M&A bidding for Korean nonlife insurer kicks off | Insurance Business Asia
M&A bidding for Korean nonlife insurer kicks off
Two names stand out as frontrunners for the purchase
The Korea Deposit Insurance Corporation (KDIC) has officially initiated the M&A bidding process for MG Non-Life Insurance.
Managed by Samjeong KPMG, the lead sales manager, the process involves the collection of Letter of Intent (LOI) submissions from potential buyers until Oct. 5, with the aim of selecting preliminary bidders.
To alleviate potential buyers’ burdens, KDIC has chosen to employ the purchase and assumption (P&A) method for the sale of MG Non-Life. P&A differs from conventional M&A approaches in that the former facilitates a discerning transfer of assets and liabilities, allowing potential buyers to exclude certain non-performing assets and subordinate debts. This method is commonly preferred and utilized by the US Federal Deposit Insurance Corporation in addressing failing banks.
This marks KDIC’s second attempt to publicly auction the company this year alone, according to a report from The Korea Times. In January, the state-run deposit insurer initiated the sale process, which yielded no interested buyers due to ongoing concerns about legal disputes.
Since the Financial Services Commission (FSC), the primary financial regulator, designated MG Non-Life Insurance as an insolvent financial institution in April of the previous year, KDIC has overseen the management of the insurer. The FSC’s designation stemmed from failures in implementing the planned capital increase and maintaining an adequate level of the risk-based capital ratio.
JC Partners, the largest shareholder of MG Non-Life Insurance, pursued both an injunction and a main lawsuit through the administrative court, seeking to overturn the government’s classification of the insurance firm as a financially troubled entity.
They were, however, ruled out in both instances. Earlier this month, the Seoul Administrative Court ruled in Favor of the financial authorities, thereby paving the way for KDIC’s rightful sale of MG Non-Life Insurance under its supervision.
Among market observers, Woori Financial Group and Kyobo Life are considered the two most robust potential bidders. Woori Financial Group’s emphasis on fortifying non-banking sectors and Kyobo Life’s absence of affiliated insurance companies position them as frontrunners.
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