Meritz Financial Group Inc., South Korea\u2019s second-most valuable financial holding firm, has dropped its bid to acquire financial distressed MG Non-Life Insurance Co. after failing to reach an agreement with unionized MG workers on job security.<\/p>\n
With MG Non-Life\u2019s sale having fallen through several times already, the insurer is now more likely to be doomed for liquidation, analysts said.<\/p>\n
Meritz Financial Group said in a regulatory filing on Thursday that it is abandoning its bid for MG Non-Life by relinquishing its status as the preferred negotiating partner.<\/p>\n
Last December, state-run Korea Deposit Insurance Corp. (KDIC) picked Meritz Fire & Marine Insurance Co., a flagship unit of the financial holding firm, as the preferred bidder for MG Non-Life.<\/p>\n
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\u201cAlthough we were selected by the KDIC as the preferred negotiating partner to acquire MG\u2019s assets through a purchase and assumption (P&A) transaction, differences with the MG labor union have led us to relinquish our status,\u201d Meritz Financial said in the public disclosure.<\/p>\n
Meritz said it formally notified the KDIC of its decision following a board decision earlier in the day.<\/p>\n
MG\u2019S LABOR UNION REJECTS REFORM PROPOSAL<\/strong><\/p>\n Meritz has been unable to conduct due diligence on MG Non-Life since December amid strong opposition from MG\u2019s labor union, which demanded employment guarantees as a precondition for negotiations.<\/p>\n Meritz Fire & Marine wanted to acquire MG Non-Life via a P&A transaction, which did not legally require the guarantee of existing employment contracts, meaning significant restructuring post-acquisition.<\/p>\n In a bid to address labor concerns, Meritz offered to retain 10% of the existing workforce and proposed a severance compensation package worth 25 billion won ($17.2 million) in total, which MG\u2019s unionized workers rejected.<\/p>\n MG Non-Life Insurance has been put up for sale after Korea\u2019s financial regulator, the Financial Services Commission (FSC), designated it as a distressed financial institution in April 2022.<\/p>\n The insurer’s capital adequacy ratio under the Korean Insurance Capital Standard (K-ICS), a barometer of a financial firm’s financial stability, stood at 43.4% at the end of September, far below the legally required threshold of 100%.<\/p>\n Potential buyers that showed interest in MG but eventually dropped their bids over the past couple of years include Korea\u2019s DAYLI Partners and New York-based J.C. Flowers & Co.<\/p>\n LIQUIDATION LOOMS LARGE<\/strong><\/p>\n Following Meritz\u2019s withdrawal, financial regulators and the KDIC issued statements acknowledging the situation.<\/p>\n \u201cIt has been over three years since MG Non-Life was classified as a distressed financial institution. Prolonged delays in the sale process have further weakened the insurer\u2019s financial health,\u201d said the Financial Supervisory Service in its statement.<\/p>\n The government is now seriously considering other methods to handle the MG Non-Life issue, with officials emphasizing that future actions will be taken per legal principles and regulatory frameworks.<\/p>\n The KDIC earlier said a failure to conclude the sale could lead to more drastic measures, including liquidation or court receivership.<\/p>\n If MG Non-Life is liquidated, it would mark the first liquidation of an insurance firm in the country.<\/p>\n Should the liquidation proceed, it would affect 1.24 million policyholders.<\/p>\n Under Korea\u2019s deposit protection laws, policyholders are guaranteed reimbursement of up to 50 million won in surrender value.<\/p>\n Liquidation would also result in the loss of employment for some 600 MG Non-Life employees.<\/p>\n","protected":false},"excerpt":{"rendered":" By In-Soo Nam | The Korea Economic Daily | March 13, 2025 Now that the fifth sales attempt has gone awry, the state-run KDIC is looking to drastic steps such as liquidation of MG Meritz Financial Group Inc., South Korea\u2019s second-most valuable financial holding firm, has dropped its bid to acquire financial distressed MG Non-Life… Read More »Meritz drops bid for troubled MG Non-Life Insurance; Liquidation looms<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"off","neve_meta_content_width":70,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[9,3],"tags":[],"class_list":["post-1998","post","type-post","status-publish","format-standard","hentry","category-korea","category-news"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/posts\/1998","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/comments?post=1998"}],"version-history":[{"count":1,"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/posts\/1998\/revisions"}],"predecessor-version":[{"id":2000,"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/posts\/1998\/revisions\/2000"}],"wp:attachment":[{"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/media?parent=1998"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/categories?post=1998"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/tags?post=1998"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}