Civic groups say initial public offering proceeds should go to policyholders
A panel commissioned by the Korea Exchange concluded that if life insurance companies are listed on the stock market, they do not need to distribute proceeds from their first public sale of shares to policyholders. But the proposal, which has to gain approval from the Finacnial Supervisory Service, is expected to be controversial as civic groups, the minor opposition Democratic Labor Party, and some politicians at the ruling Uri Party strongly criticized the proposal, saying it only represents the interests of the insurance companies. In the final ruling on January 7, the Advisory Panel on Listing of Life Insurers said, "Domestic life insurers aren’t required to distribute proceeds from their IPO to policyholders because they are not shareholders." An IPO is an initial public offering, or the first sale of a company’s share to the public. In addition, the panel proposed that Samsung Life Insurance and Kyobo Life Insurance use their asset revaluation reserves as dividends for policyholders. Retained earnings at Samsung Life and Kyobo Life are worth at 87.8 and 66.2 billion won (US$93.9 and $70.8 million), respectively.The panel recently submitted its final proposal to the Korea Exchange, but because of the current controversy surrounding the issue, initial public offerings of life insurers are not expected to take place until late this year or early next year. It may take as long as three months for the Financial Supervisory Service to finalize the terms surrounding the listing of life insurance companies on the Korean stock exchange, and at least six months for a company to prepare for the sale of its shares. Some industry watchers say Kyobo Life and Dongbu Life Insurance may be some of the first companies to list their stocks after regulatory approval. Civic groups, minor opposition Democratic Labor Party, and some politicians at the ruling Uri Party strongly criticized the panel’s proposal. In a joint statement, civic groups such as the People’s Solidarity for Participatory Democracy and the Citizens’ Coalition for Economic Justice said that since life insurers lean toward being a mutual company - designed to use its funds to provide services for all subscribing customers - they should distribute proceeds from their IPOs to policyholders. They urged the government to dissolve the current panel and form a new panel to reflect the interests of policyholders. In addition, they also called on a parliamentary committee to hold a public hearing to further investigate the situation. Please direct questions or comments to [englishhani@hani.co.kr]
