Samsung Life Insurance’s plan to become a financial holding entity of Samsung Group has received a heavy blow as the country’s financial regulator ordered to halt some of its operations and issued a warning against its chief executive as a punitive measure over overdue suicide claims.

The Financial Supervisory Service last Thursday issued a ‘reprimand’ warning to Kim Chang-soo, president of Samsung Life Insurance. If the decision is finalized before the general shareholders meeting slated for March 24, the company would not be able to appoint Kim to serve as chief executive for consecutive terms and have him lead the firm’s plan to transform itself into a financial holding entity of Samsung Group.

The life insurer has geared up to become a holding entity of its financial affiliates under the country’s largest conglomerate by acquiring shares in its sisters Samsung Card and Samsung Securities last year. But Samsung Life Insurance now has to push back its plan by three years as the current law restricts an insurance firm from becoming other financial entity’s new largest shareholder for three years upon receiving an order to suspend operation.

As of November last year, Samsung Life Insurance owns 30.1 percent stake in Samsung Securities, 71.9 percent stake in Samsung Card and 98.7 percent in Samsung Investment Trust Management. The life insurer has planned to buy additional 15.98 percent stake in Samsung Fire & Marine Insurance to secure 30 percent or more shares in the non-life insurer, readying itself to become the financial holding entity. But it now is unable to make the purchase due to the disciplinary action.

Industry watchers predict a break in Samsung Group’s plan to shape Samsung Life Insurance as a financial holding entity would also hamper Samsung’s hereditary succession plan to make Jay Y. Lee, vice chairman of Samsung Electronics and de facto leader of Samsung empire as the group’s formal head.

Samsung Life Insurance along with two other local insurers was ordered by the Financial Supervisory Service to suspend some of their operations after they failed to pay out death claims for subscribers who committed suicide. The insurers had sold policies for accidents that cover suicides that occur two years after contract initiation, but they denied the payouts and failed to explain the reason for denial to families of policyholders who committed suicide.

Shares of Samsung Life Insurance closed Friday at 106,000 won ($93.72), down 500 won or 0.47 percent from the previous session.

By Park Joon-hyung and Kim Tae-sung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]