Financial Services Commission Issues 'Management Improvement Request' to Lotte Insurance... Must Submit Plan Including Capital Increase

The Financial Services Commission announced on March 4 that it had resolved to impose a "management improvement requirement" on Lotte Insurance at its regular meeting.

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After Lotte Insurance received a "management improvement recommendation" from financial authorities in November last year and submitted a management improvement plan, the authorities judged the plan to lack specificity and feasibility, and therefore disapproved it last month. As a result, the stage of prompt corrective action was raised by one level at this regular meeting.

Under this measure, Lotte Insurance must prepare a new management improvement plan and submit it to the Financial Supervisory Service within two months from the date of the resolution. The plan must include detailed measures to improve capital adequacy (both quantitative and qualitative) as assessed in the management status evaluation, such as asset disposal, reduction of business and operating expenses, organizational restructuring, capital expansion, and establishment of a sale plan.

The Financial Services Commission explained that this measure is a preemptive step to manage capital soundness. It stated that the escalation of the corrective action was not due to further deterioration in Lotte Insurance’s business condition, and that there will be no issues in providing insurance services, such as insurance payouts and retirement pension operations, during the implementation period.

Meanwhile, as of the end of September last year, Lotte Insurance’s risk-based capital ratio (based on K-ICS) stood at about 142%.

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