Korean union urges intervention in troubled insurer to protect policyholders and jobs

The Korea Financial Services Workers Union-MG Non-Life Insurance Union (KFSWU-MG) held a press conference on 17 March outside the Korea Deposit & Insurance Corporation (KDIC) headquarters in Seoul, demanding urgent intervention from the state financial stability authority to ensure the sale process of troubled insurer, MG Non-Life Insurance, protects 1.25 million policyholders and secures employment for its workforce.

MG Non-Life Insurance was declared an insolvent financial institution in April 2022 after recording a lower risk-based capital ratio following the implementation of International Financial Reporting Standards (IFRS). The KDIC subsequently appointed a management team to prepare for the company’s sale.

Appointed buyer’s offer falls flat

After three failed tender notices between January 2023 and July 2024, the KDIC nominated Meritz Fire & Marine Insurance Co Ltd as the preferred negotiator in December 2024 and granted an exclusive negotiation period. However, on 13 March, Meritz unexpectedly withdrew from the bidding process, citing “various internal and external issues.”

Bae Young-Jin, President of the MG union, expressed profound disappointment with Meritz’s offer, which would have retained only 10% of the company’s 500 employees.

“We are greatly disappointed at the Meritz offer which would accept only 10% of employees and offer 250 million won (approximately US$173,000) in compensation to those leaving the company,” said Bae.

Lee Jae-Jin, President of UNI affiliate, KFSWU, called on the government to explore alternative proposals, citing successful precedents such as the Korea Development Bank’s (KDB) investment in Hyundai Heavy Industries and Daewoo Shipbuilding Company during the global financial crisis. Lee also referenced the KDIC’s successful investment in Seoul Guarantee Insurance Corporation, which recently culminated in a profitable exit after an initial public offering.

“Now we are back at the starting point. The financial authorities must reconsider the sale plan, including public fund injection, to save policyholders and guarantee employment security for the sake of insurance market stability,” Lee urged.

Unions pledge cooperation to find new buyer

The union emphasized that no insurance company in Korea has previously been liquidated, with restructuring programmes typically implemented in cooperation with timely government intervention.

In their statement, the union declared their willingness to cooperate with the KDIC and Financial Supervision Commission (FSC) to find a new bidder through an appropriate procedure.

“We are deeply concerned about the rights of policyholders and employment security in our workplace. If necessary, we will consider a certain level of concession and offer full cooperation to find a new bidder. We propose establishing a special committee to proceed with the sale of MG insurance company at a reasonable price and under reasonable conditions in the market,” the statement concluded.

UNI Asia & Pacific Regional Secretary Rajendra Acharya shared the concern of the unions and said,

“We fully understand the frustration of the MG Non-Life Insurance Union and strongly support the solidarity shown by KFSWU for its member union. We urge the KDIC and the FSC to take heed of the unions’ demands and offer of cooperation that protects policyholders and employees of MG Non-Life Insurance from falling victim to a fire sale of the company.”