Four years on, MG Insurance nears new owner as OK Financial named preferred bidder

OK Financial Group has been designated the preferred bidder for Yebyeol Non-Life Insurance — the bridge insurer created from MG Non-Life Insurance — bringing the four-year effort to find a buyer for MG Non-Life to the verge of completion.

Korea Deposit Insurance Corp. is set to officially announce the preferred bidder Friday afternoon. If negotiations proceed without a hitch, the parties are expected to sign a final contract in the third quarter, followed by approval of a financial support plan, approval of a change in majority shareholder and a share transfer before the acquisition is formally concluded.

The decisive factor in selecting the preferred bidder was the size of the deposit insurance fund's financial support, sources said. The buyer of Yebyeol Non-Life will receive funding from KDIC in exchange for taking over the financially distressed insurer. KDIC internally set the support range at 1.15 trillion to 1.2 trillion won ($798 million), and OK Financial Group was reportedly the only bidder to propose a figure within that range. "The amount of support requested was the absolute benchmark — anyone above it was not a candidate for negotiation," a financial industry official said.

OK Financial also has no non-life insurance subsidiary of its own, meaning it can take over Yebyeol Non-Life's organization and roughly 1.3 million insurance contracts intact. That also lets it avoid the substantial operational costs — systems integration, contract verification and the like — that would come with transferring policies to one of the five major non-life insurers, making the deal relatively straightforward for the seller as well, industry observers noted.

Attention is now turning to whether MG Non-Life Insurance will finally find a new owner, four years after being designated an insolvent institution.

KDIC had pursued multiple public sales over the years, only to see each fall through. A deal with Meritz Fire & Marine Insurance appeared close to completion in 2024 through a private contract, but ultimately collapsed after MG Non-Life's union mounted fierce opposition over job security. Last July, financial authorities created Yebyeol Non-Life and decided to pursue both a transfer of contracts to five non-life insurers and a public sale simultaneously.

Still, significant hurdles remain. As with the Meritz case, union resistance or sticking points in contract negotiations could derail the deal again. A KDIC official said the union is also seeking a sale and "is cooperating as much as possible." Because OK Financial has no existing insurance unit, analysts expect employment continuity to be less of a flashpoint than it was during the Meritz negotiations.

Clearing the regulatory approval hurdle is another question. In 2017, OK Financial Group was named preferred bidder for eBest Investment & Securities, but the deal fell apart after financial authorities ordered the group to restructure its lending-heavy business model. OK Financial surrendered its moneylending license in 2023, but the Financial Supervisory Service later found that two affiliates had continued operating moneylending businesses through 2024 — a violation that resulted in a 370 million won fine last year.

"We are now moving from the proposal stage to signing a final contract," a financial industry official said. "Negotiating the detailed contract terms will be considerably more demanding."

Whether the acquisition will give momentum to OK Financial Group Chairman Choi Yoon's vision of building a "comprehensive financial group" is also drawing attention. If the Yebyeol Non-Life deal closes, it would mark OK Financial's first acquisition of management control since it took over Korea Citi Capital — now OK Capital — in 2016, and would be the first time a savings-bank-based financial group has brought an insurer under its umbrella.

However, Yebyeol Non-Life's liabilities exceeded 4 trillion won as of end-March, against assets of 3.55 trillion won. Beyond the KDIC support funds, the acquirer will almost certainly need to inject additional capital to stabilize the company.

Meanwhile, the second round of public bidding for Yebyeol Non-Life on June 30 drew four participants — OK Financial Group, Korea Investment Holdings, Heungkuk Fire & Marine Insurance and JC Flowers. The first round had attracted only Korea Investment Holdings and was declared void.