Samsung Life's "Exceptional Accounting" Nears Conclusion... Will the FSS Finalize at the Joint Meeting on the 1st?

The Financial Supervisory Service is expected to reach a conclusion as early as this week regarding the controversy over the so-called "exceptional accounting" (il-tal accounting) that recognizes the accounting treatment of participating policyholders' shares at Samsung Life Insurance as an exception.

According to the financial sector on December 1, the Financial Supervisory Service and the Korea Accounting Standards Board are holding a joint inquiry response meeting on this day to discuss whether to continue allowing il-tal accounting under the International Financial Reporting Standard 17 (IFRS 17) for life insurers such as Samsung Life Insurance. The joint inquiry response meeting is a body jointly operated by the Financial Supervisory Service and the Korea Accounting Standards Board to provide the authorities' official opinions on companies' accounting-related inquiries.

Financial Supervisory Service Headquarters. Financial Supervisory Service

Previously, the Korea Life Insurance Association and civic groups submitted an inquiry to the Financial Supervisory Service and the Korea Accounting Standards Board regarding the permissibility of il-tal accounting. The main point of the inquiry is whether Samsung Life Insurance can continue to account for the shares of Samsung Electronics acquired with premiums from participating policyholders as a liability item called "policyholder share adjustment." If this exceptional accounting is no longer recognized in the future, Samsung Life Insurance will have to change its accounting method, which could significantly alter its key financial indicators.

Lee Chanjin, Governor of the Financial Supervisory Service, is known to be effectively opposed to allowing il-tal accounting. During a National Assembly audit in October, Governor Lee stated, "We have completed internal coordination to normalize the exceptional accounting practices in accordance with international standards."

However, this joint meeting is limited to corporate financial statements and does not address the policyholder share adjustment item in supervisory accounting related to financial statements for supervisory purposes. In supervisory accounting, policyholder share adjustment is still recognized as a liability, so there is a high possibility that il-tal accounting will continue to be maintained for supervisory accounting purposes until the regulations are revised.