Daesin Life Insurance Designated As Insolvent Financial Company

It is anticipated that the public funds will be injected to Daesin Life Insurance, which is in crisis of closing down due to the refusal of investment by the majority shareholders. However, supplementary funds seem unavoidable since the public funds have already accounted for other uses.

The Financial Supervisory Service (FSS) designated Daesin Life Insurance yesterday as the insolvent financial company, since the result of the review turned out that Daesin’s deficit of net worth was amounted for 241.1 billion won. The FSS ordered Daesin officials to halt the management of business, and selected Park Byong-Myong team chief of the FSS as the manager.

While being operated by the manager system, Daesin will go through a process of the public auction or transfer of the contract. However, when no one wants to buy Daesin, liquidation is inevitable. In this case, the public funds will be injected for the protection of the policyholders.

However, the public funds created by the government last year for the restructuring of the insurance business are amounted to be 1 trillion won. Of 1 trillion won, 141 billion won is already confirmed to be allotted to Daehan, Kukjae, and Regent Fire Insurance, 747.2 billion won to Hyundai Life Insurance, and 100 billion won to Samsin Life Insurance. Therefore, if Daesin Life Insurance is not sold, it seems unavoidable to create the supplementary public funds of 250 billion won.

The government has requested Daesin to submit the management improvement plan to make an epochal reform in the management condition of Daesin Life Insurance, such as investment of the majority shareholders of Daesin Stock, by postponing the designation of Daesin Life Insurance as an insolvent financial company. However, as the majority shareholders refused the investment, the government confirmed Daesin Life Insurance as an insolvent financial company.

Park Chang-Jong, director of the insurance examination at the FSS, said that ``Daesin Life Insurance was not considered last year when the public funds in the field of insurance were created. The creation of the supplementary funds will be discussed by the Public funds management committee by observing the result of the negotiation, which is currently undergoing, for the sales of three insurance companies.``

Lee Hoon dreamland@donga.com