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MG Non-Life Insurance enters bankruptcy proceedings... Finding a new owner remains uncertain

[비즈한국] MG Non-Life Insurance has been declared bankrupt by the court. Since its business suspension and the transfer of insurance contracts last year, MG Non-Life Insurance had effectively seen most of its operational functions moved elsewhere. As the MG Non-Life Insurance corporate entity enters legal liquidation procedures, market attention is turning to whether the sale of Yebyeol Non-Life Insurance, the bridge insurer, will be successful.

MG Non-Life bankruptcy: "No impact on policyholders"

On the 13th, the Seoul Rehabilitation Court declared MG Non-Life Insurance bankrupt. The court appointed the Korea Deposit Insurance Corporation (KDIC) as the bankruptcy trustee, and claims must be filed by May 21. The creditors' meeting and the debt investigation date are scheduled for June 18.

MG Non-Life's management crisis had been ongoing for years. The Financial Services Commission (FSC) designated MG Non-Life as an insolvent financial institution in April 2022, followed by a worsening Risk-Based Capital (RBC) ratio and persistent capital impairment. While financial authorities pushed for normalization through a sale, multiple public bidding attempts fell through.

At the end of 2024, Meritz Fire & Marine Insurance000060 was selected as the preferred bidder to pursue an acquisition via a Purchase and Assumption (P&A) method, but negotiations collapsed due to conflicts with the labor union over employment succession. Since then, with no clear buyer appearing, discussions on the restructuring of MG Non-Life have been prolonged.

Financial authorities ultimately initiated liquidation procedures to protect policyholders. In May of last year, the FSC ordered a partial suspension of business for MG Non-Life and announced the direction for future handling, kicking off full-scale restructuring. In September, the decision was made to suspend MG Non-Life's operations and transfer insurance contracts, leading to the migration of insurance policies and major assets to the bridge insurer, Yebyeol Non-Life Insurance.

Yebyeol Non-Life is a temporary bridge insurer established in July 2025 with 100% funding from the KDIC to temporarily take over MG Non-Life's contracts. Its purpose is strictly limited to maintaining and managing insurance contracts by acquiring the assets and liabilities of MG Non-Life, with a lifespan of two years.

As the transfer of insurance contracts is complete, this bankruptcy declaration is essentially a legal step to wind up the MG Non-Life corporate entity. An FSC official explained, "All of MG Non-Life's insurance contracts have already been transferred. This bankruptcy is a procedural measure for corporate liquidation and will have no impact on policyholders."

Yebyeol Non-Life final bidding postponed to April

The Korea Deposit Insurance Corporation is currently pursuing the sale of Yebyeol Non-Life. Three parties participated in the preliminary bid held in January: Hana Financial Group086790, Korea Investment Holdings071050, and US-based private equity fund JC Flowers. However, none of them have confirmed their participation in the final bidding yet.

There is speculation that Hana Financial Group may not participate in the final bid due to the burden of large-scale capital required for the acquisition. Analysts suggest that JC Flowers' participation is also uncertain, as it has faced difficulties finding a partner despite attempts to secure a Strategic Investor (SI). Korea Investment Holdings is also reportedly undecided on final bidding as it is reviewing multiple acquisition targets, including Yebyeol Non-Life.

Industry experts suggest that the sale process will not be easy, considering Yebyeol Non-Life's financial structure and the necessity for large-scale capital injections in the future. It is estimated that at least 1 trillion won is required for the acquisition, including the purchase price.

Recently, the KDIC postponed the final bidding deadline from the original March 30 to April 6. The KDIC explains that this is a simple scheduling adjustment and that there are no issues with the sale process, such as due diligence. However, it is reported that if there is only one bidder in the final round, plans are being reviewed to secure additional bidders through re-announcement. Furthermore, if no interested buyers appear even after a re-announcement, the option of proceeding with a private contract with the sole participating financial firm is also being discussed.

If the sale fails, there is a high probability that the insurance contracts held by Yebyeol Non-Life will be transferred to major non-life insurance companies, such as Samsung Fire & Marine Insurance000810, Hyundai Marine & Fire Insurance001450, DB Insurance, KB Insurance, and Meritz Fire & Marine Insurance. The FSC previously stated, "If there is a suitable buyer, we will proceed with sale negotiations; otherwise, we plan to swiftly push for the transfer of contracts to the five major non-life insurers."