Approval of Overseas Subsidiary Acquisition Before 'Severe Disciplinary Action' Conclusion... Will Samsung Life's Disciplinary Level Be Lowered?

Financial Services Commission Still Deliberating Samsung Life Sanctions After One Year
Criticized for Delaying, Says "Reviewing Key Issues"
Legal Advisory Body Offers Favorable Interpretation

[Asia Economy Reporter Oh Hyung-gil] It has been confirmed that the financial authorities recently approved Samsung Life Insurance's acquisition of shares in an overseas subsidiary, despite delaying a major disciplinary decision for nearly a year. This draws attention as it comes at a time when, if Samsung Life Insurance's sanctions are finalized, it would be unable to enter new businesses or acquire subsidiaries for the next year.

According to the financial industry on the 30th, the Financial Services Commission approved the agenda regarding Samsung Life Insurance's acquisition of shares in the UK real estate asset management company Savills IM at its regular meeting held on the 25th of last month.

Samsung Life Insurance acquired a 25% stake in Savills IM for 101.3 billion KRW in May. Following the completion of the share acquisition transaction, it agreed to entrust the management of assets worth 1 billion USD (approximately 1.1 trillion KRW) for four years. This is considered a key acquisition that will serve as a new growth engine for Samsung Life Insurance, which is strengthening asset management aiming for revenue diversification.

Within the financial sector, there is an interpretation that the Financial Services Commission's decision this time reflects a significantly different judgment compared to precedents. Financial institutions that have received major disciplinary actions such as 'institutional warnings' have traditionally been sanctioned against entering new businesses or acquiring subsidiaries.

Hanwha Life Insurance, which was sanctioned before Samsung Life Insurance, saw its acquisition of shares in Carrot General Insurance, a digital non-life insurance company under its subsidiary Hanwha Asset Management, fall through in February.

In particular, Samsung Card, a subsidiary of Samsung Life Insurance, had its MyData preliminary review process suspended by the Financial Services Commission due to the ongoing sanction procedures against Samsung Life Insurance. The follow-up review has yet to resume.

Inside and outside the financial sector, there is also a view that the Financial Services Commission is delaying the decision on Samsung Life Insurance's major disciplinary action to prepare for lowering the level of sanctions.

Financial Services Commission Chairman Ko Seung-beom responded to criticism at last month's National Assembly audit regarding the 'delay in sanctions' against Samsung Life Insurance by saying, "It is not intentionally delayed; we are reviewing various issues," and "We will handle all matters according to laws and principles without prejudice against any specific company," but the controversy has intensified.

Recently, the Financial Services Commission's legal advisory body issued an interpretation completely different from that of the Financial Supervisory Service (FSS), leading to speculation that Samsung Life Insurance might avoid major disciplinary action. Previously, in December last year, the FSS recommended institutional warnings and fines against Samsung Life Insurance to the Financial Services Commission for unfair support to affiliates and non-payment of cancer insurance benefits.

At that time, the FSS viewed Samsung Life Insurance's failure to claim delay damages stipulated in the contract for a 156.1 billion KRW IT system construction commissioned to its affiliate Samsung SDS as unfair support to affiliates. However, the Financial Services Commission's Legal Interpretation Deliberation Committee concluded last month that the insurer's failure to claim delay damages from an affiliate does not constitute a 'free transfer of assets' prohibited under the Insurance Business Act.

Regarding the non-payment of cancer insurance hospitalization fees for convalescent hospitals, the FSS found that "rejecting cancer hospitalization payments without undergoing medical consultation violated the policy terms," but the Legal Interpretation Deliberation Committee reportedly issued an interpretation in August stating that "rejecting insurance payments without medical consultation is not a violation of policy terms."

The change in leadership within the financial authorities and the shifting internal atmosphere regarding the inspection system add weight to these speculations. Recently, FSS Governor Jung Eun-bo emphasized "harmony and balance between preventive supervision and post-supervision" during a meeting with life insurance CEOs, showing a market-friendly approach.

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