Financial Services Commission Declares MG Sonhae Insurance a Troubled Financial Institution

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[Asia Economy Reporter Song Hwajeong] The Financial Services Commission announced on the 13th, during its regular meeting, that it has designated MG Sonhae Insurance as a financially distressed institution.

The FSC explained that, based on an evaluation of MG Sonhae Insurance's assets and liabilities as of the end of February this year, its liabilities exceeded its assets by 113.9 billion KRW, meeting the criteria for designation as a financially distressed institution under the Act on the Structural Improvement of the Financial Industry (Geumsan Act). The FSC added that financial authorities had previously encouraged MG Sonhae Insurance to normalize its management through management improvement requests and orders, but since MG Sonhae Insurance's submitted management improvement plan was disapproved and capital expansion was delayed, it was difficult to expect management normalization.

At the regular meeting, the FSC suspended the execution of duties of MG Sonhae Insurance's executives (registered executives) who failed to comply with capital expansion orders under management improvement orders, pursuant to Article 14 of the Geumsan Act, and appointed a manager to act on their behalf. The manager team consists of three members from the Financial Supervisory Service, one from the Korea Deposit Insurance Corporation, and one from MG Sonhae Insurance.

An FSC official stated, "Even if designated as a financially distressed institution, MG Sonhae Insurance's operations will not be suspended, and tasks such as premium payments and insurance claim payouts will continue normally. Therefore, policyholders who wish to maintain their existing insurance contracts should continue to pay premiums as usual. If premiums are unpaid, the insurance contract may be terminated, and insurance claims may not be paid even if an insured event occurs."

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