The acquisition of MG Insurance is facing difficulties. Meritz Fire & Marine Insurance, the preferred bidder, attempted due diligence, but repeated failures due to union opposition have increased the likelihood of legal action by the Korea Deposit Insurance Corporation (KDIC).
According to the financial sector on the 9th, KDIC is reportedly reviewing an injunction to prevent MG Insurance’s labor union from obstructing due diligence. A KDIC official stated, "We are preparing legal action regarding the failure of due diligence. If the court grants the injunction, the process can proceed smoothly."
Since MG Insurance was designated as a distressed financial institution in April 2022, KDIC has attempted three public sales. In December last year, Meritz Fire & Marine Insurance was selected as the preferred bidder, but repeated opposition from the labor union has prevented any progress in due diligence.
MG Insurance's labor union opposes the process, claiming that Meritz Fire & Marine Insurance is making excessive demands and that a large-scale restructuring is expected post-acquisition.
Meritz Fire & Marine Insurance is pursuing the acquisition through a Purchase and Assumption (P&A) method, which does not legally require employment succession. As a result, the company sees workforce reductions as inevitable after the acquisition.
On February 7, Meritz Fire & Marine Insurance attempted another due diligence at MG Insurance’s headquarters, but union resistance once again led to failure. The union insists on supervising the entire due diligence process, deciding whether documents can be taken out, and prohibiting former MG Insurance employees now working at Meritz Fire & Marine Insurance or the due diligence firm from entering the premises.
Baek Young-jin, head of MG Insurance's labor union, stated, "Meritz Fire & Marine Insurance's demands are excessive and unacceptable. If KDIC takes legal action, the union will also respond accordingly to resolve the issue."
KDIC has indicated that if Meritz Fire & Marine Insurance withdraws from the acquisition, it will consider various resolution options, including liquidation or bankruptcy. If MG Insurance undergoes liquidation, approximately 1.24 million policyholders could be affected.
Policyholders are protected under the Depositor Protection Act, which guarantees up to 50 million KRW in surrender value refunds. However, any amount exceeding this limit could be lost. Additionally, some policies, such as indemnity health insurance, may not be available for renewal under the same conditions, raising concerns among policyholders.
If the liquidation process proceeds, MG Insurance's approximately 600 employees may also face job losses. The insurance industry predicts that if labor and management fail to reach an agreement, the acquisition could collapse.
An industry official warned, "If the MG Insurance sale does not go through, measures to protect policyholders will be necessary. If labor and management cannot find common ground, the worst-case scenario of liquidation could become a reality."
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MG Insurance Sale Stalls Amid Union Opposition, KDIC Mulls Legal Action
The acquisition of MG Insurance is facing difficulties. Meritz Fire & Marine Insurance, the preferred bidder, attempted due diligence, but repeated failures du
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