KDI mulls strategy shift to sell MG Non-life Insurance

Korea Deposit Insurance Corp. (KDI), a South Korean state-owned company established to protect local depositors, is now weighing a shift toward a private contract to find a new owner for MG Non-life Insurance Co. after a third sale bid flopped. The shift comes amid concerns that sticking to the bidding approach for the sale of the insurer could be ineffective as financial companies and private equity investment firms have been hesitant to acquire the debt-ridden insurer.

According to a statement released by Korea Deposit Insurance on Sunday, the company announced a tender for MG Non-life Insurance on July 31st, 2024, following the first announcement. The re-announcement came 12 days after the third round of bidding concluded without success, as both local private equity investment firm DAYLI Partners and US-based J.C. Flowers & Co., both of which had submitted letters of intent (LOIs) in the preliminary bidding on July 19th, did not follow through with the main bid.

In accordance with Article 27 of the Enforcement Decree of the Contract Law involving the State as a Party, if only one qualified bidder or no bidders emerge after re-announcing the tender, the contract may be turned into a buy-sell agreement. Financial experts said that as the third round of bidding failed, it is unlikely that a new bidder will come forward, which explains why Korea Deposit Insurance has reportedly shifted its focus to selling MG Non-life Insurance via a buy-sell agreement instead of a bidding approach.