[비즈한국] The labor union of MG Non-Life Insurance and the Korea Deposit Insurance Corporation (KDIC) are in a standoff ahead of the company's sale. Since MG Non-Life Insurance was designated as an insolvent financial institution in April 2022, the KDIC has attempted three public sales, all of which failed. After switching to a private contract in August 2024, Meritz Fire & Marine Insurance000060 was selected as the preferred bidder and is currently conducting due diligence, but the process has been halted due to objections from the labor union. The conflict has intensified to the point where the KDIC has even mentioned the possibility of liquidation or bankruptcy for MG Non-Life Insurance.
On the 16th, the Financial Resolution Department of the KDIC stated its position on the sale process and direction through an "Explanatory Material Regarding the Sale of MG Non-Life Insurance." The KDIC is currently conducting additional due diligence with the preferred bidder, Meritz Fire & Marine Insurance, but the process has been suspended due to friction with the MG Non-Life Insurance labor union.
The MG Non-Life Insurance labor union has been opposing the acquisition by Meritz Fire & Marine. Bae Young-jin, head of the MG Non-Life Insurance labor union, stated, "Considering how Meritz Fire & Marine has expanded its business in the non-life insurance market, it cannot be trusted," adding, "Meritz Fire & Marine has a history of mass layoffs of employees aged 30 and older. Even if they promise to guarantee employment at the time of acquisition, it is doubtful whether it will be upheld later." There is also concern that if Meritz Fire & Marine acquires MG Non-Life Insurance through a Purchase and Assumption (P&A) method, there would be no obligation to guarantee employment.
MG Non-Life Insurance attempted to escape its insolvent financial institution designation through lawsuits but failed. On the 9th, the company's major shareholder, private equity firm JC Partners, lost the third trial in a lawsuit filed against the Financial Services Commission to "cancel the decision as an insolvent financial institution."
The KDIC expects the sale to be completed by April or May if the process proceeds as scheduled. Its stance is that if this sale fails, the company must effectively be resolved through other means. In its explanatory material, the KDIC stated, "Throughout the approximately three-year public sale process, Meritz Fire & Marine has been the only valid bidder, making it uncertain whether other potential buyers can be found. If Meritz Fire & Marine gives up on the acquisition because due diligence cannot proceed, we plan to consult with relevant agencies to review alternative resolution methods," adding, "If a sale proves difficult, there is a possibility of paying deposit insurance to policyholders and proceeding with liquidation or bankruptcy."
While the KDIC proposed several resolution plans in the event of a failed sale, such as a 4th public sale, transfer of contracts to other insurance companies, liquidation/bankruptcy, and business normalization, it specifically mentioned liquidation and bankruptcy. Along with the explanation that liquidation and bankruptcy are unfavorable to both policyholders and MG Non-Life Insurance employees, it added that it is reviewing legal action against the labor union for obstructing due diligence.
The MG Non-Life Insurance labor union immediately refuted the KDIC's statement. In a rebuttal statement, the union claimed, "The financial authorities and the KDIC should be managing and operating insolvent financial institutions more meticulously, yet they have mentioned liquidation and bankruptcy, which are currently invalid stages," and added, "They have defamed the MG Non-Life Insurance labor union by including false claims such as obstruction of due diligence and illegal industrial action in their press release."
The labor union also emphasized that the KDIC's remarks constitute obstruction of business. Head of the union Bae Young-jin stressed, "Because the KDIC revealed the possibility of liquidation or bankruptcy, difficulties in the field have increased," adding, "Attracting new subscribers has naturally become difficult, and now it is even hard to renew existing contracts."
As the conflict between the two sides deepens, the sale process has been temporarily suspended. Both the KDIC and the labor union are blaming each other for the cause of the suspension. The KDIC explained, "The union is demanding employment guarantees and the withdrawal of the preferred bidder selection, and is refusing due diligence," adding, "The KDIC attempted on-site due diligence with the inspection team on January 9, but withdrew due to the union's obstruction. The union is also refusing to submit all data necessary for due diligence."
In contrast, the union argues that the KDIC and the inspection team demanded data without authorization despite procedural issues. They pointed out that it is a problem to request sensitive data such as the personal information of MG Non-Life Insurance employees and trade secrets when Meritz Fire & Marine's acquisition has not been finalized.
A union representative explained, "We did not refuse to submit the data itself. We told them that if they provide legal review for the necessary data in accordance with the status of a preferred bidder, we would review it and give an answer," adding, "However, the KDIC and the inspection team did not respond. We are keeping a close watch as there is talk that they will attempt on-site due diligence again this week."
Regarding the deterioration of management, the two sides also provide different stories. Since being designated as an insolvent financial institution, the financial status of MG Non-Life Insurance has been in a downward spiral. The Risk-Based Capital (RBC) ratio—an indicator of whether an insurer can pay insurance claims to policyholders on time—dropped by nearly half from 76.9% at the end of 2023 to 43.4% in September 2024, and the number of new contracts during the same period decreased from 83,965 to 68,979 (annualized).
The KDIC cited the inheritance of insolvent contracts from the days of Green Non-Life Insurance and weakened sales capabilities as the causes. On the other hand, the MG Non-Life Insurance labor union pointed out, "The administrator dispatched after the designation as an insolvent financial institution has done almost nothing in terms of risk management, preventing the expansion of insolvency, and insurance accident prevention." Furthermore, they expressed concern that sales capabilities would fall further due to the mention of the possibility of liquidation or bankruptcy.
If the sale falls through, there would be no damage to policyholders other than through the liquidation or bankruptcy method, as transferring contracts to other insurance companies would allow the conditions to be maintained. However, in the case of liquidation or bankruptcy, the protection limit is only 50 million won, meaning high-value policyholders would suffer losses. An industry insider noted, "It seems the KDIC has taken a strong stance to resolve the situation through a sale as much as possible, rather than through methods like business normalization."