company.
Photo taken on the morning of the 13th at the MG Insurance headquarters in Gangnam-gu, Seoul. Photo by Yonhap News
On May 14, the financial authorities announced a plan to restructure MG Insurance, which included suspending new business at MG Insurance, establishing a bridge insurance company to protect policyholders, and transferring all existing insurance contracts to the five major non-life insurers.
The financial authorities and the KDIC initially decided to establish a bridge insurance company because MG Insurance was designated as a troubled financial institution and failed in both normalization and sale attempts. A bridge insurance company is a temporary entity set up to gradually dispose of assets and liabilities, a method previously used during the savings bank crisis.
However, the labor union has argued that many employees could lose their jobs during this process, insisting that the bridge insurance company plan be scrapped and a normal sale be pursued instead.
The financial authorities and the MG Insurance labor union have reached a provisional agreement to establish a bridge insurance company but to prioritize the resale of the company. If the resale fails, the existing plan to transfer contracts to the five major insurers will proceed.
On this day, the MG Insurance labor union approved the agreement with the consent of 281 union members and ended its ongoing hunger strike.
However, the financial authorities stated that the matter is still under discussion and nothing has been finalized. In addition, the interim agreement between the KDIC and the labor union does not specify details such as the scale of job security or support funds, so further discussions are expected in the future.
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