LIG Group to sell sharesLIG Group announced yesterday it will sell all its shares in its non-life insurance unit to cover the expense of compensating retail investors who claimed losses due to financial fraud in 2011.
In a statement released yesterday, the conglomerate said it will sell the 20.96 percent stake, or 12.5 million shares, in LIG Insurance owned by 78-year-old Chairman Koo Cha-won and 16 associates. The associates include the chairman’s oldest son, Bon-sang.
After the news, shares of LIG Insurance surged 13.4 percent to close at 30,450 won ($28.86).
The chairman announced his decision in an e-mail sent to the employees of LIG Insurance.
“I have spent my days thinking of what I should do while sitting alone in a small room,” he said in the email. “[I thought about] what help will it do to the development of LIG Insurance if I kept my place as the financial company’s majority shareholder while I am being tried for fraud, regardless of the truth. And how I should take responsibility for damages inflicted to investors due to the management failure of LIG Engineering and Construction as a majority shareholder.
“After looking at various methods, I have come to the conclusion to sell all of the stakes my family and I own in LIG Insurance.”
In the email, he added that he would not only do his best to minimize any damages that may incur such as securing jobs, but will also seek an investor who would raise corporate value.
LIG Insurance is the flagship of LIG Group, which the chairman’s family has been running for half a century. It is the nation’s fourth-largest non-life insurer in the country with 15 trillion won in assets.
In fact, 85 percent of the 11 trillion won LIG Group made last year was from its insurance business.
Some market experts speculate that LG could emerge as a potential buyer, as LIG spun off from LG in 2000.
Yesterday’s announcement came after the chairman said he would pay 130 billion won, including investment principal and guaranteed interest payments, to about 700 retail investors.
The LIG Group chairman and his son in September were tried and convicted of investment fraud conducted in 2011, when they knowingly sold short-term debt of the group’s defunct construction unit, which amounted to 215 billion won.
The construction company in 2011 filed for court receivership after being unable meet its debt obligations.
BY LEE HO-JEONG [firstname.lastname@example.org]