Chairman & CEO Shin Chang-jae of Kyobo Life Insurance.

Kyobo Life Insurance Chairman Shin Chang-je received a verdict in his favor in a lawsuit on a put option agreement regarding the Korean insurer’s pre-initial public offering valuation.

The dispute between Kyobo Life and Affinity Equity Partners is expected to be prolonged as financial institutions differed on the interpretation of the ruling.

Insurance industry sources said the International Chamber of Commerce (ICC) made a ruling in favor of Kyobo Chairman Shin in a lawsuit against Affinity Consortium.

In the ruling, ICC said the strike price in the put option was not valid. It mandated Chairman Shin to buy back the minority shareholders’ 24 percent stake in Kyobo life at 409,000 won per share or paying interest on it.

ICC did not accept Affinity’s claim that the strike price was calculated on the premiums of Chairman Shin’s take and Kyobo management.

As to Affinity’s claim that Chairman Shin violated an obligation to do his best for the IPO, ICC said Chairman Shin’s violation was minimal and did not require his compensation, citing that all other directors of Kyobo board, expect Director Lee Sang-hoon, put up opposition to the IPO in a meeting in September 2018.

Earlier, Kyobo Life Insurance disposed of a 24 percent stake by liquidating Daewoo International and KAMCO’s stakes to financial institutions such as Affinity and IMM PE on the condition that the Korean insurer should be listed on a bourse by September 2015.

At that time, the corporate value of Kyobo was evaluated at 5.2 trillion won.

Affinity’s side claimed that Chairman Shin’s failure to make good on his promise of finishing the IPO by September 2015 made it impossible for the Affinity side to recoup its investments, so it demanded the strike price of 409,912 won per share.

As Chairman Shin’s side did not accept Affinity side’s execution of the put option, the latter filed a lawsuit for ICC’s arbitration.

In return, in April 2020, Chairman Shin’s side filed a case to the prosecution against appraisers including Deloitte Anjin accused of inflating the fair market value of shares subject to put options.

Of late, the prosecution indicted the three appraisers and legal officials with Affinity in violation of the Certified Public Accountant Act.

As to ICC’s arbitration verdict, Affinity side said ICC recognized Chairman Shin’s responsibility over breach of the contract and the validity of the put option.

It interpreted that ICC ruled that Chairman Shin violated major obligations of the contract regarding procedures related to the evaluation in the case of the execution of the put option rights.

Affinity side’s interpretation is that ICC rejected Chairman Shin’s defenses in the arbitration ruling.

Chances are high that Chairman Shin might reattempt the IPO based on ICC’s arbitration ruling. ICC rejected the strike price of the execution of the put option, but ruled that the contract was still valid.

Words on Kyobo’s reattempting of the IPO circulated as the Korean insurer posted a stable operating profit in the first half of this year and became the nation’s first insurer to obtain a green light on the My Data Business on top of the implementation of ESG businesses.

A view of Kyobo Life Insurance headquarters in Gwanghwamun, Seoul. (Photos: Kyobo Life Insurance)