Samsung Life slapped with warning for poor internal controls

The Korea Times

The Korea Times

Finance

Fri, September 29, 2023 | 23:17

Companies

Samsung Life slapped with warning for poor internal controls

Posted : 2023-04-26 16:33

Updated : 2023-04-27 11:51

Samsung's office buildings where Samsung Life Insurance headquarters are located / Yonhap

By Lee Min-hyung

Samsung Life Insurance was issued an administrative warning from the Financial Supervisory Service (FSS) over its poor internal control and risk management system.

The watchdog recently sent the message of warning to the insurer, urging it to autonomously improve its risk management capabilities.

This came after the Samsung affiliate was designated as a group of a financial conglomerate last year. Any companies classified into the group should build tighter internal control systems on their own against possible financial accidents, such as insider trading.

But the FSS supervision showed that Samsung Life has not set up any specific division dedicated to fulfilling the role and has conducted internal control with only a few officials.

In November 2021, the company created the division, but its specific role and responsibility have not been reflected in Samsung Life's bylaws until the FSS inspection.

"Given Samsung Life's corporate size and diverse business areas, the company should strengthen the workforce of the division," the FSS said. "The company should also specify the authority of the organization in its corporate bylaw and enhance the system of the internal control unit."

The FSS also took issue with Samsung Life's capital adequacy ratio. The figure reached 244.6 percent in June last year, but it had been on a gradual decline since June 2021 when the ratio came in at 309.1 percent.

"The company remains negligent in managing the ratio," the FSS said. "Samsung Life should also be wary of possible risks surrounding the insurance business amid widening interest volatility."

mhlee@koreatimes.co.kr