The Financial Supervisory Service is considering reprimanding major life insurance companies for breaches of accounting standards or irregular trading with their parent groups, officials said Sunday.
The regulator conducted its investigation into eight major players last year and its possible sanction targets involve conglomerate-based players such as Samsung Life Insurance and Hanwha Life Insurance (then Korea Life).
Some of the eight firms, including Kyobo Life, Tong Yang Life, Mirae Asset Life, Shinhan Life and ING Life will be fined for rigging financial statements in an alleged bid to maximize dividend payments to their main shareholders, said an FSS official.
“A procedure for disciplinary action is to distinguish simple misstatements from deliberate book-rigging,” he said. “The more significant issue is to prove allegations over a firm’s irregular intra-group trading.”
But FSS officials downplayed the feasibility that some rule-violators may face business suspension and raised the possibility of issuing “warnings” with fines.
Regulatory inspectors are also looking into documents to reveal whether some of the companies provided group affiliates with exclusive benefits in their sales of insurance policies such as the retirement pension.
Over the past decades, some business groups have been suspected of exploiting their financial subsidiaries, such as insurance and credit card units ― as a tool to secure operating funds of their manufacturing subsidiaries or reportedly set aside slush funds.
A stock analyst alleged that irregular intra-group trading is still being carried out at conglomerates.
“The FSS, happened to launch its probe into the life insurance industry when economic democratization was becoming a buzzword among presidential hopefuls,” he said. “The market is focusing on the coming results, including punitive measures under the (coming) Park Geun-hye administration.”
Presidential candidates had generally supported the idea that the nation should restrict the prevalent cross-shareholding structure among affiliates in major business groups.
By Kim Yon-se (
kys@heraldcorp.com)
