‘Revival of Knights’ MG Insurance, “No problem” over concerns about consumer damage and regulatory gap

ⓒ Current affairs focus DB

[땡큐뉴스 / 임솔 기자] The designation of insolvent financial institutions issued by the financial authorities to MG Insurance has been suspended. MG Insurance took a breather, but as the financial authorities were unable to request capital expansion for MG Insurance, some are raising concerns that consumer damage may occur due to the occurrence of regulatory blind spots.

According to the financial industry on the 11th, the Seoul Administrative Court recently cited JC Partners’ application for an injunction to suspend the designation of an insolvent financial institution against the Financial Services Commission. The reason is that the designation is highly likely to cause irreparable damage such as cancellation of insurance contracts, restrictions on attracting new insurance contracts, loss of opportunity for inflow of funds, and decline in company value.

As the effect of designation as an insolvent financial institution is suspended, the suspension of business of executives of MG Insurance will be lifted. Employees of the Financial Supervisory Service and Deposit Insurance Corporation, who were dispatched as business managers for MG Insurance, will also return. However, as the application for injunction was cited, there were concerns about this as the financial authorities’ supervisory measures for MG damage insurance, such as orders for capital expansion, were disabled.

In response, MG Insurance said, “Even before the designation of an insolvent financial institution, it was under the regular supervision system of the Financial Supervisory Service, and after timely corrective measures, it has been subject to strict supervision compared to other companies, including dispatched supervisors. He is a permanent resident of the company, closely examining the overall management of the company, and the regular supervisory system of the Financial Supervisory Service is operating unchanged.” He dismissed concerns about regulatory vacuum.

In addition, MG Insurance explained that the possibility of consumer damage is very low in terms of insurance payability and liquidity. In the actual management status evaluation (RAAS), various indicators indicating insurance payability maintain the highest grade (grade 1).

As of the end of December 2021, the ‘liquidity ratio’, which indicates the level of holding of liquid assets to insurance payouts, and the ‘non-performing asset ratio’, which predicts the insolvency of insurance companies’ investment assets, were 447% and 0.16%, respectively, meeting the first grade, so insurance payments were paid. Assessing the ability is sufficient.

In particular, the LAT, which is submitted annually to the financial authorities, also reported a surplus of 530 billion won as of the end of December 2021. This means that the company is accumulating more than 530 billion won in reserves than necessary to fulfill all obligations to customers, including insurance money. The LAT evaluation is a system that evaluates the adequacy of the liability reserve based on future cash flows every year in order to supplement the limitations of the current accounting standards for evaluating liabilities at cost.

An official from MG Insurance said, “Both the RAAS and LAT evaluation results are at very good levels, so we are able to respond to not only immediate insurance payments but also rapid increases in insurance payments without any problems. We will do our best to prepare for further consumer protection depending on the situation of concern.”

Meanwhile, on the 10th, the FSC requested the Seoul Administrative Court for a decision to “cancel the losing part of the respondent in the original decision and reject all of the applicants’ applications.” However, the specific reasons for the appeal were not disclosed.

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