[2025 Audit] Lee Chanjin, FSS Governor: "All Insurance and Accounting Divisions Agree on Applying International Standards to Samsung Life Accounting"

National Assembly Political Affairs Committee Audit of the FSS
Internal Insurance and Accounting Divisions in Full Agreement
Stronger Enforcement of Accounting in Line with International Standards

Lee Chanjin, Governor of the Financial Supervisory Service, stated at the National Assembly Political Affairs Committee’s audit of the Financial Supervisory Service on the 21st that both the insurance and accounting divisions of the Financial Supervisory Service are in full agreement with the principle of aligning Samsung Life Insurance’s irregular accounting practices with international accounting standards. While he did not give a direct answer to whether this could be implemented within this year, he emphasized that the matter would be addressed as soon as possible.

Lee Chanjin, Governor of the Financial Supervisory Service, is attending the 2025 Political Affairs Committee audit held at the National Assembly on the 21st, responding to questions from lawmakers. Photo by Yonhap News

Samsung Life Insurance used premiums earned from selling participating insurance policies in the 1980s and 1990s to purchase shares in Samsung Electronics. In its financial statements, dividends for insurance policyholders are classified under “policyholder equity adjustment” rather than “insurance liabilities.” During the tenure of former Governor Lee Bokhyeon, the Financial Supervisory Service accepted Samsung Life Insurance’s position, based on the explanation that there were no plans to sell the Samsung Electronics shares. Governor Lee Chanjin has now reversed this stance, making it clear that no exceptions will be allowed.

Assemblywoman Kim Hyunjung of the Democratic Party of Korea pointed out, “During the previous governor’s term, an accounting method used by Samsung Life Insurance, which is almost unprecedented internationally, was effectively condoned,” and added, “As a result, not only Samsung Life Insurance but also many other life insurers with participating contracts have indiscriminately adopted irregular accounting, leading to serious negative consequences.”

Assemblywoman Kim further argued that Samsung Life Insurance’s sale of Samsung Electronics shares in February was problematic. In February, Samsung Electronics retired 3 trillion won worth of treasury shares as part of its value-up (corporate value enhancement) policy. This raised the possibility that Samsung Life Insurance’s stake in Samsung Electronics could exceed 10%. According to the Separation of Banking and Commerce Act, financial companies are not allowed to hold more than 10% of a non-financial affiliate’s shares. Samsung Life Insurance maintains that it sold part of its Samsung Electronics stake to comply with the law, but critics argue that this undermined the previous premise of not selling Samsung Electronics shares, which was central to its irregular accounting practice.

Assemblywoman Kim also pointed out, “The premise of not selling Samsung Electronics shares was broken in February,” and added, “I believe this action was based on a misinterpretation.”

In response, Governor Lee Chanjin stated, “Past inquiries and responses regarding irregular accounting did not mention the non-sale of Samsung Electronics shares,” but added, “Since the alignment of irregular accounting with international accounting standards is a unanimous view among the insurance and accounting divisions of the Financial Supervisory Service, we are working to address this issue and will seek external opinions as part of the process.”

Governor Lee did not give a direct answer to Assemblywoman Kim’s question as to whether the Financial Supervisory Service could independently complete the normalization of irregular accounting by the end of this year.

Questions were also raised regarding the application of the equity method, which involves including the performance of subsidiary Samsung Fire & Marine Insurance in Samsung Life Insurance’s consolidated results.

Assemblywoman Kim stated, “There is also the issue of applying the equity method to Samsung Fire & Marine Insurance, and a clear double standard has been established in this regard. I ask that you handle this matter strictly.”

Governor Lee responded, “We will address the issue of the equity method for Samsung Fire & Marine Insurance in the same context.”