Press Release of August 22, 1998
Update on Insurance Sector Restructuring
- Business Transfer of 4 Insurance Companies -
- The Financial Supervisory Commission (FSC), at an FSC meeting on August 21, 1998, deliberated the designation of 4 non-viable insurance companies, ordering those 4 companies, namely Kukje Life, BYC Life, Taeyang Life and Coryo Life to transfer their policies-in-force to Samsung Life, Kyobo Life, Hungkuk Life and First Life respectively. It has decided to ask for license revocation of 4 companies by the Minister of Finance and Economy.
- Business subject to transfer are all policies-in-force as of the date the decision of business transfer was made.
- The Korea Deposit Insurance Corporation will provide for the difference between valuation amounts of policy reserves and transferred assets, as a way to prevent the acquiring companies from being overburdened by transferred business.
- 4 life insurance companies expressed intentions to take over closed companies' business and FSC after considering their eligibility in terms of solvency level, reserve adequacy and asset size decided to designate them as acquiring insurance companies.
o Selection criteria for acquiring insurance companies
· Companies operating sales offices at at least 10 jurisdictional areas nationwide (out of 16 jurisdictional areas)
· Companies that received Insurance Supervisory Board's rating of A or better for FY'97 with proven superiority in assets quality, profitability, liquidity and management capabilities.
· Companies with more than twice the number of personnel compared to that of closed insurance companies
- Considering each company's unique characteristics and management capabilities and after consultation with representatives of acquiring companies and completion of approval procedures, business transfer pairs were determined.
o Total assets, sales network and computer system etc. were considered.
- The government will exert its utmost efforts to minimize policyholders' inconveniences, expedite the early completion of business transfer and normalization of business.
o As policies held with the closed companies are covered under the Depositor Protection Law, insurance claims will be paid out to policyholders as usual. Also, as business will be transferred to financially sound insurance companies, policies will be maintained with no change in insurance terms.
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Structural Reform Planning Unit
Financial Supervisory Commission