Korean Union Demands Intervention in Troubled Insurer
The Korea Financial Services Workers Union-MG Non-Life Insurance Union (KFSWU-MG) held a press conference on March 17 outside the Korea Deposit & Insurance Corporation (KDIC) headquarters in Seoul. The union is urging the state financial stability authority to intervene in the sale process of MG Non-Life Insurance to protect the interests of 1.25 million policyholders.
Members of the KFSWU-MG at a press conference outside the KDIC headquarters in Seoul.
MG Non-Life Insurance was declared insolvent in April 2022 after changes to the International Financial Reporting Standards (IFRS) affected its risk-based capital ratio. The KDIC was then tasked with managing the company’s sale. The union is deeply concerned about the potential impact of this sale on its members and policyholders.
Failed Bids and Uncertain Futures
After three failed tender notices between January 2023 and July 2024, the KDIC selected Meritz Fire & Marine Insurance Co Ltd as the preferred negotiator in December 2024, granting an exclusive negotiation period. However, Meritz withdrew from the bidding process on March 13, citing “various internal and external issues.”
Bae Young-Jin, President of the MG union, expressed his disappointment at Meritz’s proposal, which would have retained only 10% of the company’s 500 employees. “We are greatly disappointed at the Meritz offer which would accept only 10% of employees and offer 250 million won (approximately US$173,000) in compensation to those leaving the company,” said Bae.
Lee Jae-Jin, President of UNI affiliate, KFSWU, called on the government to explore alternative solutions, referencing the Korea Development Bank’s (KDB) investment in Hyundai Heavy Industries and Daewoo Shipbuilding Company during the global financial crisis. Lee also noted the successful investment by the KDIC in Seoul Guarantee Insurance Corporation, which resulted in a profitable IPO.
“Now we are back at the starting point. The financial authorities must reconsider the sale plan, including public fund injection, to save policyholders and guarantee employment security for the sake of insurance market stability,” Lee urged.
Union Offers Cooperation
The union emphasized that no insurance company in Korea has previously been liquidated, with restructuring programs typically implemented with government intervention. In their statement, the union declared a willingness to cooperate with the KDIC and Financial Supervision Commission (FSC) to find a new bidder.
“We are deeply concerned about the rights of policyholders and employment security in our workplace. If necessary, we will consider a certain level of concession and offer full cooperation to find a new bidder. We propose establishing a special committee to proceed with the sale of MG insurance company at a reasonable price and under reasonable conditions in the market,” the statement concluded.
Rajendra Acharya, UNI Asia & Pacific Regional Secretary, shared the union’s concerns. “We fully understand the frustration of the MG Non-Life Insurance Union and strongly support the solidarity shown by KFSWU for its member union. We urge the KDIC and the FSC to take heed of the unions’ demands and offer of cooperation that protects policyholders and employees of MG Non-Life Insurance from falling victim to a fire sale of the company.”
