Lotte Non-Life Insurance Withdraws Lawsuit Against FSC Over Cancellation of "Management Improvement Recommendation"

Financial Authorities Issue
"Rejection Decision" on Lotte Non-Life Insurance's Management Improvement Plan

Lotte Non-Life Insurance announced in a public filing on the 13th that it has withdrawn its lawsuit seeking to nullify the management improvement recommendation imposed by the Financial Services Commission.

The first hearing on the merits of the case had been scheduled for May this year, but Lotte Non-Life Insurance's withdrawal of the suit has halted its legal response. Lotte Non-Life Insurance stated, "In line with the Financial Services Commission's management improvement recommendation, interest payments on our hybrid capital securities are currently suspended," and added, "This withdrawal of the lawsuit will not change the suspension of interest payments."

Previously, in November last year, Lotte Non-Life Insurance filed an administrative lawsuit after receiving a "management improvement recommendation," the lowest level among prompt corrective actions, from the financial authorities and objecting to the measure. The company also filed for an injunction to suspend execution, arguing that the authorities' action, based on the results of a non-quantitative assessment, could be unlawful, but that application was dismissed late last year.

Subsequently, at the end of last month, the financial authorities rejected the management improvement plan submitted by Lotte Non-Life Insurance, citing a lack of specificity and feasibility. Accordingly, after going through the prior notice of disposition procedure, the financial authorities plan to impose on Lotte Non-Life Insurance a "management improvement request," which is one level higher among prompt corrective actions. The Financial Services Commission plans to have Lotte Non-Life Insurance resubmit its management improvement plan for re-examination.

Meanwhile, Lotte Non-Life Insurance's soundness indicators have somewhat improved as of the end of last year. Its preliminary risk-based capital ratio (K-ICS) stood at 159.3%, up 39.4 percentage points from 119.9% in the first quarter.

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