South Korea’s financial watchdog said Thursday it penalised the insurance unit of South Korea’s debt-stricken Kumho Asiana group for causing 243 million dollars in losses through risky investments.
The Financial Supervisory Service said Kumho Life Insurance would be banned from starting operations in the non-insurance sector for three years.
CEO Park Byung-Wook and former head Choi Byung-Gil were banned from taking an executive post in any financial institution for three years, it said, while Park was also barred from running for a second term as CEO.
The watchdog held them responsible for 280 billion won in losses stemming from investments in overseas derivatives, equities and real-estate funds between 2002 and 2008.
The losses pushed down Kumho Life’s solvency ratio, or its ability to pay claims, to below the minimum allowable level of 100 percent, it said.
The insurer’s solvency rate stood at 90 percent at the end of 2009.
Kumho Life is a key subsidiary of Kumho Asiana, the country’s eighth largest business group, which has been struggling to ride out a liquidity crisis after its attempt to sell Daewoo Engineering and Construction failed.
It acquired Daewoo Engineering for 6.43 trillion won in 2006, and bought logistics company Korea Express for 4.1 trillion won last year, prompting concerns about its reckless expansion.
The group is straining under an estimated 18 trillion won in debt, compared with assets worth about 38 trillion won.
In December it put two of its troubled affiliates under a debt workout programme.
The global economic crisis has delayed the sale of Daewoo Engineering, a major builder that was bailed out in the wake of the 1997-98 East Asian financial crisis.