For Providing Unwarranted Support to Majority Shareholder
The Financial Supervisory Service has issued a warning to Hanwha Life Insurance and imposed a fine of approximately two billion won. In addition, it reprimanded three executives and nine staff members.
Hanwha Galleria Timeworld, which owned 48.3 percent of the insurance company, obtained a duty-free business license in 2015 and then unilaterally chose a part of the insurance company’s 63 Building for its duty-free business. At that time, a lessee was using that part of the building.
As a result of the major shareholder’s decision, the insurance company paid 16.7 billion won in construction costs, 7.2 billion won in contract breach penalties in relation to the lessee and 0.8 billion won in maintenance costs. The Financial Supervisory Service’s warning and fine are because of the eight billion won provided by the insurance company. It explained that the construction costs were the company’s assets and not provided for nothing.
The Financial Supervisory Service called transactions with a subsidiary into question, too. The insurance company paid building management costs to 63 City, a subsidiary agency, and the payment included approximately 1.1 billion won in contributions to Hanwha Group’s nonprofit foundation irrelevant to the building management service. According to the Financial Supervisory Service, this constitutes tangible and intangible assets given to a subsidiary for nothing, which is a violation of the Insurance Business Act.
It also said that Hanwha Life Insurance paid reduced or no insurance money regarding 4,734 contracts from January 2015 to May 2019 to keep more than two billion won out of over 4.7 billion won. As a result of its disciplinary measures, the insurance company now cannot launch any new business for one year to come if the launching requires permission from the authorities.