Court: "MG Sonbo is indeed a financially distressed institution"

MG Sonbo, Loses First Trial in Administrative Litigation

The court ruled that the financial authorities' designation of MG Insurance as a financially distressed institution was a reasonable decision. The sale process of MG Insurance, led by the Korea Deposit Insurance Corporation, is also expected to proceed smoothly.

On the 17th, the 12th Administrative Division of the Seoul Administrative Court ruled against MG Insurance and its major shareholder JC Partners in their lawsuit seeking to cancel the designation of MG Insurance as a financially distressed institution by the Financial Services Commission.

Previously, in April of last year, the Financial Services Commission designated MG Insurance as a financially distressed institution. This was because its liabilities exceeded its assets, and its Risk-Based Capital (RBC) ratio did not meet the minimum standard of 100% required by the Insurance Business Act. Capital expansion was also delayed, making it difficult to expect business normalization, and the execution of duties by executives was suspended. Since then, MG Insurance has been under the management of the Korea Deposit Insurance Corporation, which has initiated the sale process of MG Insurance.

However, MG Insurance and its major shareholder, the private equity fund JC Partners, filed an administrative lawsuit arguing that the Financial Services Commission excessively conservatively evaluated MG Insurance's assets and liabilities. They contend that the review should be conducted again based on the revised accounting standards.

Currently, Kyobo Life Insurance and Woori Financial Group are reported to be interested in acquiring MG Insurance. Kyobo Life Insurance needs to establish a sufficient non-life insurance portfolio to transition into a financial holding company, and Woori Financial Group, unlike other financial holding companies, is in a position to secure a lacking insurance business sector.

[Image source=Yonhap News]

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