"One Step Closer to Business Normalization"... MG Sonbo and KDB Saengmyeong Fulfilling Long-Standing Wishes

[Asia Economy Reporter Oh Hyung-gil] Long-standing challenges in the insurance industry are finding solutions. After nearly a decade, KDB Life Insurance is accelerating its search for a new owner, while MG Insurance has achieved business normalization after more than two years.

According to the insurance industry on the 18th, MG Insurance recently completed a capital increase of approximately 200 billion KRW following a change in its major shareholder to JC Partners. With the termination of the management improvement order issued by the Financial Services Commission, the company is signaling a fresh start.

Since 2017, MG Insurance's major shareholder, Saemaeul Geumgo, had not increased capital, causing the Risk-Based Capital (RBC) ratio to plummet to 83.9%, which led to a management improvement recommendation from the Financial Services Commission.

The RBC system requires insurance companies to hold additional net assets beyond the required reserves to ensure they can fulfill insurance payment obligations to policyholders even in the event of unexpected losses. If the RBC ratio falls below 100%, a management improvement recommendation is issued; below 50%, a management improvement demand; and further measures such as management improvement orders follow.

However, MG Insurance's financial soundness continued to deteriorate, resulting in a management improvement order last year and the submission of a management improvement plan to financial authorities.

As a condition for approval of the management improvement plan, MG Insurance committed to the financial authorities a capital increase plan totaling 200 billion KRW, including equity investments from Saemaeul Geumgo (30 billion KRW), Woori Bank (20 billion KRW), Equion Capital (20 billion KRW), Rich & Co (20 billion KRW), Ajou Capital (10 billion KRW), and refinancing of 100 billion KRW.

During this process, the major shareholder changed from the existing Jabez Partners to JC Partners, which caused a significant delay in obtaining approval from financial authorities. Ultimately, the capital increase was completed only on the 16th, and MG Insurance's RBC ratio is expected to rise close to 200%.

Along with the capital increase, MG Insurance appointed Park Yoon-sik as the new CEO, aiming for a fresh start.

CEO Park, who has extensive experience in the financial sector, holds a master's degree in Trade from Sogang University and an MBA from Cornell University. He has served as a team leader at Cheil Bank, a director of management consulting at Arthur Andersen Korea, and a director at PwC Consulting. In the insurance industry, he was vice president at Dongbu Insurance and later CEO of Hanwha General Insurance.

Lee Dong-geol (left), Chairman of KDB Industrial Bank, and Sohn Tae-seung, CEO of Woori Bank, are attending a meeting between the Financial Services Commission Chairman and bank CEOs held at the Bankers' Hall in Jung-gu, Seoul on the 20th, sharing their opinions. Photo by Kang Jin-hyung aymsdream@

After nearly 10 years since 2010, favorable winds are blowing for the sale of KDB Life Insurance by KDB Industrial Bank.

KDB Industrial Bank is expected to soon hold the main bidding and select a preferred negotiation partner for the sale of KDB Life Insurance. It is reported that the private equity fund (PEF) JC Partners has completed due diligence.

JC Partners is said to have purchased 92.73% of KDB Life's shares for about 200 billion KRW and plans a paid-in capital increase of approximately 300 billion KRW.

However, KDB Industrial Bank remains cautious. A bank official stated, "We are conducting due diligence on potential buyers, and the schedule for the main bidding and selection of the preferred negotiation partner is undecided," adding, "Specific details such as the preferred negotiation partner, sale price, schedule, and investment structure have not been determined."

Given that previous sales attempts failed three times, it is understood that the bank intends to proceed with caution this time.

In 2010, due to the financial difficulties of Kumho Group, KDB Industrial Bank, together with Kansas Asset Management, formed a PEF worth 650 billion KRW to acquire KDB Life Insurance (formerly Kumho Life Insurance).

Subsequently, from 2014 to 2016, three attempts were made to sell the company, but due to market views on the economic situation and concerns over KDB Life's management instability, as well as differences between the market and the bank's desired price, no suitable buyer was found.

In response, Chairman Lee Dong-geol of KDB Industrial Bank appointed insurance expert Professor Jung Jae-wook of Sejong University's Department of Business Administration as CEO of KDB Life last year. Under his leadership, intensive restructuring of the organization and business was carried out, achieving business normalization and preparing for the sale.

This content was produced with the assistance of AI translation services.