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Photo = Yonhap news |
[Alpha Biz= Paul Lee] A dispute has emerged over accounting treatment following Samsung Life Insurance’s classification of Samsung Fire & Marine Insurance as a subsidiary.
On July 16, the Korea Accounting Standards Board (KASB) held its 148th forum under the theme “Accounting Treatment of Life Insurers’ Investments in Affiliates.” The discussion centered around the recent controversy regarding Samsung Life’s accounting treatment of its stake in Samsung Fire.
The KASB asserts that since Samsung Life has formally recognized Samsung Fire as a subsidiary, it should apply the equity method—reflecting a proportionate share of Samsung Fire’s net income based on its ownership stake. However, Samsung Life argues that it holds less than 20% of shares in Samsung Fire and does not exercise significant influence over management, and therefore the equity method should not apply.
The controversy began after the Financial Services Commission (FSC) approved Samsung Life's request to designate Samsung Fire as a subsidiary during its March 19 meeting. Although Samsung Life initially held a 14.98% stake in Samsung Fire, a planned share cancellation by Samsung Fire increased the stake to 15.43%, triggering subsidiary classification under Korean insurance regulations, which prohibit insurers from owning more than 15% of another insurer unless treated as a subsidiary.
The debate reflects broader concerns about consistency and transparency in accounting practices within South Korea’s insurance sector.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
